Slides by Pamela L. Hall Western Washington University 1 The Investment Decision Chapter 12.
Slides by Pamela L. Hall
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Slides by Pamela L. Hall
Western Washington University
Career Aspects of Personal Finance
Chapter 2
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Your Career Choice and Personal Goals
Realize that what you study in college may drive your career for the next 40 years Is it more important for you to do something
you enjoy or Is it more important for you to make money
Maybe you can accomplish both
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Money and Financial Security
For most of you, your wages/salaries will provide the bulk of your income until you retire
You job will be the source of your retirement contributions
You job will be the source of other benefits such as health insurance, disability insurance, etc.
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Other Issues
Job satisfaction For many people this is more important than
income Intellectually challenging, pleasant work
environment, friendly coworkers
Social contribution Desire to contribute to society
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Variables That Affect Your Income Potential
Education Those with bachelor’s degrees earn almost
twice as much as high school graduates Gap has widened in recent years
People with higher education levels experience lower unemployment levels
However, college costs have risen at a much greater rate than inflation
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Figure 2.1: Relationship Between Educational Level and Income
$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000
High school graduate
Some college
Two-year degree
Bachelor's degree
Master's degree
Doctorate degree
Professional degree
Ed
uca
tio
nal
Lev
el
Mean Annual Earnings
Note the positive relationship between educational level and income.
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Figure 2.3: Unemployment and Education
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
1999 1992
Un
emp
loym
ent
Rat
e
High school graduatesCollege graduates
Even in periods of relative economic prosperity the unemployment rate for high school graduates is much higher than the employment rate for college graduates.
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The Importance of Continuing Education
In many occupations you are financially rewarded for advancing your education
Nursing, teaching, engineering, etc.
Other occupations require annual continuing education to retain licenses
CPAs, real estate agents, etc.
Continuing education programs are available at most community colleges and other higher learning institutions
Designed for working adults Often scheduled at night and on weekends
Many employers offer tuition reimbursement and release time
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Figure 2.5: Average Starting Salary (by bachelor's degree)
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000
Psychology
Political Science
Marketing
Accounting
Management Information Systems
Computer Science
Electrical Engineering
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Occupations Earning Patterns
Should not just considering the starting salary for an occupation Some occupations pay more at the starting
level but others may have higher salary potential
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How to Choose a Career
Take a personal inventoryExamine future outlook for jobsMeasure career potentialConsider the benefits of preparation for an
occupational cluster
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Take a Personal Inventory
Define your career goalsExplore your career interests List your skills and special talents
Check out your campus Placement Center for information and personality tests
List your educational background and try to apply it to the job market
Analyze your likes/dislikes from previous jobsExplore your hobbies and personal interests
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Web Links
Game that attempts to match one’s individual interests and skills with similar careers
http://career.missouri.edu/holland
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Help is Available from Career Counselors
Career counselor will interview, test and counsel clients about careers
Interview and testing process may take several days to complete
Tests measure career-oriented abilities Verbal Computational Mechanical Social Sales Supervisory Personality dimensions
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How to Measure Career Potential
Changing career scene requires that you focus on the following The industry’s growth prospects—some
industries are expected to grow much faster than others
The occupation’s growth prospects—careers with greatest potential are those with economic growth, not worker attrition
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Figure 2.6: Employment Growth by Major Industry Division
-30% -20% -10% 0% 10% 20% 30% 40%
Mining
Construction
Manufacturing
Transportation, communicationsand utilities
Wholesale trade
Retail trade
Finance, insurance, and real estate
Services
Government
Agriculture
Self employed
Overall employment
Projected Employment Growth (1998-2008)
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Figure 2.7: The 10 Industries with the Fastest Projected Employment Growth
0% 20% 40% 60% 80% 100% 120% 140%
Computer and data processingservices
Allied health services
Residential care
Management and public relations
Personnel supply services
Equipment rental and leasing
Museums and zoos
Research and testing services
Transportation services
Securities and commodity brokers
Projected Employment Growth (1998-2008)
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How to Measure Career Potential
Job location—a depressed area will offer fewer career opportunities Certain geographical locations offer better prospects
for specific occupations
Employer’s growth prospects—financial soundness of company Recently many large companies have down-sized Most experts believe growth in jobs will be created by
small- and medium-sized companies
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Prepare for an Occupational Cluster
An occupational cluster is a group of related jobs Example—if you get a degree in finance you could
