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Are you investing – In yourself?

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Today’s topic comes from a question I received this week from someone asking my opinion about the value of the CPA credential.  He told me he was interested in pursuing the certification but wanted to know if I felt it was worth doing given his limited “free” time.   I think this is a good question and very relevant as we all are busy making ends meet and meeting demands in our personal life. 

 Below is a summary of the answer I provided:

 If you look at it strictly as cost vs. benefit it will probably be worth it to invest the time.  If you invest 150-200 hours over 15 or 20 weeks to study at a $50/hr “cost” plus the cost of the study materials ( I assume self study) and the exam cost;  I think the payback might be 2 years.

That also assigns no value of having the CPA designation in your title or on your business card – what is that worth? To some it is worth little to some a lot. The CPA designation does increase your value in the market place and will increase your billing rate to clients or your salary from an employer.

I am only guessing 10 hours per week is what you will need to study perhaps you are able to cut that down if you are a fast learner.  If you have the discipline to tough it out for 3-4 months you will reap the benefits for the rest of your career.

Good luck!

 When responding, I could have done a little more research to determine the estimated increase in salary that a CPA earns over a person without the certification.  For this discussion, let’s use $3,000 per year as the premium for being a CPA.  The present value of that over the course of a 20 year career as a CPA would yield a $21,782 return AFTER deducting $10,000 for the present value of investing 200 hours of study at a cost of $50 per hour. (I used a discount rate of 7%) 

 In my opinion, the value of investing in yourself is worth it.  For anyone who is studying for the CPA exam perhaps this will give you that extra incentive to hit the books.  In this case I used a very modest premium of $3,000 per year.  It is estimated that having the CPA certification is worth a 10% premium.   In my response I guessed that the payback would be 2 years.  I would say that using a baseline salary of $60,000 (this was a person with over 10 years of experience) a 10% increase would probably be about right to break even after 2 years.  That may not be instant gratification but it is pretty close to it.

 Whether you are in the skilled trades, the medical profession or anything in between and you want to get ahead or stay ahead of the competition in the workforce – hit the books!  In today’s economy it is good insurance to increase your value.  In addition to the monetary rewards, you will have the satisfaction of bettering yourself.  Good luck to everyone out there studying and trying to improve your skills.

 Have a great week.

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Written by pacelinebiz

July 12, 2010 at 6:16 pm

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