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youngandthrifty.ca argues why obtaining a degree and busting 4 years of your life to get a diploma might not be needed to achieve financial success. To each their own!

Say “HI” to Teacher Man, Y&T.ca’s staff writer!

Hello fellow personal finance readers. I go by the pen name “Teacher Man” due to the fact that I recently graduated from university and am in my second year of teaching high school. About 9 months ago my partner and I started a website called My University Money. It is aimed at helping young people (with a specific focus on post-secondary students) and just talking about financial and student lifestyle issues in general. Young & Thrifty was one of the first bloggers to really reach out to us and give us a little recognition when we were just starting off.

Is It As Simple As Degree = Money?

It used to be considered common knowledge that the way for middle class people to get ahead in life (or really any class of people for that matter) was to do well in high school, apply to a bunch of universities/colleges, and then go to the best one that you got accepted into.  The consensus was that borrowing money to get a degree from a well-respected institution of higher learning was the best investment you could make.  Universities and colleges across the land are still reading from this gospel, but it is not nearly as true as it once was.  More and more often we read stories in the newspaper of people with fine arts degrees who are $120,000 in debt and have little job prospects.  Now, there are obviously some benefits to school that can’t be measured by dollar signs, but it is worth noting that the once sacred truth that you had to attend a university or college to be successful is no longer valid at all.  Don’t take my word for it, go ahead and Google the resumes of Bill Gates, Steve Jobs, and Mark Zuckerberg.  You won’t find a university/college degree.


Teacher vs Labourer


We aren’t all computer geniuses who can drop out of post-secondary school and become billionaires, but here is more of a layman’s example.  When detailing potential career paths for my students I often use my career as a teacher for one part of the case study, and for a comparison I use my high school friend Chase.  Chase and I both grew up having fathers that harvested wood for a living.  While I decided on one -40 day that being a teacher was a good idea, Chase likes working with machines and was a solid operator.  After high school I went to university and Chase went to work in the oil patch out in Alberta.  I spent 5 years in school and came out debt free with a pair of degrees, due to the fact I had a great summer job.  This put me ahead of the vast majority of graduates, but let’s compare my financial situation to Chase’s:

Chase earned an average of $65,000 a year during those 5 years.  I’m not sure of his exact investment levels or returns, but let’s say he listened to his know-it-all teacher buddy and saved the cardinal rule of 10%.  Now he actually made some great investments in property so I think he did much better than the average in terms of investment returns, but let’s say for the sake of argument he received an annualized return of 8%.  After 5 years TM is leaving school with a net worth of $0 (give or take the value of an old car).  Chase has $38,132.91 in the bank.

But now it’s time for our favorite staff writer to catch up right?  I mean, it’s common knowledge that someone with two fancy degrees (ok, so my degrees aren’t that fancy) should make a lot more money than a labourer right?  WRONG.  As one of the best paid teachers in the world, I start at $50,000 a year, and max out around 80K.  I would imagine Chase’s salary will grow substantially as well, but again, let’s be conservative in order to prove my point and say he continues to make $65,000 (easily doable anywhere in Alberta and Saskatchewan right now).

If we check in on TM and Chase in another 5 years and assume that I have been saving 10%, and getting the same returns as my buddy I will have $35,199.61 in my investment account.  My hard working friend will have accumulated $94,162.66.  After twenty years from the date of our high school grad (*shiver at the thought of awkward reunion*) if we keep the same assumptions, Chase will have an investment nest egg of just under $300,000!  The teacher guy will be severely trailing his friend as he brings in $184,642.54 and this is factoring in that I should be making a little more income that my buddy is at that point.  Even assuming that I would be able to able to save a little better percentage of my money at 15%, I would still trail my friend who made the “wrong” decision out of high school.


I Still Like Being Me, But…

All this being said, I would not trade places with my friend for anything.  I had an unbelievable time during my post-secondary education and enjoyed experiences that I would have never got while working.  I simply want people to understand that they can choose not to believe the multi-billion dollar propaganda machine that is post-secondary education.  My buddy has great work connections at this point.  He has investment experience that I can only read about.  He has the financial backing to start his own business if he so chooses, and he is making more money than me!  These are factors that I would not take lightly, and he single-handedly proves the point that there is not one singular path to financial success.


Why Jam A Square Peg Into A Round Hole?

