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Is Education Important?

by Keith Rawlinson
Volunteer Budget Counselor

When it comes to current and future income, how big of a difference does education really make?  

Well to be honest, it makes a huge difference.

First, let's apply the concept of supply and demand to the job market.  Supply and demand simply says that the more of a supply there is of something, the less that thing will be worth.  Well, that 'thing' can also be a person looking for a job.  The higher the education, the fewer people there will be who have that level of education.  Therefore, if an employer needs someone with an education, the higher the educational requirement, the more money the employer will have to pay.  Thus, the more education you have, the more you are worth in the job market.  And don't forget that you may be very good at a job, or be able to perform a job that requires a higher education, but if you don't have the level of education required, you cannot get the better job and you are not worth the extra pay.  So, the question becomes how big of a difference does education really make when it comes to income?  

To answer that question, let's take a look at the following chart and discuss what it means.

How education relates to income.

Here are some examples, using the above data, to give you some idea of how education can affect your income.  Please understand that these are very simplistic examples.  In real life, there would probably be more, or higher, living expenses than what I figured into these calculations,  So, in real life, things would likely be even worse than what you see in these examples.  

If you drop out of high school, then on average you could expect to earn only $23,452 per year.  This may sound like a lot of money to some people, but after taxes it comes out to somewhere around $1,661 per month.  Take away $300 for groceries, $250 for a car payment, $200 for utilities, $100 for gasoline, $50 for insurance and $75 for clothing, you are left with $686 for a mortgage or rent payment.  Would you really want you and your future family to spend the rest of your lives living in a place that costs only $686 per month?  And remember that this is the median, which means that somewhere around half of people without a high school diploma or GED actually earn less!  Also, and I'm not trying to be mean or disrespectful, I have to be honest in order to help people with their financial futures.  It is sad, but true, that a GED is often not looked at the same way as a high school diploma would be.  In other words, an actual high school diploma will generally be much more respected than a GED.  Don't misunderstand, though.  A GED is still far better than no High school equivalency at all, but will make it harder to get going in the real world than a high school diploma would.  In other words, if you are in high school, stick it out and get your diploma.  If that ship has already sailed, then by all means at least get a GED.

If you at least finished high school, you would average $33,176 per year, so in this example you would have $1,375 left over for a rent or mortgage payment--now you're able to afford a much nicer place just by finishing high school.

If you go to college and get a four-year degree, the difference is even greater.  With a four-year degree, you average $54,756 per year which comes to around $3,422 per month which would leave you with $2,497 for a rent or mortgage payment.  Or, you could use part of that to get a nicer place to live and part of it to get a nicer car.  Or, you could invest $500 per month in a good growth stock mutual fund from age 25 to retirement at age 65 and retire with over 3 million dollars in the bank!  So, to answer the question once and for all...

 Education is important!  

First, make sure you finish high school or get a GED.  Then, if you aren't going to go to college, at least try to get some vocational training through a vocational school or as an apprentice or journeyman.  Believe me, the difference that education can make to your financial future is huge!

If you are wondering how to pay for college, then read Where To Get Money For College.

To learn a lot more about saving, investing, eliminating debt and becoming wealthy, please read the articles on the Financial Page.  There, you will find a veritable treasure of what to do and how to do it.
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Please know that all of the thoughts, information, suggestions and techniques given on this site are nothing more than the author's opinion on the matter being addressed.  Do further research before making any decisions.

This article copyright 2012 by Keith C. Rawlinson (Eclecticsite.com).  All rights reserved.
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