Author Topic: Does an MBA make sense?  (Read 2103 times)

mr.mac

  • 5 O'Clock Shadow
  • *
  • Posts: 10
Does an MBA make sense?
« on: January 07, 2022, 11:24:16 PM »
I know this is a broad question but I wanted to ask it.  Does an MBA make sense from a Mustachian point of view?

Part of the reason I ask is because they are very expensive (at least in the US) but can lead to a high salary for years to come if one is strategic about it.  I think a lot of this depends on the school, person, and industry they work in.

My opinion has always been that if it can be done part time while still working and from a good school it can be worthwhile but if it leads to excessive amounts of debt, no.

I'm curious what your opinions are.

Ron Scott

  • Bristles
  • ***
  • Posts: 286
Re: Does an MBA make sense?
« Reply #1 on: January 08, 2022, 03:13:45 AM »
I know this is a broad question but I wanted to ask it.  Does an MBA make sense from a Mustachian point of view?

My opinion has always been that if it can be done part time while still working and from a good school it can be worthwhile but if it leads to excessive amounts of debt, no.

I think you nailed it 👆and the fact that you are even asking this question provides part of the answer.

Investing in yourself, in your education, is invaluable.

Arguments can be made that advanced degrees like MBAs are becoming less desirable because of Covid, cost, and the time required. I donít buy it.

Education typically yields more employment options, better jobs, higher pay, and network connections that can help you for years to come. An MBA is not a panacea or a guarantee of success. But if pursued intelligently it can certainly increase your odds of finding rewarding work you enjoy vs. a 9-to-5er you canít wait to quit in the name of FIRE.

FI and RE have very large, very personal $$ and time ranges. I would rather wait to make decisions on both of them with an MBA under my belt and the better opportunities it can afford ahead of me.

Dreamer40

  • Bristles
  • ***
  • Posts: 260
  • Location: Portland, OR
Re: Does an MBA make sense?
« Reply #2 on: January 08, 2022, 04:00:20 AM »
I think an MBA can be valuable if you go into it with clear goals and make the most of it. Like leverage that time to network extensively and know what kind of business you want to get into. I know someone who focused on commercial real estate and tailored his time in the program to getting himself in a position to start his own large and successful company within a few years of graduation with a fellow student. He worked his butt off to make that happen. Other people probably passively absorbed the coursework and still have jobs that look more like internships or entry level corporate gigs that donít necessarily require an MBA. Getting some business experience before starting a program like this could be useful to help identify what someone hopes the degree and program will accomplish. And then talk to enough experienced people to make sure that the expectations line up to some extent with the likely reality.

BeanCounter

  • Handlebar Stache
  • *****
  • Posts: 1634
Re: Does an MBA make sense?
« Reply #3 on: January 08, 2022, 06:46:30 AM »
I think people have to be very careful with MBAs. They frequently can be much to broad to directly contribute to better jobs. IMHO it's best to work in industry for awhile and have a clear idea of where you are trying to go and why or how an MBA would contribute to that. And if at all possible get your employer to pay for it, or a portion of it. If an employer is willing to do that, they are invested in you and they see how furthering your education will contribute to their organization.

I took enough graduate classes to sit for the CPA and then decided that finishing my MBA wouldn't add much to my CV. Before I FIRE'd I was being pursued by my organization for CFO roles and not having an MBA never came up. The CPA and years of experience and time with my employer were enough.

My husband on the other hand wanted to make a job change after about 10 years in one industry. He took a job at a University and started working on his MBA for free. He then became department head at the University. Higher Ed wants all of it's leadership to have advanced education and he would not have been promoted without his MBA. He also did a lot of networking while taking classes for his MBA and could have left the University for other jobs. But again, he knew exactly what he wanted to pursue and how his MBA was going to help with that.

It's more about having a clear career path and an idea how the MBA with contribute. The piece of paper itself is pretty meaningless.