North America is in dire need of tradesman, hard workers with heavy equipment experience, and a variety of other less publicized careers.  If you like doing this work why should you try to force yourself through years of university or college?  My example above illustrates the fact that compound savings often beats increased income, and I would guess that at Chase’s real income over the next 20 years, if he were to consistently save 10% and invest in basic index funds, he would have more in the bank at retirement than many lawyers, teachers, government employees, and the majority of people with degrees.  Make your own choices when it comes to what sort of career you want to pursue, and try to ignore these “rules for success” that people put in place 40 years ago.  They are not relevant today, and can actually be harmful, especially if that is not what you want to do.


Article comments

dave says:

I know too many teachers right now that can’t find jobs. If you take something in demand like sciences or engineering your chances are better but the demographics do not favor teaching and will not for many years. Too many people chasing those rich government funded pensions. Too bad for them they won’t be seeing any of that.

Teacher Man says:

Maybe not in Houston Dave, but in Canada our pensions aren’t in too bad a shape!

Is a diploma “necessary?” I think the sheer number of financially successful people who don’t have diploma proves otherwise; however, what is the proportion of financially successful people with diplomas compared with those without? Most millionaires, for example, have advanced degrees.

skeptical investor says:

jamesaltucher.com is against the college, wrote many posts and a book too,”They have been brainwashed into thinking they will be worthless without college. How sad for them. How sad for their parents.”

Choosing not to get a degree doesn’t mean you have to do manual labour. The book The Education of Millionaires goes into detail on the skills you can use to create a place for yourself in any industry (and then hire people with degrees if you need to).

From a financial perspective it’s funny how some people will “invest” 15 years of their life and hundreds of thousands of (borrowed) dollars to get into a post-secondary institution (and a degree with no guarantees of any employment, let alone highly-paid employment) without questioning it. But when you suggest investing $1000 in an index fund they might say it’s too risky! Higher education has some amazing marketing.

Hey Value Indexer, judging by your name, we’ll get along great! I agree that labour isn’t the only option. My buddy started in labour and has already worked up within the company. I think this is a legitimate option for lots of people. There are obviously other options out there, including entrepreneurship of course, but that scares some people a little more. Totally agree with your perception of the term “invest”. Higher education is so good at marketing, they have enlisted all of society including my fellow high school teachers to do it for them!

EDM says:

This resonates with me a lot. I was the black sheep of the family and had a child when I was 19 years old. I was a single mom just a year out of high school and I had to choose between working, going to school, being a mom.

I couldn’t choose all 3, so I chose to be a mom and continued to work. I did some professional certifications along the way as well. A combination of hard work, luck and tenacity lead me to a pretty good career path with above average salary.

I always felt incomplete though without a degree and I think about obtaining it part-time, if/when I can squeeze it in.

Wow, that’s a tough story. You had to make some choices I can’t imagine making. That being said, could I ask you to go a little more in-depth about why you need a degree to feel complete? I mean, degrees (depending on which one you choose) can be pretty easy to get, and can actually be pretty useless. I can give you the reading list for my degree if you want, and you will essentially have the same education I got! If you really want I’ll even grade some essays 😉

In all seriousness though, you managed to be a mom and build a career. I’m no mom, but I’m fairly certain that is WAY harder and more fulfilling that obtaining a degree. Congratulations to you. If you honestly feel you need the degree check out online options. They are getting better everyday.

EDM says:

Hi there! Incomplete, because I have been conditioned to think that without a University degree I am always going to be “not as good” as others when in competition with for a new job opportunity.

I know it’s all in my head, and I have always been honest with potential employers when I interview. Those companies that understand my story end up hiring me – the others don’t, but I wouldn’t want a job with them anyway if all they cared about was how I looked on paper.

My daughter will be 18 this year, and I’m just turning 37 – I feel liberated, with a long life ahead of me… no debts, some decent assets, and I”m young still, so I have choices. Knowing that everything I have comes from refusing to give up…. and that almost always feels like victory, even though I don’t have a degree.

Thank you for a great post, I am a fan now :o)

I think that there are specialized fields out there that don’t require a degree. There are entrepreneurial spirits who make the world work for them without a degree. But on the whole, a degree will make you more money and open more doors to you. I’m pretty sure more jobs today are requiring degrees than in past generations. People should be wise in borrowing for college, but I’d still advocate for going if at all humanly possible.

