Currently, due
to global economic recession, it is highly competitive to get a job after
graduation. As an international student major in Accounting, it is even harder
to get a job because international students need employer sponsor Visa, which
means employer need to pay additional money to hire non-citizen employees.
Obviously, students from College of Business are not a scarce human resource.
In the real business industry, companies generally will not hire students only
from College of Business but students from all different kinds of majors. More
specifically, accounting firms would hire candidates major in computer science,
economics, psychology, law and so on. The fact is that even students have been
studied four years in Science of Accountancy, they are still not qualified to
perform financial statements and consulting service for the clients. All
accounting firms have to train freshman for couple months, then we could start
our real career. This is the main reason why it is very hard for College of
Business students to find a job because they are so easily to be replaced by
other candidates from a different academic background. Generally, the annual
salary of Big Four accounting firms’ entry level would be around $50,000. In
order to be a more qualified candidate, it is very helpful to pass the
Certified Public Accountant (CPA) since the accounting firms would prefer to
hire students who already passed the CPA which do not need firm to pay extra
fees to support current employees completing this certification program. One of
my friend, who already got a job in Deloitte, told me for entry-level employees
who passed the CPA license would get ￥300 than those
who do not pass each month. Although to be qualified for taking CPA exam
requires 150 credits and over $1000 application fee, eventually those extra
education fees would be payback through long-term career life, and CPA license
also make you more competitive in the future no matter which area in business
industry. Overall, it worth to invest education fee right now in improving my
human capital for future. That is why I spend one more year in graduate school
to earn 30 more credits for qualifying taking CPA exam. Therefore, receiving
higher level education and passing certification program is one way I used to
minimize income risk in the future.
Because after
tax accountant’s annual income would be tight for a living, it is very necessary
to save money and reduce living expenditures. From a consumption perspective, I
apply for Social Security Number(SSN) in order to build my own credit history
from now on. Since with an SSN, I could apply for a credit card which have 1%
cash back on all transactions. In addition, I would also start to deposit money
into reserve or growth account rather than checking account for extra money to
earn minor interests every month. Without SSN, I would only deposit money into
checking which does not earn any interests. Moreover, a good credit history
could lower borrowing rates such as mortgage rate, car loan, and potential
extension of payments date in the future. There are many benefits that we could
take to reduce expenditures. For example, with credit history, you can apply a
Macy’s membership card, then you can get 20% off for every purchase you made.
Not only Macy’s, Amazon, Target, Apple, Discover etc., they all provide a
similar benefit which could help us reduce consumption costs. Furthermore,
whenever I made an online purchase, I always use rebate websites which could
give cash back depends on different online stores. For example, Amazon would
give 3% cash back rebate in most items, eBay is 1%, Walmart is 2% rebate.
Hence, it is also very simple and effective to cut the costs by purchasing
online through rebate websites.
Saving and
investment also play significant roles in diversifying income risk. Normally, I
would plan the monthly expenditure ahead and record all transactions into excel
to monitor the expense. Typically, I would spend 1/3 on groceries, 1/3 rent and
utilities, and 1/3 on saving for an emergency or future use. For instance, if I
am going to buy a car or house, it would be a good idea to start to save money
month by month, rather than preparing a large lump sum at one time. Some of my
friends, even start to open an investing accounts in the stock market with the
money they saved. One of my friend who already earned 200,000 dollars during
college life and purchase a BMW by himself. Of course, he borrowed the initial
investment from his parents at zero cost. For students like me who are not
quite familiar with stock market, I would rather be more conservative on
investing money on stock market, I’d like to pay the insurance such as health insurance,
dental insurance or pension insurance to levied future living pressure. It is
extremely expensive to get health service in U.S. compared that to China.
Definitely, it is very important to maintain a good health like healthy diets
and regular exercise every day to improve our immune system.
Overall, my
strategies to mitigate income risks would be pursuit of high level of
education, completion of certification problems, establishment of credit
history, reduction of expenditure through cash back programs, long-term saving
plans, investment on insurance and investment, and maintaining healthy
conditions.
So I gather from reading this that (1) you were already thinking about these issues a lot before reading the prompt and (2) if you can solve the Visa problem then you'd prefer to remain in the U.S. That decision itself probably has significant ramifications about future income. If you could find a similar job back in your home country, I suspect the pay and career prospects would be quite different.
ReplyDeleteOn your sentence which includes 1/3 on groceries, 1/3 on rent and utilities, ... Let me make several observations. Rent can depend on how far from work you choose to live and whether you have your own apartment or share with others. Buying a car or a house and saving for that eventuality now, where that sort of thing is planned ahead of time, is different from saving in case you lose your job sometime in the future and can't find another so quickly. The latter is unplanned and I would term an emergency. In class I have mentioned more than once having buffers. The precautionary motive for saving is about the unplanned use of the funds, which serve a a buffer to the bad outcome. Also, I would have at least one more category for other sorts of spending - furniture, clothing, entertainment. It might be a much smaller share on average, but it won't be zero.
Last, you didn't say anything about this, so I will talk about my own situation in this regard. My mother lived to be 92. She was 79 when my dad passed away. There was a reasonably large estate to take care of her needs, but she was in poor health and providing her with good care was expensive. The estate eroded fully before she passed away. I contributed some. My brother, who is a doctor and who earns substantially more than me contributed the bulk to make up the shortfall. If you don't have to worry about your parents' welfare from an income point of view, that is good. If you will have to do that eventually, that is another reason for the precautionary motive to save.
After reading your posts, it really takes me a long time to think about the future of my parents. Chinese social welfare is quite worse compared to that of U.S.A.. We don't have high medical care insurance or pension. In second tier city, the cost of 1 meter square of the house is generally around 1200 dollars per square, while the average monthly income is around 500-800 dollars before tax. It is so ironically if we get married and assume our spouse has similar wages. It literally takes more than decades to get initial downpayment of the house. Without our parents' help, it is impossible to afford our own house. By the way, the house is only qualified to live for 70 years. To live with parents is not a permanent way to solve the problem. At the same time, living costs are quite high compared to the salaries. It is very hard to have savings. Maybe the entire life for poor families is working on paying back the mortgage. That's why every girl or guy wants to marry the partner who already had his or her own house in China. Raising our parents and children in the future is very hard for this generation in China due to the huge economic recession and large population.
ReplyDeleteEven though you mentioned the saving is for unplanned use. In my life experience, saving more sounds like a planned use for the future life. Certainly, it would include the emergency use like medical care. It is very shocked for me to hear that in some rural area, pension for retired people is only about 100 dollars. In large city, the pension is about 400-500 dollars for most people, depending on the type of job before you retired. I cannot believe how poor families maintain their routine life with such low income. Honestly, I really worry about my future career back on China. Without help of my parents, life would be very struggling.