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Get Educated: The Payoff for Hitting the Books

I know, I know. Studying is no fun! But your efforts at school will pay off in a major way. In the long run, educated people earn WAY more money and have a far better quality of life than those without formal education. Though it may feel super painful to pay for your schooling and work tirelessly on your courses, it’s well worth your efforts.

The Temptation

Joseph, 18 years old, had worked at his uncle’s oil-field services company for three summers in a row, cleaning and learning to maintain equipment. Because he continued to live with his parents and had limited expenses throughout those years, he’d managed to save a whopping $10,000. Upon graduating high school, Joseph’s uncle offered him a full-time job with an annual salary of $50,000. Wowie! Joseph thought. Not only was that a lot of money, but he could avoid the costs of paying hefty tuition bills by choosing to work full time rather than going to university. Visions of houses, snowmobiles, and cars started dancing through his head. But his parents strongly encouraged him to follow his original plans to go to university to become a mechanical engineer. He agreed to weigh the pros and cons of both options.

Have you ever wondered how much it really costs to go to school?

The average cost for a four-year university, college, trade, or technical program ranges between $20,000 and $50,000 — and that doesn’t include living expenses or purchasing a computer, textbooks, and software. But it doesn’t end there. Because you are in school, you give up the opportunity to work full time and make some money. Let’s say you could count on an annual salary of $30,000 if you didn’t go to school. Over the course of your four-year program, you’d be “losing” a potential $120,000 in income. Add that to the $20,000 to $50,000 in tuition expenses PLUS the amount you’ll spend on books and technology, and your post-secondary education is “costing” you well over $140,000!

Are you asking yourself why you should bother making an investment in college, university, trade school, technical school, or other post-secondary education? Considering that 75 percent of future jobs will require education past high school, the answer is yes![1] Certainly, there are very successful people in North America without higher education. But this phenomenon is becoming less common because the corporate cultural norm has changed: education is critical.

Of all the investments out there, which you’ll learn about throughout Rich by Thirty, education is the safest and most lucrative investment you can make.

From a “safe” perspective, education is something that can never be taken away from you. And regardless of what you study in school, your education will broaden your way of thinking, expand your skill set, and make you far more competitive in the workforce. Education can also, in some instances, save you from the labour intensity of many jobs that don’t require an education. This may not seem like a big deal now, but a tired and/or weak body in the future will inhibit your ability to continue working comfortably in a job that requires physical labour.

Financially speaking, according to the National Graduate’s Survey (Statistics Canada) and a 2013 report from the U.S. Census Bureau entitled “The Big Payoff,” when you invest in any type of education past high school, your long-term income-earning ability is a few hundred thousand dollars to over a million dollars greater than a high school graduate’s.[2],[3] So, though the short-term pains of student loans may seem unbearable, it’s worth the long-term gains in income throughout your working career.

Research has also shown that educated young people not only earn more money, they also enjoy a higher quality of life because they have more choices in terms of career opportunities and lifestyle.

Back to Joseph for a moment. If he succumbs to the temptation of a seemingly high income now, he will forego the much higher income the mechanical engineering route would have provided him later in life. Plus, his risk of injury in a manual labour job is much higher. In addition to that, he’d miss out on the opportunity to grow his skill set, broaden his thinking, and experience the social connections and friendships that a higher education often provides.

So, if you’re on the fence about formal education, like Joseph is, weigh your list of pros and cons regarding your future job security, income, skills, and quality of life.

It Starts Early

Preparing for and investing in your education should start early and well before your last year of high school. If you haven’t already spoken to your parents about the cost of your future education, ask if they have money set aside for it. If they do, great! Find out how much, to determine if it’s enough. If they don’t, you’ll need to start saving up or brace yourself to take on student debt.

When I was about 13 years old, my parents sat me down and told me that they would not be able to help me pay for university because they simply didn’t have the savings. Thankfully, my grandmother had set aside some money to help pay my way, but the majority of the costs for my program, living expenses, and supplies would have to be paid by me. It didn’t take me very long to kick into savings “high gear.” I babysat as often as I could and got a job at the local library at age 14. Whatever I earned, I saved at least half, if not a little more.

