Too often, we think of investments strictly in terms of things like stocks, bonds, real estate — assets with a cash equivalent that can be used to build wealth. These aren’t the only ways we can invest for our future, though. In fact, one of the most valuable pieces of capital you can invest in, and you are doing it just by reading this right now, is yourself.
You can invest in yourself in numerous ways — traveling to expand your cultural experiences or exercising to support your long-term health are both experiential investments that can pay off in numerous ways, monetarily or not. But in terms of investing in your financial future, education is one of the most critical assets in life’s portfolio.
We would be remiss to downplay the amount of money and time that’s often required to invest in education. However, the residual benefits of exploring post-high school education — whether from a two-year or four-year college, vocational school, graduate program, or elsewhere — are resounding. Think: the capacity to build a wide and lasting network, unique professional development options offered by schools, and the scope of opportunities that can open up for you in the job market, to name a few. Investing in your education is a powerful starting point on the path to not only your own financial security, but the ability to invest in your community and those around you.
Opening the door to your future.
An education beyond a high school degree can be a conduit to a world of professional opportunities. Beyond the skills and knowledge that you obtain in the classroom, school provides the experience of being surrounded by diverse communities, access to subject matter experts in dozens of fields, and the permission to continually try new things. It is a unique environment prime for questioning and exploring, as well as for developing a range of skills you can apply throughout your life.
In such an environment, you also have the chance to build relationships and grow a network that can support your endeavors for years to come. It can be difficult to assign a dollar amount to the value of a strong network, but the connections you create with peers, teachers, professors, counselors, etc. can be a catalyst that helps you get your future foot in the door for opportunities like internships, jobs, and more.
Increasing your potential to build wealth.
As education levels increase, unemployment decreases, and incomes tend to rise. According to research from the Federal Reserve Bank of St. Louis, in January 2020, pre-pandemic, the unemployment rate for those with less than a high school diploma was 5.5%, while the rate for those with some college or an associate’s degree was about half that at 2.8% and a bachelor’s degree or higher was 2%.
Similarly, data from the U.S. Bureau of Labor Statistics shows that in 2019, each additional level of education, from high school up to a doctoral degree, correlated with an increase of weekly earnings. This being said, it’s important to add the caveat that correlation does not equal causation. Meaning, while additional schooling often aligns with higher salaries, it’s certainly not the only contributing factor. It’s critical to recognize personal or family wealth, race and ethnicity, and other social elements that impact these numbers.
With higher income comes greater ability to save and invest, which in turn can help grow wealth over time. This can allow you more financial security for yourself, your family, and children if you have them. It also gives you more room to give back to your community and, similarly, take greater responsibility in contributing to and lifting up the educational systems that nurture future generations of students as they seek to navigate through the school to professional pipeline.
Still, like stocks or bonds, investing in your education inherently comes with risks and rewards. Education is a major expense that continues to become more expensive, and student debt is an undeniable burden that some carry for years or even decades. However, numerous studies and data points show a correlation between education and employment and income levels. When thinking about furthering your education, it’s critical to consider the risk of potential lasting debt against the possibility of greater income over the course of your lifetime. For some, the possible return may not be worth the initial input, and making that call is a personal decision that shouldn’t be taken lightly.
The starting point for financial security.
Education has the potential to be one of the most lucrative investments you make. By investing in it, you could increase your lifetime earnings by hundreds of thousands, even millions, of dollars. But the decision to further your schooling beyond high school is a significant one, and it’s always a good idea to explore your options. You may find that a two-year vocational program at a community college will help you achieve a career you’re passionate about, or you could decide that a four-year degree is the path you want to take.
Whatever you choose, remember there’s no one correct educational or professional path. Whether college is the first stop after graduating high school or you earn a degree later in adulthood, it’s all about using education as a tool in a way that works best for you.
Everybody has the capability of achieving financial security. It starts by taking small steps, like opening a savings account, or contributing to your 401(k) — and taking these foundational actions doesn’t require a Ph.D. or even a high school diploma. But by investing in education, you can equip yourself with the means to further build upon that base more than you might be able to otherwise, helping to propel you closer to the financial goals you hope to reach.
We continuously strive to help our Allies achieve their financial dreams.
During her tenure as president of Ally Invest, Lule led Ally Invest Securities, Ally Invest Advisors and API business lines. She also authored several articles about the investing industry and investor behaviors. Lule has a passion for agile product development and an appreciation of design thinking in shaping user-centric experiences. An advocate for financial and retirement solutions that rely on a mix of digital and human guidance, Lule believes in empowering individuals, especially women and minorities, to independently drive their own financial futures.