The stats do say you’re better off with a degree than without one; however, if you have an opportunity to make 60K+ a year right out of high school, and you like the work you’re doing, why do we force people into the mindset of getting a degree? Especially when student debt becomes more and more of a problem. Look at Chase’s and my respective situations, I sacrificed 5 years of earnings and 50K in tuition etc, in order to get to my salary level and I still haven’t caught him!

Jessica, The Debt Princess says:

well I can tell you for a fact that a diploma doesn’t equate financial success. As a former teacher not grad student (in education for some reason) I much prefer self employment.

Interesting… I’ll take that as a vote for future self employment (some days I definitely consider this).

Jordann says:

This is so true! I know many recent graduates with degrees that qualify them to do what they could’ve started doing right out of high school. I’m very thankful that my degree allowed me to find employment in my desired field immediately, even though I now have $20,000 in student loans to pay off.

I had a great time in university, and the experience alone was probably worth the money, but in purely financial terms, it is getting harder and harder to make a case for university as opposed to job-specific post-secondary training.

spiffi says:

I did my 4 year bachelor’s degree, and then after a year of working in an office making barely 35k a year, I went back to school for a 9 month diploma. The diploma program was only open to people who had a Bachelor’s degree. After completing that course, in software development, I moved from Canada to the US – I literally *could not* have done that without my degree, as part of the requirement for my work visa was a Bachelor’s degree. Upon getting an entry level job with my work visa, I doubled my earnings in the first year, and doubled them again 5 years later.

My brother did not take any post secondary schooling, got an entry level job in a call centre, worked his way up through the company and now is part owner of a software company. He makes less per year than I do, but his potential upside is far greater, as an owner.

We both ended up in the same industry, doing very similar things – the only difference is that my degree gave me the flexibility to work in both Canada and the US – without a degree, it would be harder for him to do the same thing as he would not be eligible for the employment-based work visas.

A very interesting comparison. How would you compare your respective job satisfaction levels, and were you put way behind on the earnings scale by debt servicing costs from student loans?

spiffi says:

In terms of job satisfaction – we both live to work, and we both love our jobs 🙂
I’m ahead in terms of earnings, despite a 26k student loan for the diploma program (which I paid off in 3 years) – and I’m ahead in terms of savings, but I’m also 4 years older – so I suspect that by the time he gets to be the age I am now, he’ll have caught up – or passed me, depending on how his company grows!

Personality-wise though, I’m much more of a saver/cheapskate (spending money hurts!) and he’s much more likely to spend money on experiences and nice things.

So would you call it a wash at this point Spiffi? If he had your saving personality, he would have a solid financial edge by the sound of things. I guess it depends so much on the growth of his company and capital growth vs what he chooses to pay himself, but still, a really relevant comparison! Thanks for sharing.

spiffi says:

I think it worked out the right way for each of us – I’m happy that I went to college, and I was always more school-oriented. I would have changed a few things, but overall, college was the right choice for me.

My brother didn’t like school, and never saw the point in it – so another four years of school you’d have to pay for wasn’t something he necessarily wanted to do.

Ultimately, I think it depends on your goals and what you want to do – some industries are still very limited in how far you can get “working your way up” if you don’t have a degree – the industry we both happen to be in, doesn’t have that limitation, other than for me to get my work visa/green card

Money PIncher says:

I came out of university with a BA and I have no idea what I can do with it. I went on to another 2 years of school to obtain a diploma in order to find a job in a field that I enjoy. Luckily I came out of school debt free, but it would have been nice if I were to bring in more income when I was between the age of 18 – 24!

Well, at least you sound like a hard worker who can learn things, so that is pretty marketable. Good luck with the job search. Grads today don’t have it easy!

Totally agree that grads don’t have it easy. I think that everyone is overeducated these days and everyone has a college degree now. It doesn’t give you an advantage anymore unless you have a degree that is relevant and practical (e.g. teaching/ engineering etc.)

I don’t believe a degree is necessary to be successful. It has never been even in my parent’s time. At the end of the day, everything is business. If you have a business mind, you can probably be an entrepreneur.

I see a degree as a leg up over the competition to get a job but I have seen many talented people without degrees making really good salaries. There are obviously requirements to meet in some fields where a degree is necessary but generally speaking, success doesn’t require a degree. Start with a rental property and be the landlord to your friends 🙂 The things I would do if I had the knowledge I have now 20 years ago.