Greystache

  • Pencil Stache
  • ****
  • Posts: 542
Re: Does an MBA make sense?
« Reply #4 on: January 08, 2022, 07:39:15 AM »
I got a graduate degree (MS not MBA) while I was working full time. My employer paid 100% but the tuition payments were taxed as income so I paid taxes on my tuition. I was able to go to classes at a remote location near my office. I never set foot on campus which was 10 miles away. It was a very expensive degree from as well regarded private school (University of Southern California). I think it was worth it. It resulted in a pay raise immediately after graduation. It was a special program designed for students who were working full time.  Having said all that, I don't think I would have done it if I had to pay my own way.  I just didn't have the money as young professional with a hew mortgage and a kid on the way. 

mtnrider

  • Bristles
  • ***
  • Posts: 464
  • Location: Frozen tundra in the Northeast
Re: Does an MBA make sense?
« Reply #5 on: January 08, 2022, 09:38:18 AM »
Does an MBA make sense from a Mustachian point of view?

My experience is that an MBA from a top tier school (think Harvard) will open doors.  You might well end up doing management consulting, and working for a company like McKinsey.  I've had two colleagues who got bored with engineering (say what?!) and did this.

Dip into the lower tier schools and it might make a small difference between otherwise equal candidates looking to move into a low level position.  If you have a passion for business or management, go ahead.  As others have said, I wouldn't suggest taking on debt for this option.  Even if it were paid by your current employer, consider the opportunity cost in time (60 credit hours).   If you're only looking for a higher salary, marketable hard skills are a surer bet. 

jps

  • Bristles
  • ***
  • Posts: 256
Re: Does an MBA make sense?
« Reply #6 on: January 08, 2022, 10:40:16 AM »
I just got one (employer paid) from a school that isn't top 20 but nationally known for a sport, and looks like has landed on some US News Best Graduate School lists in the top 50 for their MBA. That being said, if it weren't free I wouldn't have considered it worth my time to pursue. I would say that around 70% of the people in my classes had finished their undergrad within the last 12-18 months and had started the MBA program instead of finding work after college. I imagine that the schools like Kellogs, Sloan, or Tufts, or wherever else, are a different story.

In the year that I finished my MBA, my salary happened to grow about 40%, but I find it hard to correlate that with the MBA. I'm glad that I did it, because for whatever reason it had always been a goal of mine to get one, but I would say that unless you have a clear path picked out where its needed, or your employer will pay for all/most of it, it might not be worth your time. Or, if you get in to a T20 program then it could be worth it too.

DeepEllumStache

  • Magnum Stache
  • ******
  • Posts: 4007
  • I came, I saw, I made it awkward
Re: Does an MBA make sense?
« Reply #7 on: January 08, 2022, 12:56:47 PM »
It depends on what you want from your life, the type of person you are, and the type of risk you're willing to take.

Top tier schools are high risk, high reward but the brand name will open doors for you. You will pay heavily for the privilege but for those wanting high level consulting or Wall Street, it can be the only realistic choice.

I went to a second tier, "value for the money" type program that boasted 100% placement. They offered a substantial scholarship. Some classmates landed lucrative jobs but they hustled to get those. I used the degree to change careers into something I loved. In my company, it's much harder for those without MBAs to get hired and it's typically at 2/3 the salary of what those with MBAs receive. Low risk, medium reward.

My sister is the other side of the argument. No MBA but has gotten a bunch of promotions to run a large organization and now earns more than I do. She worked her way up from a temp admin position in a tech company despite having a liberal arts undergrad. Her bosses have had the "you need to consider an MBA to get into the C-suite" type conversations with her but she's still deciding if it makes sense for her.

DaTrill

  • Bristles
  • ***
  • Posts: 297
Re: Does an MBA make sense?
« Reply #8 on: January 08, 2022, 12:59:09 PM »
If you are under 35 with 5 years professional working experience in some desirable field (Acct/Eng/FIN/Programming), the program is top 20 in person (not one of the many alternative MBA programs within universities) in all rankings and is paid 100% by employer, then it is most likely worth it from many aspects. 

If you are over 35, you don't have experience is a desirable field (HR/Management) the program is a marginal state school or lower and is only partially subsidized by employer, it might be a good time sink, but worthless from a career and FIRE perspective.

