I recently had a conversation with a young client about his 401(k) savings. She was doing everything right:

Contributing enough to get her full employer match
A well diversified portfolio based on her risk level
Goals around what her future retirement looked like

The discussion soon shifted to the topic of graduate school. She hadn’t thought much about it, but it was something she noted as a future goal and was hoping to achieve.

This got me thinking about my own graduate school experience.

Investing in You

I earned an MBA from the University of Utah. I didn’t always want to go this route, but after three years in the corporate world I felt that earning an advanced degree would do a few things:

Sharpen my fundamental business skills
Increase my exposure to new career paths
Make me more money

To be honest, “make me more money” was, at the time, a little nearer the top of the list!

But I knew there would be a substantial initial investment. In my case, it was to the tune of around $40,000 - pretty reasonable given some of the college debt horror stories I read about (thank you, personal savings and in-state tuition).

After completing my MBA, I started looking around at other job opportunities offered by my employer. I found an opening in an area that I had developed a deep interest in during my schooling (Marketing and Product Management). Luckily I got the job.

Unexpected Returns

But here’s the kicker. I was given an immediate pay bump of around 70% of my current salary! I was blown away!

This made a tremendous impact on my finances. Suddenly I had a significantly higher amount of cash coming in, much of which could go towards my new student loans, which were now past their deferral period and required interest and principal payments.

And unlike other investments, such as a stock that has a one-time jump in gains, a big jump in salary works more like an “annuity.” It created a constant stream of additional income with each paycheck - every month, every year, as long as I kept my job.

There were other benefits, too. For example, since employer 401(k) contributions match a percentage of one’s salary, my employer match increased substantially. My new position also put me on a lower-level management track, which set me up for future management positions, all of which would pay more and give me opportunities to develop my leadership abilities.

Young professionals need to make sure they’re taking these sorts of “investments” into account when thinking about their financial life. These have little to do with the stock market or picking a winning stock.

That is to say, of course, the winning stock is YOU.

Retirement Savings are Important, But...

If you’re between the ages of 25-40 please DO think about retirement and choosing appropriate investments, all the things that are essential to getting the most from your 401(k). That’s important stuff.

But also take some time to think about the investment of you; what you can become professionally and your own potential “returns.” I can't guarantee that you'll get double your salary right off the bat, but the opportunity for greater earning potential will be there.

The impact of investing in you is tremendous.