Last year, I offered ten ways to boost your human capital. I’ve spent the past few years concerned mostly with the net worth, income, and expense measurements of personal finance, but human capital is just as important as monetary capital. By increasing human capital, you increase your value to society as well as potential future income. In this series, I’m taking a deeper look at how you can increase your human capital.
If you read a fair amount of financial writing, whether in mainstream media or on personal finance blogs, you may have come to question the value of higher education. It’s a reasonable question. After all, student loan debt has surpassed credit card debt as the Untied States’ heaviest pull on net worth. An increasing number of students leave college with student loans that will take an increasing amount of time to pay off, and in an economy where graduates are lucky to have jobs that pay well, or even lucky to have jobs, the increasing cost of college is raising questions as to whether the financial sacrifice is worth the education.
Numerous surveys should that in general, income levels increase significantly with each degree, with the most significant increase being from a high school degree to a bachelor’s degree. Despite this, the increases don’t always continue into advanced graduate degrees or professional degrees if you look at each industry separately. As a result, financial writers look at the return on investment (ROI) of any particular education and often determine that for many people it makes more sense to join the workforce right out of high school.
The numbers don’t tell the full story, however. Someone whose job is a mortgage broker might not see an income gain from finishing a bachelor’s degree. In fact, he could earn more by starting right out of high school with a head start of up to four of five years. This can be a lucrative position for someone particularly skilled at sales. However, as many mortgage brokers have seen since 2008, the income potential can be limited by the economy. Most brokers are primarily paid in commission, and if banks aren’t lending, brokers make very little money. Most quit.
With a boarder education, such as a degree in a different field or certification in something related, like financial planning, they would have flexibility. Their income would not be subject to market forces as much if they had education that might take them elsewhere.
Again, looking at averages, it’s not always the subject of a degree that’s important. Most jobs require a college degree, but the degree doesn’t always need to be in the same field as the job. One type of degree could increase your suitability for a number of jobs. At one time, I was considering going back to school to earn a law degree. I wasn’t interested in being a courtroom lawyer, but the degree could have opened doors for me in the future in any number of fields.
It can be difficult to earn degrees later in life when there are more responsibilities to be concerned about, but it can be done.
- If you don’t have a bachelor’s degree, earn one now. If you’re interested in boosting your human capital and allowing yourself greater flexibility, don’t be concerned about which school. Find a convenient program, perhaps at a local community college, and take classes at night until you can walk away with a bachelor’s degree.
- Take classes online. Regardless of whether you’re aiming for a degree, consider enrolling in online courses. While the difficulty of the courses can be higher than classroom-based courses, you may have freedom to learn the material on your own schedule. In my experience, online courses required more teamwork than traditional courses, so you’ll need to reserve time to work together with your classmates.
- Have a goal of certification rather than a degree. Friends of mine who enjoy technology found more opportunities for greater income when they became certified with certain hardware and software.
- Enroll in classes unrelated to your field. If you’re not passionate about your work, you may benefit from changing course. You don’t necessarily need to leave your current job behind, but taking classes that allow you to learn more about a topic you’re passionate about can increase your versatility as well as invigorate your desire to succeed in any field. Over the last few years, I’ve been taking photography classes, and it’s helped me view the world more artistically, and that may pay off some day if I focus on taking photography to the next level, or it may only pay off in the way I look at the world around me.
Most importantly, and particularly for younger people, higher education and the habits that come with succeeding at higher education help develop advanced cognitive skills that allow people to have a better understanding of the world around them. That’s a concept to which it’s difficult to assign a finite value, but it is important in the development of someone seeking to reach the top of Maslow’s Hierarchy of Needs pyramid.
Education is an important component of human capital. Do you consider it worthwhile to increase your education?