Post #6 Income Risk

Over this last summer, I experienced a shocking revelation; I had absolutely no idea what I was going to do after I graduate and little time to figure it out. I only have one semester left which we’re already half-way through, and most of my friends have already graduated.

Anyway, while my colleagues were diving into the real world with no more expectations for the future than I had, I decided it was time for a change. I went to my library, grabbed the first couple books I came across, and I got to work.

The first book I picked up was called “Earn What You’re Really Worth” by Brian Tracy. The book covered topics such as self-discipline, time-management, goal-setting, and increasing human capital (he didn’t use the term, but that’s essentially what it was). While I can’t yet attest to how realistic his ideas are, they inspired me, nonetheless. For the rest of the summer, I read everything I could so by the start of the fall semester, I had read over twenty books on economics, business, and finance. Reading obviously takes up time, though, so I was making a very real sacrifice to accommodate it.

What I gave up for my new pursuit of human capital was work. You might be wondering why I found the two mutually exclusive, but this is the best answer I can give: working at a cash register or as a sales clerk would increase my current income, but using those extra hours to increase my human capital would improve my future income. Every moment spent at work, so I thought, would be a moment better utilized for self-education.

I knew when I was making the sacrifice that there were some flaws to my strategy. Work was practical experience. I’d benefit by adding to my resume, and I would grow more accustomed to work-life and organizational structure than I currently am (most of my work-experience is informal). I would also earn money for my efforts which, like any college student will tell you, I never seem to have enough of. While I put some of what I learned into practice, such as organization techniques and goal-setting, I had limited opportunities to use what I learned in the real-world.

So I had to consider the pros and cons of both work and study, and I put them into two distinct categories: does this help me now or does this help me in the future? Once I had everything mentally sorted, I was able to weigh the strategies against each other. Experience or knowledge? Money or knowledge? A strategy of obvious benefits or a strategy that others would find impractical?

One of the things I picked up on from several different authors is how job uncertainty affects my generation more than it has historically. That you can never, and should never, believe you’re set for life. Job certainty is now, more than ever, a fantasy. At the same time, I now see this as an opportunity. As long as I can continue to increase my human capital, I can find and obtain a career when I need to. There’s far less income risk as long as I stay on my toes and keep learning. That way, if the economy heads south or just the company I work for does, I can remain competitive in the job market. This is one of the reasons I chose studying over work.

Since I can’t know the counterfactual, I’m not entirely sure what decision I should have made, but I’d probably make the same one. Increasing education decreases income risk and tends to increase income as well. So that’s why, when choosing between current benefits and future benefits, I choose the latter.