Getting an advanced degree isn’t for everyone. But depending on the career path you’re looking at, it could work to your professional and financial advantage to get a Master of Business Administration (MBA).
An MBA can open the door to a world of job opportunities, whether you want to work in finance, management, accounting, marketing, or a similarly related field. And the money can be very good.
In 2020, employers planned to offer new MBA hires a median starting salary of $115,000, according to MBA.com. That’s much higher than the median $65,000 for new hires with only a bachelor’s degree.
Of course, that’s just the median. Job candidates who graduate from top-tier schools like Harvard or Columbia and are hired by big-name firms in major cities can snag starting salaries that are considerably higher. And in time, MBAs can grow their wages via promotions, bonuses, and other perks that leave them earning a pretty penny.
But as enticing as those numbers might sound, an MBA can’t guarantee you a higher salary — or the happiness you deserve at a job.
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Is an MBA worth the money?
MBAs aren’t free. You’ll spend money — a lot of it — on tuition and fees. And if you pursue that degree on a full-time basis, you may not be able to work at all at the same time. That means on top of covering the cost of your advanced degree, you may need to borrow money to cover your living expenses if you don’t have enough in your savings account to tide yourself over during that time.
Estimating the average cost of an MBA is difficult because tuition costs really do vary substantially from one school to the next. For the class of 2021, Wharton, for example, cost $161,810 all in, whereas UCLA Anderson cost $130,238. That’s a big difference among two pretty well-known and well-regarded schools.
As such, to see if an MBA is worth it for you financially, you’ll need to run some numbers to calculate your break-even point. Imagine an MBA will cost you $150,000, and that it will also result in a salary that’s $30,000 higher per year than what you’d earn without it. Based on that, your break-even point is five years.
Even if you have to borrow money to support yourself during your studies so that you rack up an additional $30,000 in debt while you’re getting that degree, that only adds another year to your break-even point. If you get your MBA by age 30, that leaves you many years in the workforce to earn a higher salary and come out ahead financially.
But remember, while an MBA may score you a higher salary, that’s not guaranteed. This especially holds true if you intend to settle down in a smaller city — one that may not house the type of employers that really offer the big bucks.
You’ll also need to consider the type of job an MBA will qualify you for. Finance and consulting jobs tend to be stressful and demanding. You may find yourself working long hours for many years of your life to command the higher salary that MBA was supposed to buy you. That may or may not be something you feel you can handle physically and mentally.
A tough decision
An MBA could offer you a lot of benefits — a higher income for life, job security, and the skills that allow you to change industries and explore different opportunities. But before you go after that MBA, make sure you understand the financial risks involved. If you don’t end up with a lucrative-enough career, that advanced degree could end up being for nothing. And you may also land in a situation where you’re forced to hold down a grueling job for many years to justify the expense of that degree.
On a basic level, an MBA can, indeed, earn you a lot more money. But there’s more to the story than that. Think things through carefully before going out and getting one.
View more information: https://www.fool.com/the-ascent/personal-finance/articles/an-mba-could-skyrocket-your-income-by-tens-of-thousands-of-dollars-or-not-here-are-the-facts/