Chap. 2 Career Aspects of Personal Finance Money and Financial Security –Wages and salaries...

Chap. 2Career Aspects of Personal Finance

• Money and Financial Security– Wages and salaries provide

• Vast majority of income

• Important benefits

– In a survey, 75% of students said #1 goal was being well off financially.


• Job satisfaction– More important than income for many

people – A critical ingredient in job success


• Social Contribution– A Job that

• contributes to society• really helps people• makes a difference

can be more important than income to some


• Variables Affecting Income Potential– Education– Occupational earning patterns– Industry considerations– Geographical considerations


• Education

– Earnings gap between high school and college degree

– College grad earned on average 1.8 times what high school grads earned

– Gap is continuing to widen

– Advanced degree holders earn 1.6x what bachelor degree holders make


• Median Monthly Income and Educational Level

$0 $2,000 $4,000 $6,000

High School

Bachelor's

Master's

Doctorate

ProfessionalDegree


• Financing Your Education– Federal programsThe largest source of aid for studentsPrograms financed or sponsored by U.S.

governmentInclude loans and outright aid– Other sources of financial aid


• Federal Programs include:

Pell G rants FW S

FSEOG PLUS Loans

Perkins Loans Stafford Loans

Federal Program s

Pell G rants FW S

FSEOG PLUS Loans

Perkins Loans Stafford Loans

Federal Program s


• Pell Grant– Does NOT have to be repaid– Helps financially needy undergraduate

students– Yearly maximum of $2,700


• Federal Supplemental Education Opportunity Grant (FSEOG)

– Does NOT have to be repaid

– Helps financially needy undergraduate students

– Yearly maximum of $4,000


• Stafford Loans– Two types of LOANS

• Subsidized

• Unsubsidized

– Obtained from U.S. Department of Education or financial institutions


• Perkins Loan– Helps both undergraduate & graduate

students

– Low interest Loan -- • repayment begins nine months after graduation

– Maximum lifetime amount of $30,000


• Federal Work Study (FWS)– Provides JOBS for both undergraduate and

graduate students– Students earn at least minimum wage– Job always for public or non-profit private

organization


• PLUS Loans– Available to PARENTS with good credit

records– Eligibility NOT based on financial need– Interest may vary but will not exceed 9%– Repayment (by parents) usually begins

within 60 days after loan is received


• Other Sources of Financial Aid– Private lenders

– Special programs offered by federal government based on:

• a student’s academic talent (Robert C. Byrd Honors Scholarship Program)

• a student’s pursuit of a career in a certain field (Paul Douglas Teacher Scholarship Program)

– State governments (for state residents attending state institutions)


• Other Sources of Financial Aid– College scholarships and loans from alumni and

wealthy donors– Loans to children of employees offered by some

corporations– Cooperative education program

• Students work part of year in field related to studies• Students attend class rest of year

– Military service -- ROTC offers scholarships in exchange for active-duty obligation


• The Importance of Continuing EducationEven after graduation, the need for education continues:

• Continuing education hours required for some professionals (CPA’s, real estate agents)

• Programs designed for working adults • Many employees offer tuition reimbursement

and release time


• Other Variables Affecting Income Potential -- Occupational Earning Patterns– Some occupations pay better than others

– Two earning patterns• Some occupations pay more at both starting level and top level

• Some occupations pay less at starting level, but have higher salary potential


• Choosing a Career1. Take a personal inventory

Consider Taking an Interest Evaluation

2. Determine where jobs will be in the future

3. Measure the career potential of an occupation

4. Consider preparing for an occupational cluster


• Take a personal inventory– Define your career goals– List your skills and special talents– List your educational background– Analyze what you liked and disliked about

previous jobs held– Explore your hobbies and interests


• Determine where jobs will be in the future– Three occupational groups will have

excellent growth rates in future• professional specialty groups• service groups• technicians and related support groups– Many of fastest growing groups have

workers with college degrees or technical training


• Measure the career potential of an occupationthe industry’s growth prospectsthe specific occupation’s prospectsthe job’s locationthe employer’s growth prospects


• The industry’s growth prospects

Career growth depends on health of industry Growing industries include:

• computer software and services

• health care

Declining industries include:• manufacturing and mining

• aerospace and defense


• Preparing for an Occupational Cluster

An occupational cluster =

a group of related jobs

• Seek General Qualifications in a Specific Field


• The Self-Employment Option– RewardsIncome potential directly related to how hard owner

works

– RisksBusiness failure (50% within two years)Erratic earningsMore taxes paid by ownersBenefits (i.e. health insurance) more expensive to

provide for self


• The Job Search1. Contact all possible sources!

2. Write an effective resume

3. Include a cover letter

4. Handle the interview well


• Contact All Possible Sources!– Friends, acquaintances, relatives– Campus placement office– Job service centers– Private placement agencies– Professional associations’ listings– Newspapers– Ads in trade publications– Electronic bulletin boards and databases– Direct solicitations of employers


• Write an Effective ResumeBasic components of a resume:

Identification (lists name, address, etc.)

Job objective (states job you are seeking)

Background (describes education and work experience)


• Write an Effective Resume– Focus on your skills related to job

Don’t forget volunteer experience!

– Be precise in describing accomplishments in present job

– Concentrate on appearance• Limit to one page• Use readable font• Print on high quality paper


• Resume FormatsChronological order– lists work experience in chronological order

Functional– highlights most important job skills

Targeted– focuses on specific position


• Include a cover letterA cover letter “sells” you to an employer.– Limit it to one page– Avoid form letters– Use a three-part structure

• 1. Grab the reader’s attention

• 2. Sell yourself to company

• 3. Call reader to action


• Handle the interview well

– Be prepared

– Approach it from a position of strength and self-confidence

– Listen carefully and ask intelligent questions


• Be Prepared

– Find out as much as you can about company’s products, structure, size, financial status, etc.


To prepare for an interview:Study firm’s annual reportRead trade publicationsRead articles in the press


• Listen & Ask Intelligent Questions– Respond to questions as directly as possible– Ask questions about the company– Express yourself well (including dressing

appropriately)


• Deciding on a Job– If salary is too low, may be able to negotiate– Don’t appear too greedy– Consider the work environment– Consider the potential top salary


• Fringe Benefits– May include--health insurancegroup life insuranceeducational expensesretirement plans

Chap. 2 Career Aspects of Personal Finance Money and Financial Security –Wages and salaries...

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