Wondering how you can start saving up for school? In chapter 6 you’ll learn how.

Working hard to achieve your best marks and top performance in extracurricular activities will also help you compete for awards, scholarships, and bursaries, which can be worth thousands of FREE dollars. And great marks combined with volunteer efforts, sports, or musical training will help support your application to whatever educational program you choose to apply for. When you’re finally accepted into your post-secondary program, you can apply for additional awards, grants, bursaries, and more through your campus registrar’s office or library.

It’s School, Not a Fashion Show

Feeling stressed about back-to-school shopping? You’re not alone! According to a survey conducted by Visa, North Americans feel frazzled by the crowds and gouged at the till for books, school supplies, and back-to-school paraphernalia.[4]

Save money on back-to-school shopping by slicing your budget in half, starting early, and getting creatively frugal.

Before hitting the shopping centre, take inventory of what you already have: pens, paper, notebooks, binders, computer, software, backpacks, et cetera. Don’t buy new supplies just because you want them. This is financially unwise and environmentally wasteful. You can also shop for necessary supplies throughout the year when stores have sales. Many stores will blow out inventory at clearance prices throughout the year to stimulate sales volumes. Get there early before the quality supplies have been picked over.

Hit up thrift shops, garage sales, neighbourhood clothing exchanges, and websites like eBay or Craigslist. See if you can pick up gently used supplies, computers, furniture, or clothing. Stores like Costco and other wholesalers carry a wide variety of back-to-school inventory at affordable prices. If you’ve outgrown clothes or no longer need old textbooks, sell them on consignment or exchange them with friends.

Though it’s convenient to buy lunches, try to avoid doing so. Plan packed lunches for yourself while at school. You’ll save loads of money and can ensure your meals are nutritious.

You don’t need to spend hundreds of dollars on back-to-school shopping. School is a place of learning, not a fashion show. Focus on purchasing essential items.

Start Working. Start Budgeting. Start Filing Taxes.

Besides saving up in advance for school, if you’re struggling to cover your tuition tab, get a job.

Apply for a paid co-op, internship, or a work-experience program related to your field of study. These opportunities are posted on employer and career-centre websites. Aim for full-time work in the summer and a part-time arrangement while you’re in school.

If this doesn’t appeal to you, spice it up with an overseas work term. When my brother finished his first year of college he applied to an online request for English teachers in China. He vetted the hiring institution through the college he attended, arranged a Skype interview, and won the competition for the position. He spent the next eight months working abroad, travelling and experiencing a new culture. Guidance counselling or career offices at your school will post opportunities for overseas work terms on their online job board. You can also check out online international job boards through a quick Google search. If you find a nifty opportunity, get a reference or two about the organization to ensure it’s a legitimate employer, prior to jetting off. Be aware that most international employers will not pay for your flight or accommodation (at least in the long term), so you’ll need to work that into your budget.

While classes are in session, work on or near campus. Your faculty, libraries, restaurants, stores, and fitness centres all need staff. If you’re feeling entrepreneurial, turn your hobbies into money: photography, writing, web design, et cetera.

Student debt is often unavoidable. But by working throughout and saving up your income, you can significantly offset the costs of tuition. This will give you greater financial flexibility after graduation. Plus, working is a great way to meet friends and grow your professional experience. Whatever you do, ensure you’ve got sufficient time to focus on your studies.

Draw up a budget the moment you’ve settled into your new routine. Using a spreadsheet or online banking budget-tracking tool, list income and expenses (big and small). Apply “financial bootstrapping” techniques to live financially lean and frugal: reduce cell phone bills and dinners out; live with family if it is geographically feasible, if not, live off campus with roommates; and negotiate for better rental rates or move to a smaller and cheaper place. Buy textbooks, laptops, desks, and furniture second-hand. (There are more budget tips in chapter 4.)

