Financial Aspects of Career Planning Lecture Notes

Chapter 2: Financial Aspects of Career Planning Overview of the chapter A person’s career and work situation is frequently overlooked in financial planning. Your career will influence the financial resources you have available for spending, savings, and investing. In addition, a career interacts with a person’s lifestyle, interests, and values, all of which influence financial decisions. This chapter provides a basic understanding of career planning, job selection, and obtaining an employment position. Included is practical information regarding career information sources, creating a résumé and cover letter, and interviewing. In addition, material on evaluating a job offer, assessing financial benefits, and considering a career change is presented. Section 2.1 Career Choice Factors  Like any other decision, employment selection involves a trade-off among various factors and requires an ongoing reassessment of the situation. Trade-offs of Career Decisions   While many factors affect your daily living habits and your financial choices, your employment situation probably affects them most. Like other decisions, career choice and professional development alternatives have many risks and opportunity costs. The many career choices you make will require continual evaluation of trade-offs related to personal, social and economic factors. Career Training and Skill Development  Your level of formal training is a determinant of your financial success.  In addition to formal career training, most successful people, employers, and career counselors stress the importance of certain traits that are adaptable to most work situations; these include: o An ability to work well with others in a variety of settings. o A desire to do tasks better than they have to be done. o An interest in reading a wide variety and a large quantity of materials. o A willingness to cope with conflict. o An ability to anticipate problems. o A knowledge of technology and computer software. o An ability to solve problems creatively in team settings. o A knowledge of research techniques and library resources. o Effective written and oral communication skills. o An understanding of both their motivation and the motivation of others. Note: Exhibit 2-1 shows median weekly earnings for various levels of education. 1 Personal Factors    Aptitudes are natural abilities that people possess. Interest inventories determine the activities that give you the most satisfaction. A vital ingredient in career choice is flexibility, since change will be an integral part of your working life and the job market. Note: Financial Literacy for My Life provides steps to developing an effective career plan. Career Decision Making  Because of changing personal and environmental factors, you will need to continually assess your work situation Note: Exhibit 2-2 visualizes the stages of career planning and advancement. Section 2.2  Your decision to work in a specific field is influenced by three factors. Social Influences  Various demographic and geographic trends are influencing employment opportunities.  More working parents, increased leisure time, an increase in the number of older people, and increased demand for employment training are some trends affecting the job market. Note: Exhibit 2-3 lists potential variables in career opportunities.   With more college-educated people entering the work force, the job market is becoming more competitive. Changes in location of job and regional salaries influence employment opportunities and demand for available positions. Economic Conditions  In certain industries, high interest rates, price increases, or reduced demand for goods and services can restrict career opportunities. 2 Industry Trends  Increased foreign competition and changing automation have reduced the demand for manufacturing jobs.  Fields that are expected to have the greatest employment potential in the near future are: o Information technology o Health care and medical technology o Environmental services o Business services o Social services o Sales and retailing o Hospitality and food services o Management and human resources o Education o Financial services Section 2.3  A variety of techniques can assist you in expanding your experience, assessing employment opportunities, and applying for your next position. Obtaining Employment Experience  Work experience may be gained through:  Part-time or summer employment  Cooperative education programs  Volunteer work  Internships  Class assignments  Campus projects and activities 3 Using Career Information Sources  The main sources of career information are: o Library materials o Media career information o Online sources Note: Exhibit 2-4 provides sources for career information. Career development office Networking is the process of making and using contacts to obtain and update career information, through community organizations, professional associations, and business and personal contacts  An informational interview is a meeting designed to gather information about a career or organization. Note: The How To feature (textbook page 58) provides tips for navigating a changing job market.   Identifying Job Opportunities  Advertisements for employment opportunities were previously found in newspapers and other print media. While some still exist, nearly all job listings are now online.  In addition to newspaper websites, check for available positions offered through professional organizations, trade associations, online sources, and the contacts you develop through campus activities and career fairs.  