In the United States, education has a greater impact on work-life earnings than any other demographic factor. Your age, race, gender, and location all influence what you earn, but nothing matters more than what you know. That's great news, really, because you have total control over your level of education.
How much does schooling matter? Here are some numbers from the 2017 Consumer Expenditure Survey conducted by the U. S. Bureau of Labor Statistics:
The average college graduate makes twice as much as his friend whose education ended with high school.
Even a two-year degree from a community college helps. The average worker with an associate's degree earns twice the annual income of a high-school dropout and 50% more than somebody with only a high school diploma. Two years of community college typically boosts income by $20,000 per year. (That's almost a million dollars during a typical 40-year career!)
Similar research from the Current Population Survey shows that education also affects unemployment rates :
A college degree doesn't guarantee you'll make more money, of course. Some philosophy majors wind up working in convenience stores for the rest of their lives, and some high-school dropouts become billionaires.
Outliers aside: The more you learn, the more you earn.
The best time to pursue education is at the start of your career, when you're young. The next best time is now .
I know it can be tough to find time and energy to go back to school once you have a family and career, but it can be done. Let's look at some examples:
- After ten years as a used car salesman, my friend Jeremy decided to become an accountant. He continued to sell cars and spend time with his wife and kids while he took online courses and studied for exams. Today, he's a full-fledged CPA. My girlfriend Kim was the office manager for a large dental practice near Sacramento. At age 35, she decided she wanted to make more money. She quit work to get a dental hygiene degree, and now enjoys better pay and increased job satisfaction. I've done this too. In 1997, when I was 28, I took computer programming classes at the local community college on evenings and weekends. In eighteen months, I was skilled enough to pick up programming work in addition to my main job as salesman for the family box factory.
If you can't commit to college, it's still possible to improve your knowledge and skills through an ongoing campaign of self-education.
I'm a vocal proponent of self-directed life-long learning. I'm always reading books and blogs about personal finance. I take writing classes at the local community college. I listen to podcasts and online courses. I attend conferences to learn from my colleagues. And as I write this, I'm in the middle of a $2000 web-based course about how to build a better online business.
The more you know and the more you grow, and the more valuable you become in the job marketplace.
Tip: A key change in my own life was moving from passive/consumptive hobbies television, computer games, watching sports to active/productive hobbies. I'm happier when I'm reading, writing, or doing web design (or exercising or building something) than I was with less-productive pastimes. And these things help me make more money.
