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Why Spending Money to Earn Your Degree Should Not Be Seen as an Expense

Posted by : Premraj | Posted on : Friday, March 24, 2017

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When it comes to our finances, we put things into one of two categories – expenses or income. Usually it’s clear what category an item fits into, but once in a while something will pop up that isn’t as cut and dried. Schooling is one of those areas. If you’re considering pursuing your masters in business administration online, but aren’t sure it’s an expense you want to incur then it may be time to re-examine which category it actually belongs in.

The Cost Doesn’t Paint the True Picture

In terms of your online MBA degree and the cost associated with it, it’s easy to get caught up in the tuition and cost of books. People look at that total and automatically slot it into the category of expenses where their finances are concerned. While this isn’t exactly false, it’s not entirely true either. Yes, it will require you to pay a sum of money, but what will you get in return?

Sometimes Debt is Okay

As of 2014, here in the U.S. the outstanding student loan debt stood at over $1 trillion dollars. That’s a rather significant amount of debt, but was that good debt or bad debt? Typically, the rule of thumb when you look into college or university is that you shouldn’t take on more debt than you will make in salary the first year in a career. This means if you expect to make $50,000 in your first year on the job, your debt should be below this amount.

When you know you will be setting yourself up to have the financial means to pay for your debt, suddenly that debt doesn’t seem so scary or bad.

It Won’t Depreciate Over Time

Unlike items you buy that depreciate over time, meaning you owe more than what the item is worth, your university degree isn’t something that will depreciate. It will be just as valuable when you leave school as 10, 20 years down the road. In fact, there are studies that show you can expect a 15% return on your bachelor’s degree.

When you think about the cost of tuition and that it can equal that of a car, what is going to be worth more two or three years down the road? The car will be worth less money, whereas you will have the peace of mind knowing you’ll get a return on your education in the form of a higher salary. Of course there’s also the fact that having a degree will give you more variety where jobs are concerned, which equals more job opportunities in general.

A Sound Investment

There aren’t many sound investments out there and most are an expense. In terms of your university education, it is definitely more of a grey area that deserves careful thought and consideration. In the case of schooling it’s important to look at its future benefits rather than just focus on the current cost involved.

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