Video transcript
- At a very high level an investment is when you're putting,let's say, your money now into something in the hope that in the future you're gonna get more than that amount of money back. And the extra amount that you get back, you'd call your return on your investment. Now you can think of an investment in slightly broader terms, where you're not just investing money. You could also be investingyour energy or your time. And you could think ofit in broader terms, that what you're gonna getback is hopefully more money, maybe more energy and more time as well in some future world. And that's why you can really view, in many situations,education as an investment. The whole idea here is especially if we'rethinking about college, is if you are willing toput the time, the energy, and the money, and there'sreally several costs here, there's the actual tuition costs, there's the room and board costs, which is the living expenses, the food expenses while you're at college, and there's also that lost income. You could be working over those years when you're in college, sothere's also that lost income. So it can be a prettysubstantial investment. But the reason why many folks are willing to do that is the beliefthat coming outta college they're going to have manymore career opportunities, ones that better resonatewith their interest, and maybe coming down tofinancial literacy, ones that give a better returnin terms of income. So you might say, "Oh, itmight cost a good bit of money. It might cost tens of thousands of dollars or even in certain caseshundreds of thousands of dollars to put the time and money into college, and also the opportunity cost of not working during those years. But when I come out, maybeI'll be able to make two times, three times as morejust right out the gate. And maybe 10 years down theroad or 20 years down the road because it puts me on a career track, I could make a lot, lotmore than I might otherwise. And once again, I would be doing it in a job that maybe I enjoy more." Now, generally speaking, andI tell this to my own family, I tell this to my own kids,I think that's a good idea. College is a good idea, but you have to tread very carefully when you decide where you want to go how much you wanna spend, andwhat you decide to major in, and how you end up leveragingthat major into a career. Because when you go to a college folks are going to offer youthings like student debt. And they're also gonnaoffer you grants and things. And grants are awesome because that's essentiallypeople are just giving you money. Obviously you have scholarships as well. But especially when you're taking on debt you really have to thinkabout, are you going to be in a position to pay offthis debt in the future and have a good standard ofliving that you hope to have given the major that you choose and given what you know about yourself? And both of those are really important because sometimes you mightsay, "Oh, well, you know, I've heard people in this majorcan make all of this money," but there might be a lot of work above and beyond doing the major. There might be a lot of hustling involved to to make sure you get the job. And there might be peoplewho aren't in that situation and you're only hearingabout the good stories. There might be certain majors where people are havingtrouble getting a job, they're having troublepaying down their debt. And so when you start thinking about what you wanna majorin, what type of career path do you want to go into, how much tuition you want topay at which universities, I really encourage you to talkto as many people as you can, especially people whohave gone down that path, maybe 4 or 5 years, 10 years ahead of you. And if you don't know those folks, ask the college, ask the university, "Hey, I would like to talkto some of the graduates. I don't wanna just take your word for it, a college that you havegood placement into jobs. I wanna talk to someof the recent graduates and see if they werehappy paying that tuition, putting that time and energy,the opportunity costs, and see if they think that was a good path or if they have some regrets that they wish they picked another path." Now the other thing to think about when you think aboutinvesting in your education, there's often a, let'scall it a sticker price. If you just do a web search and you look at someuniversity and you'd say, well, what's the tuition, and what's the tuitionplus the room and board, which is the cost of living and eating, or housing and eating and all of that, there's some places that it could look like it's 50, 60, $70,000 a year when you put it all together. Now some folks will have topay that amount of money, which is a lot so youhave to be very careful if you take on that type of obligation, especially if you're taking on debt. But in a lot of cases you can get significantfinancial aid depending on the university. I'll tell you from my point of view when I was in high school, a lot of my, let's callit my dream schools, when I looked at the tuitionback then in the '90s, if you put tuition and living expenses, it was about 30, $35,000. And my family, my mom was, I was in a single motherhousehold, made about $16,000 in the year that I wasa junior and a senior. I was like, okay, there's no way we're gonna be able to afford that. But I applied anyway. And the reason why I did is my sister, who was three years older,told me about financial aid because she also wentto a similar university. And you don't know whatit's gonna cost you until you get in and they giveyou a financial aid package. And that package is goingto be some scholarship, maybe some grants, and it'll be some loan. And then when I got that package I realized that it was actually doable. Now, I still did take on manytens of thousands of dollars of debt, which is real money. And so I took it very seriously. I asked a lot of questions. I tried to do my best to makesure I was going into a career that I had a good chanceof paying off that debt. And even when I was startingto graduate from college I didn't just rest on my laurels and say, "Oh, I have a good degree. Surely someone will walkup to me and give a job." No, I hustled. I hustled to make sure that I got a job that put me in a good financial position. So talk to a lot of people. Think about these questions. College generally is a good idea but all college isn't equal. All career paths aren't equal. And what you do with thosedegrees, they aren't all equal. So really think hard about that. But if you do it, you'llprobably make a good investment.
