For most MBA students, earning an MBA Degree has both short-term and long-term financial implications. My experience is that many MBA students make short-term financial decisions that often have long-term financial consequences, consequences about which they know little about or are choosing to ignore. Whether out of ignorance or neglect, the result is the same, financial wellbeing suffers. Fortunately, there are post acceptance/pre enrollment financial planning action steps that most MBAs can use to proactively manage their short-term and long-term financial wellbeing. These action steps are appropriate for all MBA students; full-time, part-time, EMBA, or online, and will result in a unique plan for each individual. My goal with this post is to introduce you to these action steps and set the stage for future posts where I outline in detail each action step you can use proactively to manage your own financial wellbeing while earning your MBA.
In a previous MyeEMBA Blog post, and borrowing from the book Wellbeing: The Five Essential Elements, I said financial wellbeing is all “about effectively managing your economic life.” Managing one’s economic life is not easy, especially when you are making decisions today that can have such a long-term impact professionally, personally and financially such as quitting a full-time job with lots of prospect and enrolling in an MBA program full-time. In other words, you are no longer making decisions about which MBA programs to make application or which program’s admission offer to accept. Now is the time that you must address the financial wellbeing issues that will arise because of your decision, some of which will need addressing prior to starting the program and some of which can be put off until after the program. More importantly, however, is that you address all near term issues with an understanding of their longer-term implications.
The following is a list of action steps I recommend you complete before you start your MBA program or at the very least during your MBA program. Over the next few weeks, I will address each in greater depth.
- Assess your financial wellbeing – What is your personal view of your own financial wellbeing? What is the view of your spouse or significant other of their financial wellbeing? Using Gallup’s Wellbeing Finder assessment tool you can measure financial wellbeing and compare results, to each other or individually over time. The index can be a useful starting point in formulating an action plan for addressing the financial issues arising from the decision to earn an MBA.
- Evaluate your current financial situation – MBA programs typically want you to pay tuition and fees in advance. What resources do you have available to pay or to leverage for borrowing? What is your credit score? How will the MBA related payments affect your cash flow? The objective in this step is to identify the resources you have available to you (cash, investments, home, salary, etc.) and claims to those resources (debt service, living expenses, etc.) so you can formulate an action plan for addressing the financial issues arising from your decision to earn an MBA.
- Identify goals, options and non-negotiable positions – Paying for your MBA can involve a set of complex issues and decisions for you and your family. Do you have financial goals? How will these goals change? What options, such as student loans, graduate student financial aid programs, home equity loan, etc. do you have for funding your MBA? Are there any non-negotiable positions to consider such as not giving up the family vacation to save money to pay for the MBA? The objective is to start building a foundation for the decision making that will be necessary when you formulate the plan you will execute that addresses the financial issues created by your decision to earn an MBA.
- Formulate and execute an action plan – You are now ready to prepare the blueprint for addressing the issues created by your decision to earn an MBA. This means decision making regarding goals, options, and non-negotiable positions. Execution includes the ongoing review and revision of the plan as new issues arise and as your financial situation changes.
Following these steps should result in a well thought out plan for addressing the issues arising from your decision to earn an MBA. Following these steps may be very simple for the individual that is single and starting an MBA program directly from their undergraduate program. However, for the 35-40 year old with a working spouse and children and is starting an Executive MBA program the process can be very complex and time consuming. In either case, it is never too soon to start working your way through the steps.
Are you prepared to address the financial wellbeing issues arising from starting your MBA program? Do you have suggestions for ways to approach these issues? Share your thoughts by adding to the comments below.
What would you like to see covered in the MyeEMBA blog? Let me know by commenting below. Please also visit my website, MyeEMBA.com, for additional resources and valuable information on MBA studies.
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Rodney G. Alsup, D.B.A., CPA, CITP
Founder of MyeEMBA.com