Measuring The 'Value' Of College - Part 3: Optimal College Decision
By The Final Chapter I Give (until we reboot the trilogy)
Quick Summary:
Part 3 we deep dive into identifying your skillsets to pick your optimal college major
You will see the 4 characteristics of a good career and the list of careers you should choose
You will learn why a doctor or lawyer are not great financial choices
We established college is a scam, but you need to play the game to get high paying jobs
Therefore you should go in and maximize your result by following the below process
Introduction: Optimizing The Value of College
Part 1 we explored the College Industrial Complex that rakes in $100s of billions annually funneling high school kids into college. You should now have clear eyes into the real reasons college is pushed so hard.
Part 2 went over how to use capital budgeting to calculate the value of different college decisions. You can now calculate the options in front of you to help in the choice
Part 3 is going to explain the best choices to make around college. Following the below guidance will set you up for a successful financial life. You now know college is a scam. But a scam you need to play along with in order to get into a high paying career. Therefore, you are going to maximize your choice. In order to do this you should:
Identify Your Strengths
Find high-paying high-growth career to pursue that is provides leverageable skills
This ended up long so I split off a part 4 on minimizing college debts/expenses into its own post.
Identifying Your Strengths for Optimal College Decision
First, you need to identify your areas of strength that best allows for your success.
There are 4 paths that your strengths can be split into. Now, there are 100s of ways to split traits. However, these 4 are picked based on the careers in the next section. These careers are the optimal choices, so think about where your strength is using this system. Additionally, this grouping is pretty simple to understand.
Where you fall on the exhibit below depends on your strengths with: (1) People, (2) Math, (3) Computers, and (4) Puzzles.
Be honest with yourself when you do this.
Also ‘things I like’ is not the same as your strength. The best way to identify a strength is to notice what comes natural to you that is hard for others.
Best case is if you ever had someone offer up ‘your a natural at _______’. That is a good sign that you found an area to think of as a strength… Unless that person was your mom…I am sure she is wonderful, but also she was lying…just like she was lying when she said you were the next superstar. How can I be sure? You wouldn’t be wasting time reading about college on the internet. You would have a team of people looking to mooch off your success who surround you at all times and force you to work on your art.
(Note – A venn diagram with 4 circles has the flaw of not having a 2 trait overlap for items across from each other. Notice how you don’t have an overlap for just ‘people and computers’ only. This is not ideal, but this is a template and more art than science and really is a tool to start thinking about this. Just by thinking about it, you will be far ahead of your peers.)
1) Computer Path as Optimal College Decision
Are you a tinkerer? Do you love getting into how things work and are built? Are you able to take something apart and put it together with ease? Can you look at computer coding language and read/write it like your native language? These would all indicate you have potential in computers.
If you are in high school and you code in your free time or built apps this shows a lot of promise. If you did some sketchy gray area stuff with a hacking group, (1) keep it to yourself for now, but (2) you are likely strong on the pure computer path.
If you like computers, you likely have some affinity for math and puzzle, but not necessarily.
Now, most people can learn to code. But there is a world of difference if you are a natural who can sit down and type out pages of code vs if your coding is largely copying functions you found on the internet.
This bucket also includes the whole world around computers from actual database/servers to the front-end UI. It is pretty self-explanatory though
If you like to play video games, you are a consumer, not a producer. You probably know plenty of people who love video games but have no skill with the actual computer side. This is a good example of confusing ‘things I like’ with ‘strengths I have’.
2) Puzzle-Solver Path as Optimal College Decision
This is the most ambiguous bucket. If you are good with puzzles, you are able to take in a ton of outside information, aggregate it, and quickly come up with solutions.
If board/card games come natural to you, this may be a good sign (No, not hungy hungry hippos). Maybe you picked up poker quickly and have good senses for other players. And not online poker, that is a lot more math based. If you can sit at a table and read people, update your calibrations of them as new hands are played, and be correct, then you likely are strong here.
Chess would be another good indicator. If you can plan multiple steps ahead with multiple contingency plans in chess, you have potential as a good puzzle-solver.
Did you play sports and were you described as ‘smart’ or ‘cerebral’? Either you sucked and your coach thought this sounded better than saying you have ‘a lot of gumption’. Or you were able to quickly react and see what was going on. There is always someone who has a knack for reading the game. Gretzky would be one example in hockey. No where near the best skilled at any facet, but just always getting in the right place at the right time.