Totally agree Passive Income Earner. My old buddy is well on his way to living the passive income life (aided by a great entry point in the real estate market). It’s true that it is not just people that are well-educated, or people that work hard that make more, it is people that exploit the supply and demand principles that the market works on.

I agree too PIE. Especially relevant in Vancouver where many people have made money just by buying real estate and flipping properties.

My BF doesn’t have a university degree but he has a 2 year certificate/ diploma. He’s going back to school for further growth, but he has grown so much that his income has doubled from what he started off with 6-7 years ago. I have a university degree and he is making the same amount as me right now.

Marianne says:

My husband and I have no post-secondary education but are ahead of our friends who did because, for the most part, they are saddled with student debt and now just beginning careers at an entry level wage. We had a head start and, while we started at entry level wages, have worked our way up in our workplaces and make good money now. I always assumed I would go on to pursue some kind of post-secondary education when the timing was right and I had figured out what I wanted to do with my life but I enjoy what I do right now and I would lose a lot of income by taking time off to go to school, spend a lot of money to go to school and then have to start out at a lower wage in whatever field I got my degree in. It just doesn’t make sense. I think in my situation, the best thing to do is make sure that I save a large portion of my income now so that if something happens and I find myself out of a job, I can then use some of my savings to retrain and work my way up in another industry.

Right, and most employers probably value your experience far more than the fact someone else took a few history courses right? Great job planning ahead for the reality that you may have re-train at some point. I wish more Canadians were this realistic and prepared!

Thankfully, I am not graduating with any debt from college, but I agree that we are not exposed with more options before we leave high school. I also think people are not educated enough in personal finance. I recently just learned about 401K, IRAs, etc. because I picked up a book and started reading PF blogs. My husband just last week, asked what am IRA was because he noticed an article I was reading.

Thanks for dropping by Savvy Latina! Glad you checked us out and hope you come back.

I think self employment is the way to go too. I would like to see the real number from your friend Chase though. It all sounds too hypothetical. Did Chase saved up during the 5 years you were in school and invest? Many people spend all their income.
I disagree that compound saving beat income. It is extremely difficult to bring saving up to that point. It is much easier for earned income to beat earning from savings. The best case scenario is to earn a lot of money and save a lot of it. (like financial samurai.)

Believe it or not RB40, these numbers undershoot how much ahead of me he is. He didn’t need market returns, he bought property on the outskirts of Winnipeg, Manitoba. He is know close to owning the property outright and it has risen at least 50% in value over the last 6 years. He didn’t save up per se, he bought the house and made large mortgage payments. I figure if he can do that, it isn’t unreasonable to think someone could save. Savings beats income unquestionably when the guy doing the saving is still making plenty of income and gets that much of a head start!

Modest Money says:

It’s definitely true that a diploma is no longer necessary in today’s world. I hear about how much people are making in the oilfields or in mines and it sounds quite impressive. That is just for people doing labour type work though. With the right personality people can achieve success in all kinds of other jobs without getting traditional education. There would be some where the education would be necessary, but many others where you can learn via experience and by working your way up in a company.

Working your way up into management out in those industries is fairly common, and if nothing else, that labour gives you could life experience and a resume to build on. I think it is underrated.

mycancukbuck says:

I think you need some kind of training to make it in today’s world – but not necessarily college or university. The trades are definitely a viable option – and they can’t be outsourced! If you do decide to go to school, try to pick something practical (e.g. accounting) or a work/study program so you can pay your way as you go along.

I read an interesting book called, “That Used To Be Us,” (talking about the USA) and they basically said that being good at a job that can’t be outsourced is the ticket going forward.

Jill says:

Yeah, it’s unfortunate that people aren’t exposed to more options before they leave high school. I’m not sure how to help that. Should people be split up into streams earlier like in many other countries? technical, professional, etc.? I’ve never been very comfortable with that because in 6th grade I hated and thought I sucked at math. If that had determined my trajectory then I wouldn’t be working in a field where I use math all the time. But is the risk of that worth it? Our education system was set up with a specific purpose, leading to a specific place. If you want people to know there are other options, how do you get that message to them?

You don’t need to stream in 6th grade, but I think offering more gradual streaming options around 9th grade is a smart way to go. There is nothing saying people can’t get education on their own if they change their mind at a later date! I think we need to do way more career prep in high schools. Most teachers have no idea what the current job market looks like or how quickly it is changing – this is scary.