University or No Uni?

So, as a keen 17-year-old, you’ve discovered FIRE. You’re ready to start saving and investing a huge chunk of your savings into income-producing assets like ETFs (or property for leveraged gains), and you have a good idea of the FIRE number you need to hit.

However, you’re facing the good old career question of “should I go to Uni or start working straight away?”.

And in this scenario, we’re strictly talking about what’s going to yield the highest financial outcome over the next 10 years, starting from when you’re 18 years old.

And I get all the jazz that if “Uni degree students earn X amount more than high school graduates”. Whilst that was certainly true in the past, I believe in this 21st century, there are so many jobs you can get without attending Uni, and we’re not trying to accumulate the most amount of wealth in 40 years.

Keep in mind, the end goal is to literally achieve FIRE the quickest route.

Let’s draw up a hypothetical scenario where 2 students just graduated high school:

• Bob is a fresh 18-year-old high school graduate who starts his work straight away as an electrical apprentice.
• John attends Uni by studying to become a lawyer.

Let’s first start off with Bob

Bob’s Finances After 10 Years

For the sake of simplicity, we’ll assume that Bob on average saves 70% of his after-tax income during this time.

Now, although his wage will be significantly lower during the first 4 years of his apprenticeship, we’ll assume that he’s still living with his parents during that time as typically most people in their late teens to early 20s live with their parents.

Now I found this updated apprenticeship wage chart from EGT:

We’re also going to assume that conservatively, Bob earns $90k per year on average after finishing his apprenticeship. Now, accordingly to a few sources from Reddit, Quora and other webistes, the wages for an electrician can vary from $70k to $200k, depending on which sites you work at, if you work overtimes and if you work in the mines.

Those factors can make a huge difference in the income projections, but we’ll be more on the convervative end and assume $90k per year.

If we break it down into a table…

Year	Before-Tax Income	After-Tax Income	Savings
1	$32,422	$29,627	$20,738.9
2	$38,417.86	$34,415	$24,090.5
3	$42,888.56	$38,081	$26,656.7
4	$50,042.2	$43,241	$30,268.7
5	$90,000	$70,412	$49,288.4
6	$90,000	$70,412	$49,288.4
7	$90,000	$70,412	$49,288.4
8	$90,000	$70,412	$49,288.4
9	$90,000	$70,412	$49,288.4
10	$90,000	$70,412	$49,288.4

Just in savings alone, Bob saves a total of $397,485.2, or nearly $400k.

However, that’s only just savings. Instead of letting inflation erode the value of his money, Bob instead invests into a low-cost, diversified ETF that delivers a return of 5% on average after-inflation.

To make things simple, we’re putting into our calculations that Bob invests $3,300 per month, as he saves $400k during 10 years, so $400k divded by 10 years equals to $40k.

$40k divided by 12 (since there’s 12 months in a year) is $3,300.

After 10 years of consistently saving and investing, Bob ends up with $509k in ETFs!

Now too shabby.

John’s Finances After 10 Years

In this scenario, John will earn his undergraduate degree in 4 years, so by the time he graduates, he’ll be 22 years old.

According to LSJ Online, a law degree can cost up to $168,960 for a domestic student and $203,520 for an international student.

Let’s just assume that in this scenario, a law degree will cost $130k.

And we’ll also assume that John works part-time during the time to pay off half of his law degree cost, so when he graduates, he’ll have $65k in debt.

From here, there are 2 ways to look at it.

1. We can assume that all the savings John puts towards at the start will be towards his law degree.
2. He makes the minimum repayment amount.

For the sake of simplicity, we’ll assume that he makes it a priority to get his student loans paid off first, and then invest all his savings afterwards.

With that in mind, let’s say Tom makes $85k in his first year as a professional lawyer. His after-tax income would be $67,012. Because he saves 70% of his income, that will all be going towards paying off his student loans, which means he’d paid off $46,908.4.

In his first year, he’ll still have $18,091.60.

It has been 5 years so far, and John is in $18k in debt. However, now that his income will increase significantly, let’s just say on average over the next 5 years, John earns $150k per year.

He would’ve easily paid off the $18k in the sixth year of his career and invested the rest.

He’ll save $77,113.4 per year on average, assuming he saves 70% of his after-tax income on average.

If he saves and invests that much over the next 5 years, he’ll end up with $435,778.54

Deduct $18k student loans, then he’ll have $415k in ETFs.

Summary

• Bob – $509k in ETFs
• John – $415k in ETFs

Ultimately, Bob came out the winner with $509k in ETFs, nearly more than $100k more in wealth compared to John.

Now, I get that the wage of each profession can depend heavily on a multitude of factors, like the amount of overtime worked, which company you work for, etc.

For example, there are a lot of electricians who earn six figures easily by working overtime or working in FIFO. The same can be said with lawyers, where an entry-level lawyer can earn $100k in his/her first year in a prestigious firm, and maybe even earn $200k+ after gaining a few years of experience.

The reason I did this experiment was to demonstrate that you don’t need to go to University to become financially independent, especially when it comes to achieving FIRE. Now, by no means am I opposed to attending Uni.

But as someone who went straight into full-time work in marketing, I much prefer gaining experience and maximising the amount I can invest during my youth years.

Now, of course, if we stretched it out to 20 or 30 years, then I’m sure that John will easily accumulate a much higher net worth.

Really, my thoughts on Uni are that it really depends on your own preference. However, I also believe that there are so many high-paying job opportunities out there that don’t require a college degree.

Would love to know down below if you think Uni is worth it, or not?