This strength is also one that is most easy to improve on. Any one can learn to get better and better at seeing the pieces and making decisions. Some people it comes much more natural.
In the business world, there is a lot of opportunity for people who can find the right piece of the puzzle. Additionally, this ability should make you a natural at the political games and networking. Some of the best ways to build your own internal brand is recommending a person perfect for a role or introducing people who can solve each others problems.
3) Math Path as Optimal College Decision
If you are good at math, you probably know it already.
Math is tested in in schools. Math is objective. This isn’t an ambiguous strength like the other 3. Are you in advance math classes and getting As with limited studying? Did you get near perfect SAT scores in math? Are you able to skip steps in proofs or read white papers and have it just make sense?
This is the easiest bucket to know if you fit in. On a pure math side, you likely are extremely literal and logical. You probably have a hard time relating to peers. However, this does not include people who dumb and weird but pretend it is because they are smart.
4) People Path as Optimal College Decision
Are you really good with people? Are you able to schmooze everyone? You meet someone and know what to say to get them to do whatever you want right away? You are able to read people?
If you are a pure people person, you are the opposite of pure math, you don’t think in logic, you deal fully in emotions. You likely do great in the dating game, crush it in interviews, and talk your way out of trouble or into places. It is art when you see this strength play out.
Being strong in this should also mean you have good defenses against being sold. You can sniff out a lie, read body language cues, and quickly maneuver the situation to your advantage.
Most Common Alternative: Myer-Briggs
A lot of people are fans of Myers-Briggs.
I am not.
Myers-Briggs Type Indicator (MBTI) is mostly what returned on searches for personality type matched to career choice. It is popular in the corporate world as well. Workers will hang their letters up outside their cube so you know how to communicate with them….or more likely so you know to avoid it.
Look at all the options, I don’t think there are 16 uniquely different careers you should choose.
The biggest issues with MBTI for careers is:
(1) it recommends a bunch of low paying jobs for many of there types. So 18 year old you is IFNJBQ+ and you are choosing a path of poverty because of it.
(2) High school kids have a decade of growth in personality, confidence, maturity, and values. Your actual personality isn’t set yet. Better to pick a career based on your strengths. As you grow up, you will see the quiet high school introvert end up as a huge extrovert in their 30s after finding their confidence. You are too young to start labeling yourself now.
Pick a path that sets you up for success. Not one based on your evolving personality that recommends careers that barely pay more than minimum wage.
Wrapping up Identifying your Strengths
This is a starting template to get you in a position to succeed.
However, the most important thing for success is your own determination for success. As you go through college and then your career you will watch peers get lazy. They will be staying up binge watching Netflix, going out to the bar 4 nights a week, getting fat and losing their energy, and all sorts of stuff. You can be in the top 10% of any skill, not because you are wonderful like mama told you, but because 90% of your peers lose any motivation. This should be encouraging. You work hard and you will succeed.
Second, as you develop, you will be able to add strengths. Don’t worry if your original strength doesn’t line up with your dream job. The goal is to get you starting in a career you can succeed in right away. You do not want to start where your peers are naturally gifted and outperform you. You start where you have the advantage and then more doors open to you.
Choosing A Career for Optimal Financial Success
Now that you have identified strengths, you want to find a career that leverages those strengths.
Public Service Announcement – Career is NOT something you love, a passion, or other nonsense. Save those things for your leisure time or after you are financially set. Your career is something that is going to make you money so you have the ability to enjoy passions. Not to mention, your passion at 18 is not going to be your passion at 22 and definitely not at 30. You grow.
“If you do something you love, you never have to work a day in your life…(except all those minimum wage jobs you need to work to actually pay the bills)”
-Guy flipping burgers talking about his real career is making paper mache my little ponies
Now, there are only a handful of careers that you should consider. These careers should have the following 4 criteria:
High Starting salary & growth potential,
Ability to leverage job skills for side businesses
Only require 4 years of school
Possible to get performance-based pay
In general, you should go the coding/computer science route if possible. It is the direction the world is moving. The biggest benefit to you is the amount of doors it opens for your own personal side business. Everything is going online. However, as someone who has no love for computers and coding, I can vouch that it isn’t for everyone.
The below diagram is roughly trying to identify a career you could succeed in with the given strength. Use this as a way to identify where to start your research. Hopefully, you know better than to sign up for a 4 year degree based on an exhibit from the internet made in paint.
