Getting your personal finances in order before you go to business school could be the single best move you can make besides getting accepted.
Going back to business school is not an inexpensive endeavor. Not only are you without any income for two years (after all, schools will not allow you to carry any kind of employment engagement as a full time MBA student), you are also paying through the nose for a top-notch business education.
The typical MBA student is not very well-positioned for financial success.
Most professionals in their early to mid-twenties are not all that worried about personal finance. After spending four or six years as an undergrad eating Ramen noodles, they are now busy spending all that new, post-undergrad pay. The temptation of a new car or nice apartment is difficult to pass up and thanks to creative financing, zero-percent interest and no-down-payment leasing options, everything from furniture to electronics become easy to obtain.
The availability of easy credit is far and away the worst offender of personal finance woes.
Credit card debt climbed steadily from the late 70’s all the way to the great recession in late 2008, but guess what? It’s on the rise again, and has surpassed the total outstanding consumer debt level that we had achieved before the bubble burst. If you know anything about the markets, this should be a huge cautionary sign. After over 125 consecutive months of economic expansion (the largest in US history), it’s inevitable that some kind of correction is coming.
The good news is, new MBA applicants have plenty of time to get their proverbial house in order.
Start by paying off your credit card debt. It’s likely you will take on debt in grad school, so bringing debt into the equation is just a bad idea. Period. Another thing you can do is to defer your current student loans. Postponing payments on your existing loans can help you manage your finances better when your income shuts off. Just remember that while student loan payments can be deferred, the interest still accrues. When you graduate, however, you can possibly consolidate both student loans together for one easy payment.
Saving money is old-fashioned. And highly recommended.
The best way to get your personal finances in order before business school is to simply save money. Stop going to Starbucks and put the money in a jar. Sell you car and buy a beater you can get around in for three years. Move back in with your parents until you take off for grad school. Do whatever you can to sock away cash. You’ll need it.
The most important reason to get your finances in order? The credit check.
The first thing potential employers do in the hiring process is to do a credit check. If you carry a poor financial situation into grad school, it’s only a flash before your next employer is inquiring into your balance sheet. Not only are you interviewing within months of starting an MBA program for an internship, it’s often the same company who will be offering you a full time job, so there is very little time once you start school to make improvements.
For information on how we can guide your business school application process, email us at mba@amerasiaconsulting.com or go to http://www.amerasiaconsulting.com/contact