Don’t Go To College If Your Goal Is To Make Money
The opportunity cost of college/university is pretty high.
Whenever people ask me why I dropped out of university, I have many reasons, including getting a job opportunity and simply not liking school.
One thing I would tell people is that I didn’t learn anything useful in university. That’s not actually the truth, though.
In my one year of university, I did learn the opportunity cost concept that I have been putting to use.
An opportunity cost is what you’ll be missing out on for choosing one particular course of action over another.
On one of the first few days of my economics class, my professor talks about opportunity cost and draws up an example on the Zoom whiteboard.
Funnily enough, she used going to university as an example.
Four years at the university and the program I was in cost about $40,000 CAD. Instead of going to university, what else could we students be doing?
In terms of money, we could be working minimum wage jobs instead of going to school.
In Alberta, our minimum wage is $15 per hour. If someone works a 40-hour workweek and takes two weeks off for a vacation in one year, they can earn $30,000 in one year.
If one person spent four years working a minimum wage job while another person spent four years at university, the working person would have $120,000 while the student would be negative $40,000 after four years.
Of course, a degree is supposed to help you find a better job, though. We can reasonably say that the graduated student will make $80,000 per year.
If we give both people eight years (student learns for four years and works for four years while the worker works for eight years), the graduated student would have $280,000 while the worker would have $240,000.
This is an oversimplification of what might actually happen, but it explains the general idea of opportunity cost.
In the short term, you make more money by going to work, while a university degree will help you more in the long run. But is that really a fact?
The Life Factors
There are many essential things in the example I wrote above that I didn’t factor into my calculations.
I didn’t factor anything such as taxes, living expenses, or any other benefits involved in either scenario.
When I dropped out of university and told my parents that it was a waste of money, my dad said that money shouldn’t have been an issue at all.
It’s true. I had a ton of benefits for going to university.
Since my mom works for the university I went to, she could cut my tuition fees by half every other semester. I also qualified for various scholarships and grants. I could have used the money to invest in whatever I felt like because pretty much all my living expenses were covered by my parents.
On top of that, I could get $10k in student loans every year. I wouldn’t need to pay them off until six months after I graduate or drop out of school.
So yeah, my dad was pretty pissed. He told me that if I didn’t want the $40k student loans with no immediate interest, he wanted it.
And I told him that I’d get him $40k within the next year, and it’ll be a $40k that we actually get to keep.
Minimum Wage Jobs Aren’t The Only Other Choice
What urks me a little is the assumption that you’ll be working a minimum wage job if you didn’t have a degree.
Life’s complicated. It’s filled with various unknowns that you could have never calculated.
You could get a degree, then a job, and suddenly get laid off. You can also get a minimum wage job, get promoted, and end up with a much higher salary.
In my case, my life has been a wild trip in the last two years where my original plans have deviated significantly. I didn’t foresee getting an extremely influential real estate mentor who basically single-handedly got me a job that pays me multi-six figures if done successfully.
I am one of many examples.
Other people went full head-on into being a real estate agent and became successful that way. Others found success building their own businesses.
When we look at the opportunity cost of going to school, we’re not just looking at the money.
The most important factor we should be looking at is what we could be doing instead of spending time in school.
There are a ton of options other than working a minimum wage job. Starting a business is a great one. There is a high chance of failure, but you will gain invaluable experience that will take you very far in life.
I would also say that finding a job (even if it pays minimum wage) that allows you to work directly with super high net-worth individuals will also help you a lot.
Being well-connected with just one high net-worth person with lots of influence could help you get a six-figure job without any job experience or degrees.
College Is Not For Everyone
College and university work for some people. They also work better in specific industries such as the medical field.
But going to university is not crucial to making good money.
If making money is your goal, you’re much better off not going to school and spending your time focusing on learning skills that you will use in a job environment, networking with the high net worth, and getting paid.
Project Manager at Concierge Auctions who sells multi-million dollar luxury real estate all over the world at auction.