Optimal Careers – Quick Overview
Being a part of more circles isn’t better. Every job on here starts near 6-figures and gives you the potential to make $250k a year by time your 30. You are just trying to line your skills up with a career that best match. The first handful of years out of college you are an individual contributor. That means you get paid based on work you complete. You want to be somewhere that the work is easy to you because it aligns with your skill.
For example, hedge fund is in the middle of the diagram because there are many flavors of hedge funds – quant heavy, market neutral, arb-seeking, etc. It doesn’t make it a better choice, but one that you could do with any strength depending you find the correct fund.
Sales is invaluable. If you are able to convince people to spend money to buy items, then you will always have a job as long as there are items to buy. The skills you pick up in sales are also transferable to all areas of life. It is essentially reading people and figuring out how use the information they offer to you. You want a sales job where you are earning commission as majority of your salary as this is performance based pay. You can always hustle more to make more. If you get into high-ticket items you can make massive amounts of money. Sales hits all 4 criteria.
Consulting & investment banking are both related to sales. It is very client focused work and especially with consulting, there is a lot of upselling services done. Consultants get billable hours and most firms are partnerships so you can work hard and get up to ownership. Investment banks will pay huge bonuses if you are on a deal that closes.
Quant is a role you either are or aren’t. The types of formulas quants work with will blow your mind unless math comes natural.
Actuary and data scientist are related fields that you can do if you are really good at math, but don’t need to be quant good.
Big data is a big business. Every industry is collecting and trying to figure out how to use massive amounts of data. Data scientist bridge the gap between math and computers. You are coding and doing heavy statistical analysis. Much of this will be around predictive models and AI.
Actuary is a career traditionally in the insurance sphere, but that has been expanding outwards. There is a series of 7-10 exams that you need to pass to be fully credentialed. Barriers to entry are good as it allows your credential to get a premium. Your company will pay for the materials, give you 100s of hours off a year to study, and give bonuses and raises upon passing. You can make near $100,000 out of college and on top of regular raises, add another $50,000+ from exams.
Computers, sales, wall street, and financial services are the fields that allow for a 4-year degree to result in high earnings. Look at the careers that are close to where you put your strengths. Research them and find the one you like the most.
Common ‘High-Paying’ Careers That Did Not Make the Optimal Career List
There is a handful of jobs that make it on the list of high starting salaries that were not included above. Nurses, PAs, doctors, lawyers, PTs, accountants, therapists, and project managers all are ranked pretty consistently as high-paying jobs. However, these roles fail one of the 4 criteria. Either they involve too much schooling, don’t typically come with performance incentives, or salary growth gets tapped out (RNs & PAs). There is not differentiated pay for a really good nurse vs a lazy nurse as bonuses do not make up much of the salary. Additionally, the rich doctors, lawyers, and accountants are those who own their own practice and they are rich for being a successful business owner rather than their craft.
If you go back to part 2 and you can compare a doctor vs a data scientist. MDs graduate with $200k in debt, require 8 years of school and 3 more years of residency. In residency they typically only make $50k a year. MDs are typically 30 before they actually start making the $175-225k salary of a real doctor. And yes, that is all a non-specialist MD typically makes after all that schooling. Specialists make more, but typically need even more than 8 years of school. So 10 years after graduating high school, a doctor has only made $100,000 in salary TOTAL vs $200,000 in debt.
A data scientist starts around $90,000 and from raises and performance bonuses likely makes a lot more. But even a bad performing data scientist who only makes $90,000 a year each year has made almost $550,000 in salary for $35,000 debt.
However, each of the careers recommended above you should be making $200,000+ range at the same time a MD is leaving residency to also make around $200,000. Therefore, financially all the extra school, debt, and lost years of earnings doesn’t make sense.
Note – If you are doing it because it is prestigious. You probably aren’t reading the right site. Prestige and ego are wastes and the quicker you put childish things aside the better. Prestige doesn’t pay your bills.
If you are doing it because the careers are Anti-fragile, you may have a better argument. There will always be a need for the personal touch of a medical provider. However, I’d also argue that sales is even more likely to be around and would still be a better choice.
A Career is not Final
You will be able to move around when you are in the real world. Choose your college major to maximize your success. Later in your career you can always move around.
You will see people who start in a career, go to consulting, then end up in a different field. For instance, start as an actuary, spend some time managing data scientist at an insurance company, use your knowledge of setting up big data to go into consulting other companies data scientist, move to a new team at the consulting firm and be a consultant during an M&A and end up in investment banking. There is a lot of overlap in these careers.