Each Monday we’re tackling one of your pressing personal finance questions by asking a handful of money experts for their advice. If you have a general question or money concern, or just want to talk about something PeFi-related, leave it in the comments or email me at alicia.adamczyk@lifehacker.com.
This week’s question comes from Jose Martinez, an economics teacher in Denver, Colorado:
I am always interested in good ways to advise my soon-to-bee graduated seniors regarding building wealth at a young age; considering most of them will struggle to simply pay their bills and to live in Denver because of our current insane growth in the housing market. It used to be that we always told kids that college is the best way to succeed financially. While this may still be true for many kids (it’s hard to disagree that more human capital doesn’t help your bottom line), I’m quite curious to know about how to help my students who have no interest in traditional college pathways or college at all.
This is what individual experts have to say generally about an issue that affects each person differently—if you want personalized advice you should see a financial planner.
Think Outside the Box
It’s hard to argue that your student would be better off not going to college, given all of the statistics to the contrary: Just one example, according to the Bureau of Labor Statistics, those with a bachelor’s degree have median weekly earnings of $1,156, while those with an associate’s degree earn $819 (it drops to $756 weekly if you have some college and no degree).
But it’s true that it is not the only path to success and that attaining a four-year degree isn’t in the cards for a lot of people, most obviously those who can’t afford to go at all or who take on an enormous amount of debt to do so. What is important is that if they go, they intend to finish, and understand the debt they are taking on. You don’t want to start and realize it isn’t for you, and then end up stuck with tens of thousands of dollars in debt for a degree you can’t benefit from.
That’s why being flexible and considering alternate paths is so important—we have in our heads that the way to be successful is to go from high school straight to a four year college, then to grad school or into the “real world,” where we’ll steadily work our way up, uninterrupted. But this is rarely ever the case, and it doesn’t have to be for your students. It’s hard to say that you don’t need college to be successful when many industries cling to this old-school notion of success and respectability, but there are also industries in which you don’t necessarily need a degree (or an Ivy League degree) to succeed.
You’ve got questions, we’ve got answers. Each Monday we’ll tackle one of your pressing personal… Read more “There is a lot of money to be made in the trades [like] carpentry, plumbing, HVAC, [and] electrical, as well as IT, and none of these require ‘traditional’ schooling,” says Eric Jorgensen, who joined the Navy at 17 and later became a journeyman electrician before earning two Master’s degrees and becoming a CFP. “A word of caution, all of them will require some degree of grunt work in the beginning, although in my experience the more you apply yourself the quicker you will progress to more complex tasks.” That said, another point to consider is that your students do not need to decide, at 17, what they will do for the rest of their lives. The 2017 Teens and Money survey from TD Ameritrade is illuminating in the ways that young people are approaching life after high school: a third of respondents said they were considering a gap year between high school and college, a good idea that’s been gaining steam the past few years (see: Malia Obama) as students and parents grapple with the high costs of higher education. In that year, or years, students can work (and save, ideally), travel, or hone any number of marketable skills. They may also choose to take courses at a community college so they don’t have to spend as much time (and money) at a more expensive institution taking pre-reqs that don’t add much value to their lives or resumé. And as Roger Whitney, a Fort Worth, Texas-based financial advisor and host of the Retirement Answer Man podcast, said, they also don’t need to complete their degree in four years. They can go to a community college first, or spread their degree over more years so they’re able to work more during school to take on less debt.
How to Pay Off Student Loan Debt While Still Saving and Investing
