To many, the month of May means flowers and the promise of an endless summer. To others it marks the graduation season. We attend ceremonies where young optimists will soon embark on the next step of the education ladder while others enter the world of work and career. But graduations are double-edged swords. While it is important to envision the future it is equally important to recognize what one leaves behind and what one carries with them.
What the future holds, what one leaves behind and what one carries with them are just some of the thoughts and realities surrounding graduations. I would like to tie these three together. It’s not a romantic notion but a way to look at past, present and future in financial terms. We’ve all heard the saying “Time is money.” I like to think that choices are money as well. The choices one makes dictate the way one spends time and the way one spends time dictates the amount of money they accumulate. The three are intertwined. Graduations give us pause to reflect on these simple three.
In my financial tales blog I wrote a tale called A Twenty Million Dollar Tale that speaks directly to the topic of college education and tries to answer the question of whether a college education is worth it or not. If one reads it they will learn that from a purely financial perspective I don’t think college is a worthwhile investment in most cases and what it offers is a non-pecuniary reward. In fact the tale gets its title from the fact that if instead of spending $25,000 per year for 4 years of college one instead invests it at 12% per year, by the time the student reaches age 65 it will be worth almost $20 million dollars. College and the ultimate graduation from college is a decision that too many families have taken too lightly for too long. The common selling point is that college graduates make more money than those that don’t. However, it does not reflect on the fact that not only is college expensive but the student loses many years of earnings. In most cases, the higher income for college graduates vs. non-graduates does not compensate for these two factors.
Time and money are complex subjects. While money is a man-made creation used to facilitate trade. It is also a measure. As a measure, money is the most efficient way for societies to monetizing time and choices. Generally speaking, the more money one has the better choices one has made. The more money one has means time well spent. When money is taxed, time and choices are taxed. Fortunately, the value of money today can be mathematically translated to the value of money tomorrow. This magic is performed through the process of compound interest. I suggest the reader also read A Compounding Tale from my blog to fully understand how money today can translate to money tomorrow. This of course means that time today or choices today are directly linked to money tomorrow. If we save money today and invest it we will have more money tomorrow. Learning how to invest wisely is time well spent and a choice one will never regret.
So this month of graduations, I encourage all graduates and attendees to reflect on the hidden meaning of the milestone event. Those that are furthering their education need to understand that the next few years means time not earning money as well as time spending money. Use it wisely because the cost is much more than it appears on the surface. Those launching careers should invest time in understanding money and how it works. You not only want to work for money but you also want your money to work for you. Those that will soon be paying or have finished paying for education, should recognize the gift they have given either themselves or a loved one. You have given the gift of money, the gift of time, the gift of choice. Cherish it.
