I’ve spent the last four years of college
accumulating a series of learning experiences to prepare me for entry to the
job market upon graduation. In high school I took part in business and
economics related competitions, which prompted me to elect economics as my
major at UIUC. Although I was fortunate enough to have my parents pay for
college, tuition price and the average starting salary of economics majors
really influenced my decision making process. My goal was to make the most out
of my parent’s generosity while aiming to receive a job with a high enough
starting salary that would allow me to be independent from my parents. I’ve
spent the past three summers working in finance/economics related internships
to help improve my chances of winning a great full time job offer. I spent one
summer working in personal wealth management and insurance planning which
taught me a lot of valuable lessons regarding income protection and the various
methods people use to determine how much money they need to save or budget for
their monthly expenses. I also spent two summers working in mergers and
acquisitions, which is where I would like to start my career.
Knowing something about income protection and
roughly the starting compensation of an investment banking analyst I’ve started
to create my budget and saving plan. Although there is no one close to me
personally who has already gone through this process, I had the opportunity to
pick the brains of the other analysts I worked with to learn more about their
income protection process. I plan to purchase workers compensation insurance,
save roughly 20% of my income and max out my yearly 401k compensation. I want
to be in a position to support myself for at least a year in case I am laid off
from work and make a habit out of saving for retirement. I currently do not
have much savings; I’ve been fortunate enough to do a lot of traveling while in
college. I do hold an on campus-teaching job, which helps pay for my day-to-day
expenses.
I recently accepted a full time job offer and
have already started to think about what job I will pursue next. I hope of
taking what I’ve learned about preparing and building my learning experiences
will guide me to my next opportunity. I am extremely interested in private
equity and will likely try to read about the industry and network as much as
possible over the next two years. I also plan to had another layer of income or
job protection by taking the GMAT next semester. If I get laid off or cannot
find a second job I will take out a loan and go to business school to rebrand
myself and improve prospects. Although this is a huge cost in the short run, I
think in the long run this will provide me with more opportunities in the
future.
Let me respond from bottom up. This is about taking the GMAT so soon after you've done your undergraduate work. This may be a penny wise but pound foolish approach, especially if the goal is an MBA. Normally, one expects MBA students to have a minimum of 5 years work experience before they return to school. Doing it so soon after the bachelors ends up not leveraging the work experience in the additional education. So the value add of the degree is less. The exception that proves the rule is that some Engineering students go for their MBA while they are finishing up their undergrad work. This is to round them out on the job market. They have the expectation they wouldn't otherwise get the business background. But for you, that is not an issue.
ReplyDeleteOn the maxing out on the 401K part, that is a good plan and in my experience do-able if you have no other dependents. While university employees have some other savings vehicle especially for them, called a 403B plan, it is essentially the same thing. I found I could live quite comfortably on my salary and sock away the 20% - until I got married and even then until the kids came along. Then all bets are off. People do start families later nowadays, for many different reasons, this being one of them. Savings patterns change when the family does come along. I'd like to think that investing in my children is a form of saving - they'll take care of me when I'm old and decrepit. That remains to be seen.
Since you do have a job in hand, some of the income risk other students are writing about has already been obviated for you. You can probably sleep better as a consequence. But know that you can't completely self-protect from income risk. How the macro economy performs matters for the individual risk you will face. So here is hoping the economy continues to rebound for the the next several years to come. We'll all sleep better if it turns out that way.
Professor, thanks for the note. I agree, getting an MBA directly after undergrad is not a good idea. However, it is a great idea to at least take the GMAT entrance exam while in school, as the score is relevant for 5 years. Next semester I will still be in “study mode” and have plenty of time to dive into the preparatory material. It would be much more difficult to study for the exam while working 100 hours a week in banking.
ReplyDeleteAlthough I cannot predict the future, I do not imagine myself settling down and having a family before the age of 30. In my mind that leaves my 10 years of strong savings capability. I’d like to build up a great nest egg and buy a home before I start a family. There is always a risk that the economy could hurt future job prospects. When picking a job I made sure to look at positions that were less sensitive to the market, which is hard in finance. Luckily the bank I will work at focuses on M&A for financial institutions. This industry is actually pretty active in both bear/bull markets. Although nothing is certain, I feel comfortable about my prospects.