The value of your degree

We hear it every year. Someone who never went to school makes it to the list of top 10 richest men in the country. And then you look at your miserable degree on the wall, the stack of overdue bills and wonder what went wrong.

From young we’re trained to study hard, get a job, secure a happy future. But things are not adding up and you suspect there’s more to it than that.

I don’t read the get rich guru books (wanna recommend any good ones? ) but if being filthy rich is your target, I don’t think any of them will recommend a 9-5 career. How do I know? Lets do the math.

Lets assume you just graduated and your degree allows you to sell your time (via employment) at $120 a day. In 1 month @25 working days you’re paid $3,000. In 1 year you get $36k.

Now let’s assume you get a 15% salary increase every year for the next 15 years after which your salary peaks at $25k a month. In 30 years you would have been paid roughly $6.2 million for your time. By then you’re near retirement age.

Knock off half of the $6.2 million for taxes, insurance, education for the kids in that 30 years and you’re left with about $3 million.

Knock off half of that for buying 2 houses and the 5-6 cars you would have owned in those 30 years and you’re left with $1.5 million.

That’s your daily spending money for living expenses, vacations, paying the loans and so on. It works to an average of $137 per day for the next 11,000 days or 30 years.

And don’t forget, the buying power of $137 in year 2017 will have shrunk due to rising prices etc. so even if you combine that figure with your husband’s or wife’s potential income, its still small by any measure.

My calculation may not be perfect but if it proves anything, its that a 9-5 career will not help you retire with $10 or $20 million in the bank. But for some odd reason many people believe it will.

IMHO, all a degree can do is give you access to on-the-job training. If you have a degree, an employer is more likely to give you a job than the guy without a degree. With it you’ll just have a lot more pocket money and probably a lot more debt. That’s all. Beyond that you’re still at par with the rest – educated or not – as far as developing financial smarts are concerned.

Does the existence of uneducated millionaires prove that degrees are overrated? I don’t think so. One fact stands out in this. All of these ‘uneducated’ millionaires are as old as your grandfather. I use quote marks becuz these guys are way smarter than your average PhD. College degrees were rare in their days so nobody imposes minimum degree requirement for a job. It was a race of who’s fastest, ingenious or most cunning.

We’re in a different time zone now and the rules of the game have changed. Try to check how many uneducated people have managed to amass $100 million or more from scratch in the last 20 years. I have a feeling you won’t find any.

My point is that in today’s terms, academic qualifications are useful to get you entry-level employment. That’s just the starting line of the race. Where you go from there is less a function of your degree and more of the other stuff you won’t ever learn in school.