Education & Earnings

Starting Point
To be financial independent, you must accumulate wealth to let is work for you. Obvious way to do this is to save money by spending less money than you earn. That is not the only way to do so (eventually not even the best way). But, it is the most straightforward method. Based on that, main focus should be on income.

Education & Earnings
In order to increase the chances of higher income levels, most people choose to acquire more education. Both are strongly correlated (earnings & education). Also, unemployment rates are negative correlated with the level of education. More education goes with higher chances to be employed and with higher income while employed. Such numbers can be observed in the United States (Bureau of Labor Statistics):

Education Level
2014 Yearly Earnings
2014 Unemployment Rate
Less than High-school graduate
High-school graduate
Some college, no degree
Associate degree
Bachelor’s degree
Master’s degree
Professional degree
Doctoral degree

Earnings & Savings
Please note, a small increase in your income can have an huge impact in your savings. For example, assume you are earning $40k per year and your expenses are at $36k per year. Your savings are at $4k per year. If your income increases up to 10% (to $44k) and your expenses stay the same, your savings have more than doubled to $9k per year. Although this is intuitive for most, people often do not get the big picture of what that actually means.

Value over Time
A person with a high school degree is expected to earn overall about $1.2 Mio. through the working career on average. Somebody with a Bachelor’s degree is expected to earn about $2.1 Mio. on average (Census Bureau report of the United States). In case of overall living expenses of $1.2 Mio. the high school graduate is not able to save any penny. The college graduate is able to save $0.9 Mio. And, if the savings are invested each year, they will grow to several Mio. Unfortunately, regardless of the potentials of investment returns: If the high school graduate was not able to save any money, by the end savings will be still zero.

Intangible Benefits
In addition to the highly probable financial gains, there are also a lot of intangible benefits of education. Just to name a few: They lift the overall living perception and thereby increase the standards of living. Some are enabled to manage their mental state, live and act only in the moment (Flow). Others can to manipulate people in the way the want to (Neuro-linguistic Programming). Academics usually have a sense of accomplishment and open-mindedness to new people and new ideas. That is why you will not find a lot of people say: I wish I had never gone to university.

Profits from Knowledge
Be cautious when applying averages to your own life. There is a chance to make a lot of money with no education. It is possible for a PhD to be out of work. However, for most people more education will increase income. Often when people start counting for retirement, they find that things are not working fast enough. They begin to search for investments with higher rates of return. Remember to consider what will probably be your best investment in live: Education.

2 Responses to Education & Earnings

  1. Slava says:

    maybe you should also consider publishing at the same time in so you can reach a broader audience without making much of effort

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