Choosing a degree is already a complicated thing, but when you add financial factors into the mix, it becomes even more complicated. But, it is something that needs to be done to protect you and your future.
While you may just be entering college and money matters may be the last of your worries, it is important that you do think about your financial situation and where you plan to be. A misstep along the way could mean that you are doomed to be unemployed with a large amount of debt. My 2 younger siblings are looking to select their college major over the next year and asked for some advice!
Below, I will go over why you need to consider your financial future when you choose your college major and we hope this information will help you.
1. What Is Your Projected Salary?
One of the first things you need to think about when choosing your college major is how much the position pays. Of course, you do not want to go into a field simply because it pays a lot of money, but knowing what your annual salary is projected to be can help you plan for the future.
For example, if you choose a career and degree that has an annual salary of $55,000, then you know how much to expect monthly and you can guesstimate what type of house you will have, how much you need to put away for retirement, and similar.
2. What Is the Job Growth Rate?
Next, you need to look at the job growth rate. This is important because if this type of job is being phased out, then you will likely be standing in the unemployment line at some point and this can have a devastating blow to your income.
You should choose the career you desire, but know what the projected numbers are and what to expect as far as whether or not your skills will be needed in the future.
3. Is There Room for Advancement or Further Education?
In addition to knowing the job growth rate for your position, you also need to know if there is room for advancement within your chosen career. If you are stuck in the same position with the same salary, this can have an effect on your pay. In fact, if there is no room for growth, you may not receive any type of pay raise, which means you will be stuck at your wage the entire time you hold that position.
This is not necessarily a bad thing, but if you are looking for the opportunity to advance or you want to eventually make more money, you need to be prepared now and switch your career choice before you receive your major.
4. How Do You Plan to Pay for Your Degree?
Another important reason you need to consider your financial future when choosing your degree is because you do not want to go into debt over your degree. For example, if your position of choice only makes $40,000 per year, but you have student loan debt of $150,000, then something is wrong and you may find yourself living closer to poverty than you want.
When you start to think about your degree choice, think about the cost of the degree as a whole, the cost of tuition, expenses, and more. The more prepared you are and the more money you can put out to pay for college, the better off you will be and the less money you will owe to the federal government. Also consider if your job will allow you to be eligible for certain programs such as student loan forgiveness or refinancing.
Side note: I was able to lower my monthly payment and pay less interest overall by refinancing my student loans.
5. Are There Any Financial Incentives?
You should also consider if your degree choice and potential position has any financial incentives that come along with it. For example, if you choose to be a nurse, there is a financial incentive to work on certain floors and at certain times of the year. This can be a hefty incentive in some cases and it will allow you to earn even more money than what your projected salary is.
If you are torn on what degree to choose, consider the above five things relating to your financial future and then make a decision based on your answers and research.
Is there anything I missed that should be taken into consideration from a financial standpoint?
I agree, I think everyone should factor that in when choosing a degree. I was definitely focused on it and it was a major factor in the path I chose. I wanted to make as much as I could out of college, enter a field they had a good career path, and be something new and different that I could enjoy every day. It’s worked out ok for me so far!
I think it should be a combination of parents, loan companies and the college itself that teach lessons like this. I assumed that I would be able to pay off my loans without any issues after graduation, boy was I wrong.
But then who would fund all of those great art programs? My father always told me if you can make money doing something you love great, if you have to choose, follow the money. I think many college aged kids feel entitled to be able to make a good living doing what they are passionate about.
I completely agree regarding the entitlement epidemic. Though compensation is to be expected as a result of hard work, it has certainly gotten out of hand recently.
This a comprehensive list of considerations. The only thing I would add is a related point: consider the requirements and costs associated with continuing education. Virtually all fields today are evolving on a yearly basis, and keeping up with advancements is likely required by HR and also necessary for advancement/overall success purposes.
Money isn’t everything, but it needs to be taken into account. Doing what you love can become stressful if you arent able to pay the bills or your student loans.
I think this post is vital for anyone who is in college. While student loan debt is a massive problem and I know I don’t have all the answers, I think part of the problem is that some people get degrees without knowing the financial implications down the line. For example, imagine graduating with a fairly weak degree but also with student loan debt. Moving back in with mom and dad and working a $10/hour job should not be someone’s goal after graduation. Doing some research before can definitely help avoid something like this.
Agreed Dollar Engineer, I know a lot of people that are deferring loans because they either don’t have a job or can’t find one that pays enough money.
Another very important factor to look into is this: Is it possible to be in that profession without a 4-year college degree? If the answer is yes, then college should be bypassed altogether unless the student is getting a full ride. So many jobs can be done by attending tech schools or getting an associate’s degree. Far too many people have bachelor degrees when they don’t need them. Examining the true need of a degree would certainly help in tackling the student debt crisis.
Great point – that is often overlooked!
There are a lot of trade jobs that pay well and set you up for early retirement. Some even still have pensions!
Great considerations AE and I think a lot of grads would wish they’d considered all these factors before doing their course.
Money is the most important factor to succeeding in today’s world (and you need money to pay for stuff) so people shouldn’t do something just because it sounds nice. It also needs to make sense financially!
Thanks Tristan – and agreed, you should consider the financial implications in almost any decision you make.
These are all awesome points. I think it’s easy to give into the overall allusion of salary and what you think the degree offers without giving each of these serious consideration. Going to school is a very expensive decision to make at a young age so it pays to do due diligence. I would also encourage them to do as much as they can to earn credits before hand to shave off the costs of their college degrees.
Great advice – you can take free college courses if you dominate in high school!
This is a big issue. My wife and I are both engineers and have graduate degrees, so we are steering our kids towards STEM (science, technology, engineering and math) degrees which typically do well from a job prospects and salary perspective. And, I think that I have drilled it into their heads that college is an investment and they need to get a good return on it with a good paying job and low or no debt. We shall see!
I dont think Tech/Engineering jobs are going anywhere, we struggle to fill seats with experienced engineers at our company.
I agree and disagree. It really comes down to perspective. I say, follow your bliss. Find something that you love to do and are passionate about, and then find the money. For example, I get so tired of the repetitive “teachers don’t make enough money” argument. I agree traditional teachers don’t make enough money. But it you love to teach find a way to do it and make money. With this perspective there are a lot of wealthy teachers out there – Robert Kiyosaki, The Financial Samurai, even you Apathy Ends are a teacher. It’s all about perspective.
Fantastic advice here! I don’t think I did any of those things, graduated with a Master’s in a field that doesn’t pay and I only worked in for two years. No major regrets, as it was a great education and experience, but I really should have thought it through more.
Great advice! I think this is the first “real world” lesson high school grads should learn- the world is only going to pay you for what it wants. If you become educated in something no one sees value in, it’s going to be hard to get paid! More young people need to be aware of this.
I also think people should think about portability of job skills and contacts. If you get into Harvard, your major does not truly matter because what you are buying is that network of people. If you want to be a real estate agent, you don’t truly need one particular type of degree or another. You need to understand the local licensing requirements, how to sell, and how to understand what people are truly looking for when they don’t know the proper words for it. No degree grants that.