Realize University Isn’t For Everyone
Let’s be real college isn’t for everyone. All you really need to survive in life is your High School Diploma. I know a lot of people who choose different education path and they now make more than my university friends. If college really isn’t for you then don’t go. It’s way too expensive way to try to make work. Too many people try to fit into a certain mold their just not meant to fit and they miss out on a lot of things they could really excel at.
With Great Student Loans Comes Great Responsibility.
This really shouldn’t have to to be said. But apparently, it does because there are millions of students out there who take on ridiculous amounts of debt to get their degree. Even worse students will take out even more student loans to pay for things like a European tour, a cruise, or a new car. This is a very very bad idea and will lead to financial struggles once you graduate a vacation is not an investment. Don’t listen to all the students who are justifying this. It’s an expense. Only use loans when you absolutely need it. Consider other options first like a part-time job, scholarships, or taking some time off to get earn more money. For more on debt visit my great article here.
College is an Investment so Let’s Break It Down
With any investment, there is the initial investment than the profit or loss. Hopefully, we want to turn it into a profit. There is a lot that goes into the costs of college we have tuition, books, and rent. But there are also costs we don’t think about very often. Namely opportunity costs. The cost of lost income opportunities to go get a degree. When we add all the costs together it adds up really quick. Here’s a simple example for our visual friends.
Opportunity costs $100,000
Total 4 Year Cost $200,400.00
So we need to at least earn that much to break even on our investment. Say we retire at 65 that gives us approx 40 years to make that back. To do that we need to make on average at least $5,000 more a year to break even. Anything beyond that is profit. Now if we are super careless with money and go on vacation maybe buy a new car eat out more and spend $350,000 on school and longer opportunity costs. We will have to earn on average $8,750 Just to break even. Now if we really wanted to get complicated we can dive into more costs, taxes, and interest rates. which would drive our break-even point even higher. And that’s to recover our initial investment. To be a good investment we would want to see our profit at least in the teens.
Don’t Lose Money on Your Investment be Prepared.
This happens when we don’t reach the break-even point as explained in our last section. And we see all the time where the waiters who serve us food have advanced degrees in a certain field they went heavily in debt for but are not able to find a job in that field or they get sick of their chosen career and quit. They are left with large amounts of debt and no way to pay for it. This doesn’t lead to success it leads to heartache and financial imbalance. See Also how to find balance in our finances By being prepared we can be successful and find happiness. This all happens in our critical young adult years when we set the course for our lives.
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