You also need to know if they tuition payment will be considered "income" and then be taxed.  If tuition is $100k and you are already making $100k, you may incur an extra $30k in taxes for a "free" MBA (happened to me).     

MoneyTree

  • Bristles
  • ***
  • Posts: 277
  • Location: SF Bay Area
    • Journal - The Best Time to Plant a MoneyTree
Re: Does an MBA make sense?
« Reply #9 on: January 08, 2022, 07:05:22 PM »
I have an MBA from a mid tier school. I did it part time while working.

The answer may be different depending on the individual and the circumstance, but in my opinion it was not worth it the money.

Made a few connections, but none of them immediately made any impact on my career trajectory, and we lost touch after a few years anyways.

This was well before I discovered MMM and the world of FI, but it definitely set back my FI timeline by a few years.

That said, I canít for sure say that things would have been better if I hadnít gotten the MBA, you never know how things would have played out, but would I recommend it? Hard no. 

Chris Pascale

  • Pencil Stache
  • ****
  • Posts: 807
Re: Does an MBA make sense?
« Reply #10 on: January 08, 2022, 07:47:36 PM »
I got my MBA while working full-time, having another remote contract job writing advertising copy, and completing a certificate program in another graduate school.

While in the program my long-term project was working on buying the company I where I was working. It was through the MBA that I realized, and forced the conversation with my boss, that I would never be able to buy it. The owner wasn't going to make the kind of deal that would allow this to happen, but had I not been in the program, I'd have stayed longer than I should have. Instead, I left and went back to the federal workforce in March, 2016.

I graduated in May, 2016, and in November of that year a job posting only available to recent grads came up on USA Jobs. I went from $44k while working a shift that ended t 1:00 AM to $57k working 6:30AM-3:00PM. A year later I got a built-in promotion making $69k. In the federal workforce an MBA can have value to hiring managers who value educated people, and there appear to be enough of them because I went from $44k in 2016 to $110k in 2022.

Obviously, being aggressive in applying for promotions made a difference for me, and it helps that so many people are leaving the workforce, but a piece of the puzzle is my MBA.


Chris Pascale

  • Pencil Stache
  • ****
  • Posts: 807
Re: Does an MBA make sense?
« Reply #11 on: January 08, 2022, 07:49:51 PM »
If you are under 35 with 5 years professional working experience in some desirable field (Acct/Eng/FIN/Programming), the program is top 20 in person (not one of the many alternative MBA programs within universities) in all rankings and is paid 100% by employer, then it is most likely worth it from many aspects. 

If you are over 35, you don't have experience is a desirable field (HR/Management) the program is a marginal state school or lower and is only partially subsidized by employer, it might be a good time sink, but worthless from a career and FIRE perspective.

You also need to know if they tuition payment will be considered "income" and then be taxed.  If tuition is $100k and you are already making $100k, you may incur an extra $30k in taxes for a "free" MBA (happened to me).   

This was me. I got the MBA in accounting at 34. I work in accounting.

Homer

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Does an MBA make sense?
« Reply #12 on: January 09, 2022, 08:06:31 PM »
I am a partner at one of the firms that hires LOTS of high end MBAs. If you are interested in investment banking, hedge funds, private equity at the larger firms, or premium management consulting, AND YOU ARE NOT ALREADY IN THOSE INDUSTRIES (e.g. in junior associate positions) then the MBA from a top 10 school is likely the only way into those careers. And if those are the things you actually want to do, and you can get in, then for sure the financial payback is excellent (e.g. most IB and consulting jobs have great starting comp, and grow ~10x in comp over the first 10 years of the career path, assuming you manage to stay that long (most donít)). If you are a junior associate in one of these firms and a strong performer it is much easier (in many firms) than it was 30 years ago to move up without getting an MBA.  Out in the corporate world, you can move up into most corporate jobs without an MBA just by performing and being ambitious, but you may not have as easy access to management rotation gigs for example. It is not at all clear to me that second tier MBA programs have a lot of value in terms of ďcredentialingĒ, and most of the material you can pick up on your own through individual reading / studying.

