What's your ROI?
I’m sure I’m not the only person that remembers all the “a mind is a terrible thing to waste” commercials promoting college attendance in the 1980’s and 1990’s. Many a young person attended college and maybe even grad school in hope of graduating and starting a wonderful career that would provide for them financially. That’s a wonderful possibility, but we need to understand that it’s only one possible outcome. Some people graduate from college and can’t find a job or find a low paying job and struggle to pay back student loans.
I just read an article about America’s overemphasis on promoting college as the only pathway to success. There are certainly careers that require a college degree. There are also careers that require master’s degrees, doctoral degrees, and various types of training. I’m not for or against attending, and graduating, from college. I do want people to know that there are several paths to success. Don’t do things because you think you’re supposed to. Understand the return on investment (ROI) that you’re going to get from different career paths. Most high net worth individuals are business owners, corporate executives, and doctors/dentists. If you’re planning on one of those careers paths, you need to think long and hard about what skills you need to achieve your career goals and what the best way might be to get/grow those skills.
(Time + cost (fees, books, loans, etc.))/ expected yearly income = return on investment.
Would you spend $40,000 to earn $32,000 a year? That’s just what some of us were trained to believe we should do. Whatever you choose, make sure that it’s a choice that you’re making. Don’t choose not to attend an educational program (community college, trade school, university, etc.) or choose to attend one based on the influence of people that may have something to gain from selling you an educational experience. Figure out what you want and choose the path that you believe will help you get there.
I was reading about how the rules that govern your 401k and IRA are created in Financial Advisor and it kinda scared me. I think that we should all be saving for retirement. The part that scares me is when there are laws enacted to make sure we do:
While at Brookings, Iwry began developing the auto-IRA, which would require employers without retirement plans but with more than 10 employees to withhold a portion of each employee’s pay—similar to a payroll-tax withholding—and deposit it into an IRA. Employees could opt out.
Be an adult
You probably realize that I’m all for small government and personal responsibility. People should be educated about how and why to save for retirement and then left alone to make their own choice. If they end up eating cat food because they haven’t saved a penny… that’s not my fault. The reason that many law makers want to make laws that force people to save is because they think we’re not smart enough to comprehend the importance of saving and investing for our own well being. If we don’t start making different choices we’ll either end up a) being forced into programs that we don’t understand. Obviously if we understood them, we wouldn’t need to be forced. We’d run to our financial institutions and set up our automatic retirement contributions as soon as we earned our first check from the mall or b) we’ll opt-out of those forced plans and become part of the social welfare system set up for people that couldn’t handle being an adult and making adult decisions.
Make good choices
What is more, the lower-income workers are more likely to withdraw money before 59 1/2 for emergencies and living expenses, and then owe a 10% tax penalty on the withdrawal. “They might wind up with less after taxes than if they had never contributed at all,” says Ms. Ferguson.
That means that workers that don’t earn that much in the first place are putting a few dollars aside and then pulling them out before they should, triggering extra penalties. I understand that sometimes things happen that we can’t control, however we can control our responses. Do you have an emergency account set up to deal with life’s emergencies? Do you have your retirement contributions going to your 401k or IRA account automatically so you can pay yourself first?
One day you’ll be old.
One day you’ll be old. You can choose to prepare for that eventuality and feel the sense of pride and accomplishment that comes with that or you can choose to do nothing and hope that you can get by on whatever money you get from social security every month. Are you willing to make decisions that will set you up for a comfortable retirement? Will you make small sacrifices now to have future gains?
Whatever you’re life ends up being, it’s that way due to your choices.