Salary Expectations Versus Reality

In this topic, we cover:

• How misunderstanding salaries can contribute to poor financial decision-making in college.
• How income is often (but not always) associated with getting the most education.
• Three rules of thumb for keeping your expectations in check.

Why do expectations matter? Unless you know what your likely income will be, it’s very difficult to make informed decisions about what kind of degree you’d like to pursue and how much you’d like to spend on higher education.

Here's the big picture when it comes to income and academic achievement. In general, the more education you have, the higher your earnings will be. Compared to those who only earn a high school degree, someone who learns a trade and attends a community college is likely to earn more. Someone who earns a four-year degree will tend to earn even more. And finally, those who earn a graduate or professional degree may earn even more

It’s also important to understand that earnings can vary significantly, even for those who continue education beyond high school. For example, a well-trained plumber can earn more (sometimes a lot more) than someone who has an advanced degree in a low-paying field.

Ideally, your career will balance the need to earn a living with the pursuit of the interests and causes that you’re passionate about. Just be careful when borrowing for college and spending money when there - if you're expecting to earn a lot more than you do, you could start life with an unmanageable debt load.

Keeping Expectations (and Debt) in Check

Most experts suggest that your total education debt (including credit card debt at graduation) should be less than your anticipated first-year salary after graduation. This may not be possible for all students though, so when you're making decisions about education debt, here are a few things to keep in mind:

• Research starting salaries, not the salaries of mid-career professionals - there can be a big difference.
• Be cautious about your chances of getting your chosen job - having a degree in a field doesn't guarantee that you'll find work in that field. When reporting employment, many schools consider students "employed" regardless of whether their job even requires a college degree.
• The "unexpected" happens all the time with college students - from extra year of tuition to meet graduation requirements to a change in financial aid to a big credit card debt. Pay careful attention to your academic and financial progress while in school to avoid these common set backs.

Finally, being realistic about starting salaries is great, but it doesn't mean anything if you don't finish your degree. Approximately half of all people who enroll in college never earn a degree and many of them will leave with college debt. To reach your career goals, success in school is often the foundation of all of your future achievements.

Library Money in the Real World