You should also file a tax return. Even though you’re not making significant income, by filing a tax return you’ll be entitled to receive government credits, which can amount to hundreds of dollars in cash every year. Plus, you can claim valuable tuition credits. Unused credits can be carried forward into the future when you’ll be earning more income. In certain circumstances, moving expenses can be claimed, along with credits for using public transportation. If you’re using student loans, you can claim federal and provincial tax credits for the interest you pay throughout the year. Use the free tax services offered by your school to ensure you’re benefiting from all the credits and deductions available to you.

What Every Student Should Know Before Signing a Lease

The countdown is on: you’re about to fly the nest! It’ll be just you, your roommates, books, essays, late-night study sessions, and maybe the odd party (okay, make that lots of parties). But what about that all-important roof over your head?

You need a game plan when it comes to your pad. Before you commit to forking over cash on the first cool place you see, ask yourself these questions:

 Budget: What’s your budget? If you don’t know how to budget, we’re going to show you in a few short chapters. You know better than anyone what your cash flow can handle each month, so stay within it. Otherwise you’ll add a layer of distracting financial stress to your already full school schedule.

 Location: Is the place close enough to school, the grocery store, and other amenities so you can keep your commuting time and costs to a minimum? Is public transit nearby? If not, do you save enough money by living further away that it outweighs these costs?

 Roommates: Have you found the right roommates? No, this isn’t just about saving money on rent and utilities. It’s about ensuring your personalities are compatible. If not, you’ll spend way too much time worrying about the things that irritate you, like dirty dishes and smelly clothes, and not nearly enough energy on your studies. You’ll also want to make sure the people you live with know the importance of paying their share of the rent on time — you don’t want to be on the hook for covering for them. Hash out these tough issues before you decide to become roomies.

 Legal Responsibility: If you’re dabbling in the roommate realm, you’ll need to determine who will ultimately sign the lease and take legal responsibility for the place. If it’s possible, have all the roommates listed on the lease. Some landlords will ask to look up your credit score to see if you’re a safe bet for paying your rent on time. Many students don’t have much in the way of credit and may need a parent to co-sign a lease. Talk about this possibility with your folks ahead of time.

If you’ve done your research and you’re ready to rent, here are some practical considerations, most of which are negotiable with your landlord:

 Cost: The cost of the rent and what it includes. If utilities, laundry, and parking are extra, work that into your budget and clearly state it in your lease. Don’t get sideswiped with add-ons you didn’t agree to.

 Term: Are you getting into a month-to-month, full year, or lease term that lasts only for the school year? Most landlords push for a year, but many allow students to rent only for the months they’re in school.

 Damage Deposit: Are you prepared for the amount and conditions of the damage deposit? How does your landlord plan to reconcile the condition of your place before and after you lease it out? It can help to take plenty of before and after pictures to establish your position if there ends up being a disagreement upon your departure.

 Notice: Can your landlord kick you out with 60 days notice? That would be an issue if you were in the middle of exams. Consider the opposite situation where you need to break the lease. What are the penalties for doing so?

 Eviction: What will it take to get evicted? Not paying the rent? Loud noise? Drug use? Vandalizing the property? You need to find out. Generally speaking, if you treat the property as your own, practice common courtesy, and pay rent on time and in full, you shouldn’t have issues.

 Repairs: Who will be responsible for which repairs? How will you notify your landlord of issues? It’s very common for tenants to be responsible for repairs under $50, such as replacing light bulbs.

 Community Rules: In many cases, condominiums and apartments have common property and strict rules around how that property is to be used. You should review these rules, determine how they will affect you, and ask your landlord if there is a need to “sign off” on them prior to signing the lease.

 Changes to the Property: Are you allowed to paint, hang art, copy keys, and swap out the furniture? This may be important as you’re establishing your much-needed Zen for school.