In an attempt to work in a specific career or for a particular company, match your interests and abilities with the needs of an organization.  For-profit and government-supported employment agencies are another source for finding available positions.  After researching a particular company or industry, design a presentation that communicates how your abilities could contribute to that organization.  Job creation involves developing an employment position that matches your skills with the needs of an organization.  With a very large percentage of available jobs not advertised to the general public, other job search techniques should be considered.  Visit places you would like to work and make face-to-face contacts.  Consider every type of organization for available positions.  Develop a job description outlining the skills you can offer.  Work as many hours a week getting a job as you expect to work on the job. Applying for Employment   The résumé, a summary of education, training, experience, and qualifications, provides prospective employers with an overview of your potential contributions to an organization. A cover letter is the correspondence you send with a résumé to communicate your interest in a job and to obtain an interview. 4  The interview is the formal meeting used to discuss your qualifications in detail.  Employment-related experiences may be obtained through an internship program cooperative education, volunteer work with community organizations, class assignments, and campus activities. Helpful career information sources include library materials, newspapers, magazines, the Internet, career development office, community organizations, professional associations, and business contacts. The cover letter points out and expands on specific training and experiences listed on the résumé that are important in the employment position for which a person is applying.   5 Section 2.4 Carefully assess the organization, the specific employment position, and the salary and other financial benefits when evaluating an employment position. Accepting an Employment Position  Before accepting a position, you may want to do further research about the job and the company.  You should look into company policies and procedures. Evaluating Employee Benefits  Financial benefits may be viewed in three time frames: 1. Immediate, or short-term, benefits include salary and other monetary payments. 2. Interim benefits include holidays, vacation, insurance, tuition reimbursement, and discounts. 3. Long-term benefits involve profit sharing and retirement programs.  Your initial salary will be influenced by your education and training, company size, and salaries for comparable positions.  Performance quality and work responsibilities are main influences on salary advances.  Cafeteria-style employee benefits are programs that allow workers to base their job benefits on a credit system and personal needs; the system allows flexible selection of employee benefits. Note: Financial Literacy for My Life demonstrates how some companies are offering creative employee benefits.    Many organizations offer flexible spending plans, also called expense reimbursement accounts. This arrangement allows employees to set aside part of their salary for paying medical or dependent care expenses. Two methods may be used to assess the monetary value of employee benefits: 1. Market value calculations determine the specific monetary value based on the cost if the employee has to pay for the item. 2. Future value calculations can enable you to assess the long-term worth of such employee benefits as pension program and retirement plans. A tax-exempt benefit is one on which you won’t have to pay income tax, but a taxdeferred benefit will result in the payment of income tax at some time in the future, such as at retirement. Your Employment Rights  You have various legal rights both during the hiring process and on the job; these include: o No discrimination in the selection process. o Minimum wage and overtime pay in certain situations. o Worker’s compensation, Social Security, and unemployment insurance. 6 Section 2.5 Every day of your work life, you can perform duties that will contribute to your career success. Communicating and working well with others will enhance your chances for financial advancement and promotion. Training Opportunities  Society requires a continual updating of information and skills.  Various methods for updating and expanding your knowledge are available. o Formal methods include company development activities, seminars offered by professional organizations, and graduate and advanced college courses. o Informal methods for obtaining knowledge include reading and discussion with colleagues. Note: Exhibit 2-5 visualizes the stages of career development. Career Paths and Advancement  Like any other financial decisions, previous employment decisions must be reevaluated in light of changing economic and social conditions.  A successful technique for coping with the anxieties associated with career development is to gain the support of an established person in your field. A mentor is an experienced employee who serves as a teacher and counselor for a less experienced person in a career field. Changing Careers  Changing jobs may be more difficult than selecting your first job. Indications that it is time to move on include: o Weak motivation o Emotional distress o Poor performance evaluations o A lack of social interactions o Limited opportunity for advancement o A poor relationship with your superior