Before I share any of my personal finances, I think it’s important to recognize how I arrived at my present financial situation so you can have a better understanding of why my finances are the way they are, and to get a quick sense of the path I took to get to where I am today. Like I said previously, I’m not rich, but I think I’m well off and doing better than the average American. Hopefully a lot better than those in my own demographic.
I believe one of the biggest factors in my financial situation is education. I graduated in 2007 with a bachelors degree in finance and started earning $50,000/year in my first full-time permanent position. Last year, in 2018, I earned $110,000. The average American earned about $45,500/year in 2018, so having a college degree in a good field usually results in higher earnings, though nothing’s obviously guaranteed. I know people with master’s degrees who make less than the average American and people with only high school diplomas who make a lot more than me. Work ethic, job sector, luck and demographics can play a considerable role on your earnings, but on average, higher education will result in higher pay.
So if you want to maximize how much you earn, then one of your best bets would be to maximize your education. It’s sometimes difficult to maximize education once you have a family and kids, so that isn’t always a viable option for parents. If that’s not a realistic option because you have kids, then I think it’s crucial that your children understand this even though it may no longer be a realistic option for you as an adult. You have to let your children know, often and at a very young age, that yeah, sometimes school sucks and isn’t fun, but higher education is one of the most reliable ways to earn considerably more money over your lifetime. I hope I’m wrong, but I feel there’s a lot of parents who don’t recognize this or don’t try to instill this in their children, and then it just becomes more difficult for those children to be financially successful as they get older.
Just because you may not be able to maximize your education now, or ever, doesn’t mean you can’t eventually become financially independent either. My parents immigrated to the United States and my dad worked blue collar jobs his whole life and my mom was a school secretary, but they are now retired with no debt and are essentially financially independent. They probably could have achieved financial independence a lot sooner if they had college degrees (and no kids), but I just want to emphasize that not having a college degree won’t keep you away from financial independence, or from being elite with your money, so long as you are prudent with your money.
All this to say, the main reason why my income is a lot higher than the average American is because I got a college degree in a good field. It also helps that I’m the equivalent of Michael Jordan in my line of work, but without that degree I probably wouldn’t be as financially ahead as I am now. Being married to someone with a college degree and having two household incomes can help tremendously, but I didn’t marry my wife for her degree or earnings potential, even though she doesn’t say the same thing about me 😳 (which is actually a really, really smart and important disposition to have, but I will address that in a later topic). Nonetheless, income is only one side of the equation. Just as important is how you manage your expenses, which I will also address at a later time. There obviously isn’t a single path for financial independence or success that everyone should follow. Starting your own business, joining the military, or playing the lottery are other possibilities with varying degrees of probabilities. For now, just understand, and if applicable make sure your young children understand as well, that while it’s definitely not the only way, higher education is likely to get ya paid better than the average American.