 Read: Don’t skim your lease agreement! The devil is always in the details. Take it home for a thorough review and consult with your student resource centre if you have questions. You might also want to understand the basic legal rights between tenants and landlords in your province or city. A quick Google search can provide this information.

Well Past High School? You’re Not Alone

Jodi was contemplating whether to head back to school after working for four years as a legal assistant. At the age of 25, she was thinking she was too old to join the ranks of so many others studying. But the income she would earn as a legal business analyst versus a legal assistant would be nearly 70 percent greater. But the cost to Jodi would be three years of additional schooling.

Many people choose to go back to school after they’ve been working for many years and already have financial commitments, such as a mortgage, rent, or car payments. My parents did it while I was growing up in the hopes of increasing their collective income and creating a better life for our family. The costs, however, were very inhibitive for our family and essentially pushed us below the poverty line for nearly a decade because they had to forego much of their income-earning capacity in exchange for their education. Ultimately it was worth it because they did make more money, but our budget was very lean and sacrifices were made during that time.

If you’re thinking of heading back to school later in life or your career, go for it! But be smart about it so you can avoid financial hardship in the process. There are two ways to balance the commitment — part time or full time.

My pal Maria does the part-time school route. She is a young mother of three children, and between working 40 hours a week and shuttling her children between dance lessons and karate practice, she has time to take only one night class each semester as she works to complete a bachelor of arts degree at her local university. Sure, it will take her almost five times as long to complete her degree as it would if she were a full-time student, but having balance between her schooling, work, and personal life is important to her.

My other pal Angela took a year off to complete her masters of business administration (MBA) full time. For Angela, this meant forgoing her healthy income as a geologist for 12 months in exchange for completing her master’s program much faster. But the moment she graduated, her income bumped up 40 percent, which helped to offset the costs of forgoing it for a year.

In either scenario, you’ll be able to achieve a higher level of education. The biggest consideration for you will be whether to forgo your current income in order to expedite the process. If you have a partner or children, going to school full-time might not work well for you and your budget. Whereas if you’re single and living on your own, the only person you’ll be affecting financially, and with your lack of availability, is you.

Informal Education

Education can also be informal. Take, for example, Jack, a young fitness trainer. He’d like to broaden his fitness expertise into teaching spin classes. In order to learn how to do this, he doesn’t need to take a formal class, he just needs to learn the skills from an expert spin instructor.

Think about where you’d like to take your career in the next 5 to 10 years. What types of skills and education will you need to make your career goals a reality? If you’re not sure, speak to someone who has the type of job you’d like to have. For example, if you’d like to become the site manager of the construction site you currently work on, spend time with the current foreperson. Inquire about education, accreditations, and specific skill sets. Ask for some specific advice on what you could do in terms of education and skills to advance your career. If you don’t have those kinds of connections, reviewing job postings for your dream job can be equally beneficial. The postings should clearly state the skills, experience, and education required for the role.

When you have a clear idea of where you want to take your career, you can determine the appropriate level of investment in your own education and skills. Whether you hit the books or not, develop skills that will give you a competitive edge and make you difficult to replace. Competitive skill sets provide leverage during salary negotiations and greater options for advancement and promotion.

CAN Education BE a Bad Investment?

There are two ways in which education can be a bad investment. The first is if you overdo it with student loans and lines of credit, meaning you get more than what you need in order to have extra spending money or make car payments. This will thrust you into unnecessary debt, which is very hard to pay off upon graduation.

The second is if you choose a program with limited employment opportunities available in that field. This would force you into a situation where you are required to complete additional, and more practical, education or face unemployment or a lower salary after graduating. Yes, you still need to be true to yourself and what you want to study, but blend that with practical skills. So if, for example, you’re doing a fine arts major, you may also want to take classes on bookkeeping so you could potentially get a job managing an art shop while still enjoying the beauty of art.

Practical skills are vital and you often get those through a combination of courses and working experiences. So do your best to blend these together. Ultimately, though, getting an education will always pay off in that it will broaden your thinking, which can then be applied to whatever you put your mind to.