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Better option : MBA or Job?

We often come to a point in our life where we have to decide between:
a) Whether to go for a job & start earning or
b) Continue for higher studies (e.g. MBA) and earn thereafter

Let’s look for some of the PRO's & CONS's of each option, giving you the best possible comparison between the two above. The basic logic to understand the decision making is - whether the benefit of HIGHER SALARY as an MBA is sufficient enough to recover the Fess paid for 2 years?

ASSUMPTION - You have sufficient funds to pay off fees of MBA, so you don't have to take Educational Loan.
a) Getting a job-
  1. SALARY - In this case, instead of perceiving higher studies, you will straight away go for job, earning for yourself from day 1. The basic assumption here will be for salary which will show increasing trend in coming year i.e. you will experience increment in salary each year.
  2. INVESTMENT - Unlike other option, here you will not have to pay any fees. Hence, you saved some money. The fees so saved by not pursuing higher studies will be assumed to be invested in Fixed Deposit
  3. INCOME - Hence you will be earning from 2 different income source, one from salary & other being interest income on Fixed deposit (from the saved money of higher education fees). (We have assumed here that the money saved from fees is invested in fixed deposit)

b) Perceiving higher studies (e.g. MBA)-
  1. FEES - For pursuing higher education you will have to pay fees each year, depending upon duration of course.
    Hence fees paid will become your expense.
  2. SALARY -Salary will start only after completion of higher studies. But the benefit is that starting package will obviously be higher than what you would be starting in case a). The basic assumption here will be for salary which will show increasing trend incoming year i.e. you will experience increment in salary each year. Our intention here shall be earning salary which shall cover our educational expenses at the earliest and get a hike beyond income earned through investment of such money if we have not opted higher education. Also the field of choice shall give you more job opportunities then in earlier case.Third, we shall be placed very soon.
  3. INCOME - Remember here you will have only 1 income source i.e. Salary income which will begin from 3rd year after completion of further education.
  4. EXPENSE - Fees paid for every year will become your expense which is absent in case a).

Let’s look for an example to understand the concept-
  • Let's say starting salary as non-MBA is Rs. 10,000/- per month
  • A fee of MBA is Rs. 2, 00, 000/- each year. Which makes it Rs. 4, 00, 000/- for 2 years.
  • Starting salary as MBA is Rs. 18,000/- (Drawn after completing course i.e. at 3rd year)
  • Assumption - Increment in salary is 10% per annum.
    Hence by doing some math, salary of non-MBA for 3rd year will be Rs. 12,100/- per month

i) Now the basic way of analyzing is whether the benefit in salary of Rs. 5,900/- (i.e. 18,000 - 12,100) is sufficient enough to recover the cost of Rs. 4, 00, 000/- ???
ii) And above that you even loose the Interest income from Investment, which you could have earned if MBA was not perceived. If the answer to both the rationale is yes you have an edge by pursuing higher education.

To put it simple if you have goals clear enough to set into a career, job experience will help you 'learn while you earn' gaining you skills more specialized than an MBA can provide.

I would say MBA is good if your current qualification needs to be furnished with more 'skills required to handle a business'. Or maybe it would help you change your field of choice. Or your dream position required you to have a MBA. It will also provide an additional degree in your profile. Exploring other options is also essential which may prove to be cost effective or time saving.

E.g. In this case if a person has his goal clear enough to be in accounts field (may be specific to cost) other degrees like ICWA or CA may prove to be good alternative. Of course MBA has its own charm but the field of specialization is crucial factor while deciding a degree.

MBA is just an example taken for higher education, it may be any higher degree. There is lot of permutation and combinations to be taken into account, above mentioned is just a single case out of many based on some assumptions. Please take it as guidelines and not as an advice.