Personal Finance / Unit 1: Earning Income
1.1 Careers, Education and Earnings
Notes
Your income is the money you earn. Education, training, skills and experience all affect how much you can earn over a career.
- On average, people with more education or specialized training earn more and are less likely to be unemployed, but the pattern is not a guarantee.
- A career is a long-term path; a job is a specific position. Paths include college, trade school, apprenticeships, certifications and the military.
- Compare the cost of training with the expected pay. Example: a program that costs $10,000 and raises yearly pay by $5,000 pays for itself in $\displaystyle \frac{10000}{5000} = 2$ years.
- Opportunity cost is the value of the best option you give up, such as wages you skip while in school.
- Skills that employers value (communication, reliability, technical know-how) can raise your pay over time.
Practice
Which statement about education and earnings is most accurate?
The link is an average trend, not a guarantee, and trade programs and apprenticeships also lead to good pay.
A certificate program costs $6,000 and is expected to raise your pay by $3,000 per year. About how long until the extra pay covers the cost?
$\displaystyle \frac{6000}{3000} = 2$ years.
Maya turns down a $20,000-per-year job to attend a full-time program. The $20,000 is an example of:
Opportunity cost is the value of the best alternative given up.
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