The following is a guest post from John, a regular reader of Financial Samurai, on how to earn a six figure income right out of college.
My first interaction with Sam was a comment I made on what would become one of Financial Samurai’s most popular posts of all time: The Average Net Worth For The Above Average Person. I argued some point and disclosed my six figure income at the ripe age of 23. Sam suggested I share my story due to seeing widespread doubt that many people like me exist out there.
In true optimistic fashion, I interpreted that to be a guest post opportunity over four years later. Financial Samurai has been the only site I’ve followed consistently and it continues to inspire. I’m convinced he has secret writers to be able to put out so much content, but I’m honored to be a part of it!
Calling All Juveniles Delinquents
This post is for you. Now is the time to cut the crap out if you want to make a six figure income. The scoreboard of life started in 9th grade. And that means better grades and less Pokémon GO. The best ones were Pokémon Red and Blue anyway. But, you’re too young for that, aren’t you?
If my parents showed me a site like this, I might have made better decisions during that critical time. Instead, all I had back in 2005 was the Bureau of Labor website telling me my selected career was going to be in decline for the next 10 years.
If you or your person of interest has an inclination towards math and science and a strong work ethic, I believe the following is the best bang-for-the-buck strategy of earning a six figure income by the age of 21.
Step 1: High School – Be Aggressive. Be Be Aggressive!
You have a maximum of one semester to screw around in high school. I did so myself until I found out some idiot from my childhood had a higher rank than mine. Quite childish, but it was the spark that lit the fire under my rear.
In the comeback of the century, my rank rose from 32 to numero uno by the beginning of senior year, just in time for college applications. Much of my carefree youth was sacrificed during this time.
But don’t worry. You don’t have to make it all the way to the top, because you’re not going to an Ivy League school (see Step 3 and Should I Go To A Public Or Private School). Instead, channel your aggression towards maximizing Advanced Placement (AP) and community college courses. Why? Because these translate into real college credits later for a fraction of the cost now.
You should still shoot to be in the top 5% of your class. Pure determination alone can get you into the top 10%, and that’s likely going to get you a spot in a public university. For example, students in Texas are guaranteed admission into any public university in the state if they are within the top 7% of their class (formerly 10%). There’s a similar program at Georgia. Check if your state schools have similar guaranteed admission criteria.
If you choose a good public school and follow all the steps to earn a six figure income, you are setting yourself up for a path to wealth.
Step 2: Choose Petroleum Engineering
A petroleum engineering degree holds the best value out there from a financial aspect. If you want to earn a six figure income, selecting a lucrative major is important. The Bureau of Labor has even lightened up their view, claiming future growth of “10 percent from 2014 to 2024, faster than the average for all occupations.”
Unfortunately, their guess is worthless. These same jokers predicted a sustained industry decline 10 years ago. I remember because my parents and friends all advised against it. Sure enough, 2006-2014 was arguably the best time in history to be in the industry. Remember $4 for a gallon of gas?
However, the petroleum business is a commodity business, which means there are good times and bad. I’m surprised the Bureau of Labor hasn’t flip flopped on their outlook yet due to the oil price collapse.
Truthfully, it’s been an absolute fecal-tsunami recently with a lot of experienced hands leaving the industry. But, you’ll have three years to wait out the storm. Global demand for oil and natural gas isn’t going anywhere in this generation, and the industry will be ripe with opportunities when the sun comes out again.
The drilling rig: one with nature.
Step 3: Attend a Public University
The top programs for petroleum engineering are offered by public universities. Notably The University of Texas at Austin, Texas A&M, Louisiana State University, and Colorado School of Mines. Much of the value of a PE degree comes from being able to obtain the best education on the market from public schools like these rather than obscenely priced private schools.
The sticker price to study one year at MIT is about $50,000. For a school like UT Austin, it’s about $37,000. The trick though is to stay within your state. Instead of $37,000, a Texas resident will only pay $10,500, netting a discount of over 70%.