work in banking, investment management, brokerage sales, real estate, or financial analysis
Makes you more marketable in today’s changing job market
The broader your skills the more employable you are
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Prepare for an Occupational Cluster
Request assignments in other areas of your organization
Sign up for training opportunities even if it does not relate to your current assignment
If you choose an advanced degree you may be better off broadening your knowledge rather than deepening it
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The Self-Employment Option
Self-employed workers make up about 7% of today’s work force
Some experts believe this will rise rapidly in the next decade
Half of all businesses do not survive for two years
Earnings can be erratic from year-to-yearHealth care expenses and taxes can be more if
you work for yourself
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Working at Home: A New Employment Trend
Popular trend especially in the publishing and software industry
Advances in technology have made this easier for both employees and employers
With fewer commuters there is less traffic congestion California promotes telecommuting for this
reason
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Sources of Career Information
Use the library Career Guidance and Placement Center
on campus Can provide detailed information about
Specific industries and firms in your areas List of where recent graduates are employed
Helps you network
Handles on-campus interviews
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Electronic Sources of Career Information
Many employers advertise on the InternetMany career-oriented web sites
Posted job opening as well as the ability to submit resumes
Most are free
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Web Links
Career-oriented web siteswww.careerpath.com www.careers.org www.cweb.comwww.jobweb.orgwww.jobstar.orgwww.americasemployers.comwww.monster.comwww.careers.wsj.comwww.jobhuntersbible.com
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The Job Search
Many people procrastinate with their job searches
However, should start early in the fall of the year they expect to graduate
Employers like applicants who are Well-organized Prepared Informed
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Where to Look
Start with relatives, friends and acquaintancesCampus Career Planning and Placement Office
Set up a placement file—contains interview sheet, transcripts, references
Job service centersPrivate placement agencies (headhunters)Professional associationsNewspapers and trade publicationsDirect solicitation of local employers
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The Effectiveness of Job Search Techniques
Many job search techniques are relatively ineffective
About 2/3 of all jobs are found by people using informal methods Networking Personal contacts Direct employer contacts
Most job openings are in the hidden job market Haven’t yet been advertised or are created for
individual job seekers
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How to Write an Effective Resume
Resume—personal data sheet listing your employment qualifications Aimed at convincing potential employers that
you are right for the job
Should contain at a minimum Identification Job objective Background
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How to Write an Effective Resume
You may have gained valuable skills in the past that can be transferred to another job
Don’t forget about volunteer experienceUse a straightforward, factual presentation styleTry to limit to one page
Adjust margins, font size, spacing
Print on good-quality paperAppearance is important
Be professional
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How to Write an Effective Resume
Resume formats Chronological—lists work and educational
experience in chronological order Functional—highlights important job skills, etc. Targeted—focuses on a specific job target and
lists your qualifications as they relate
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Cover Letters
Cover letter is a letter attempting to sell yourself to a potential employer
Tailor each cover letter to the job for which you are applying
Address it to a specific individual Limit it to one pageAlways send your resume with a cover letter
Even if submitted electronically
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Cover Letters
Should contain three elements Attention-grabber Selling yourself
Explain what you offer and summarize your background
Call to action Ask potential employer to call you or say that you
will be calling them
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The Job InterviewFace-to-face meeting with prospective employer
First impressions are made
Prepare in advance Learn about employer in terms of size, products,
locations, philosophy, etc.
Approach interview with self-confidence Stress your qualifications Only talk about weaknesses if interviewer brings them up
Try to minimize their effect
Listen carefully to interviewer and respond as directly as possible
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The Job Interview
Ask interviewer questions about company and job position
Interviewer will be influenced by Your ability to express yourself Your enthusiasm Your posture and dress
May have to take an aptitude textUnethical to sign up for an interview for ‘practice’
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Deciding on a Job Offer
If you receive a hiring interview you must decide if job matches your Career goals Financial goals Work environment goals
Many job applicants find themselves having to choose between multiple job offers
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Salary and BenefitsShould expect a competitive salary
May be able to tactfully negotiate a higher salary
Don’t look at just the numbers—consider the whole package Work environment Advancement opportunities Potential top salary Fringe benefits
Health insurance Group life insurance Reimbursement for educational expenses Retirement plan
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Re-Entering the Workforce
Employers want evidence that your knowledge and skills are current
Try to keep your skills current by Taking part-time volunteer jobs Working on freelance projects Taking refresher courses