Here’s another tip on your journey to a six figure income. If your state doesn’t have a great petroleum engineering program, select chemical engineering. It’s not as lucrative and you might be a step behind, but oil and gas companies will still hire you. After about 3 years, there won’t even be any differentiation at all.
Further, the ultimate advantage chemical engineers have is that they are not limited to the dirty oil industry! If solar wins out and the oil price tanks for good, you’ll have several industries where you can jump ship to: biotech, food, pharmaceutical, nuclear, you name it.
Another advantage public schools have is their far broader acceptance of AP and community college courses. After all of my credits were applied, I entered college as a junior and graduated in 3 years instead of 4. That’s an extra savings of $10,500 or $50,000 if I were smart enough to get into a school like MIT. I’m not even including room and board and textbook expenses. Absolutely huge.
Maybe you don’t have as many AP credits as I did? You can still accelerate your schedule by knocking out basic classes through community colleges while at the university!
Step 4: Obtain an Internship
Forget working part time at Starbucks during the school year and instead, invest your time studying. The top priority is collecting internship experience, because you’re only here for 3 years. And since freshmen typically don’t have relevant work experience, the only way companies can judge your worthiness is through your GPA.
While grades aren’t everything, they do an excellent job of sticking out in a pile of resumes and getting your foot in the interview room. For example, I absolutely sucked at networking. I remember attending some welcome reception and walking around the room for 5 minutes before going back to my hotel room!
However, because I had a 4.0 GPA, I still got invited to over 25 interviews that semester. As a result, I became a Level 99 interviewee primed for dominance the following recruiting season.
After the first internship, it’s much easier to get the second because now you have work experience to talk about. Further, if you show up to work, do a good job and engage with people, they’ll likely ask you to come back. But if you’re following my 3 year plan, the second internship will be your last so choose wisely.
The perfect scenario is interning for a company you admire and receiving a full time offer at the end of the summer. This would normally be in August after your junior year, with your full time job to start in the summer after graduation…meaning you can coast your entire senior year.
You can party, find your true self or whatever you kids do these days. A few B+’s here or there won’t ruin your life anymore, but just don’t flunk. A solid internship will make it easier to get a great job with a six figure income.
The Best Bang For Your Buck
Well here we are. You’ve finished college in three years at age 21 and have the coveted six figure income. Back in 2010, the starting salaries were in the $80,000-$90,000 range with a $5000-$20,000 signing bonus. The starting salaries have crept up over the years and can now be over $100,000 without any bonuses.
Petroleum engineering only requires a bachelor’s degree. Lawyers, doctors and pharmacists can make six figure incomes out of the gate too. But when does the gate open? After 3-5 years of additional schooling? After a couple years of residency when you turn 30 and have $200,000 in student loans?
The beauty of this job is that a masters degree, PhD or an MBA are not required to advance, not even for the vice presidents who clear $300,000-500,000 in salary and who knows what in stock options.
Petroleum engineers can maintain a normal life. Perhaps you’re thinking of a career in finance. I know I still wonder what could’ve been every time I visit Sam’s site. However, a senior engineering role (6-10 years) can command a $200,000 per year salary.
Despite the high pay, I rarely see anyone consistently working more than 40 hours per week. When you calculate the hourly rate, it’s equivalent to someone who earns $300,000 but working 60 hours per week.
Oil companies are concentrated in low cost of living cities. Houston, Texas is the oil capital of the world. While certainly less glamorous, a $100,000 income will get you a lot further in a city like Houston or Dallas than in San Francisco or New York City.
The Final Step To A Six Figure Income
Petroleum engineering is just one example towards a high paying career, and there are many other avenues as you can see in the chart above. I was blessed with market timing, geographic location, and an interest in the math and sciences.
Ultimately though, it’s still a J-O-B where you’ll be working for the man and trading five days for two. But it’s a heck of a safety net while you start the process over again. Oh, you thought you made it to the end? Nope! The final step is creating your own six figure salary, this time without an employer.
That’s what sites like Financial Samurai are for, helping people build multiple income streams and accelerating their wealth through sound financial principles. I hope to do the same!
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