Blissful Biker

  • Bristles
  • ***
  • Posts: 392
  • Location: BC
Re: Does an MBA make sense?
« Reply #13 on: January 18, 2022, 10:14:40 AM »
In my opinion an MBA makes sense only for the love of learning.  And don't get me wrong, there's real value in expanding your mind and growing intellectually.

But from a FIRE perspective I wouldn't recommend it.  I am an engineer who rose through the ranks without an MBA and now have several reporting to me.   Good people but their contribution isn't markedly different based on having an MBA which is reflected in their salary.

Anon-E-Mouze

  • Stubble
  • **
  • Posts: 171
Re: Does an MBA make sense?
« Reply #14 on: January 18, 2022, 11:01:54 AM »
It is also worth considering if there are any post-undergrad / Master's level certificates in more focused areas of interest that would be worthwhile to you.  These can also potentially be a good option if you're looking to pivot a bit in your career or go into greater depth in some areas, especially if they're reasonably priced. They usually take much less time, too (maybe a 6 month-1 year commitment) and can be helpful in later stages of your career.

There also may be high-value certifications that could be worth getting in some fields. But you need to do your research (e.g. what do people ahead of you in your field have in terms of credentials)? What are the job ads specifying?

For example, the CFA (Chartered Financial Analyst) designation is practically a prerequisite for a career as an investment portfolio manager (or similar role) in the financial industry.  If you're interested in managing projects, a PMP certification is helpful. Both of these are much less expensive than doing an MBA (although completing the 3 levels of the CFA will cost you in terms of blood, sweat and tears).

There also are MBA-type programs that are worth considering in different fields. My husband got an executive Master of Science in Technology Management degree from Columbia University.



trollwithamustache

  • Handlebar Stache
  • *****
  • Posts: 1086
Re: Does an MBA make sense?
« Reply #15 on: January 18, 2022, 12:27:04 PM »
If you are paying for it, its gotta be a top 10 school. Mucking around even in the 11-15 may not be worth it, there is just such a huge drop off in quality.

if your employer will pay for it, go for it then it doesn't matter.

Car Jack

  • Handlebar Stache
  • *****
  • Posts: 2059
Re: Does an MBA make sense?
« Reply #16 on: January 18, 2022, 03:07:37 PM »
Depends why you're getting the MBA, how you're getting it, where you're getting it and who's paying for it.

The traditional top high school student getting a Bachelors with 4.0s then on to a top school MBA and being at the top of class is the ne plus ultra, big dollar achiever that all the employers are going to chase after.

The second focus I've watched are in my field.  Engineering.  Engineers who have either become managers or want to become managers go nights to Knowledge Kollege (basically whatever school is close and has night courses), get company tuition re-embersements, then when the MBA comes, they have more credibility moving up in the company management ladder or moving to another similar job.  I know many engineers who have done this. 

There are certainly a ton of other scenarios.  Heck, financial advisors, CPAs, and marketing people might benefit from an MBA. 

If you don't have a specific target, then don't.  Unless, of course you can do the tuition re-embersement and don't mind some years of night classes.

SESW Tech

  • 5 O'Clock Shadow
  • *
  • Posts: 17
  • Age: 42
  • Location: Corona del Mar, CA
Re: Does an MBA make sense?
« Reply #17 on: January 19, 2022, 09:29:44 AM »
Does an MBA make sense from a Mustachian point of view?

My experience is that an MBA from a top tier school (think Harvard) will open doors.  You might well end up doing management consulting, and working for a company like McKinsey.

I think this nails it.  If you go to Harvard, Stanford, and maybe a few others (Wharton, Tuck, maybe 1 or 2 more), then it can be a great investment - very realistic to make $1M+ in private equity or similar.  Also, I would only do this if in mid-20's.  If you get into your 30's, the career boost is lower and opportunity cost is higher.

Chris Pascale

  • Pencil Stache
  • ****
  • Posts: 807
Re: Does an MBA make sense?
« Reply #18 on: January 21, 2022, 11:08:35 AM »
Does an MBA make sense from a Mustachian point of view?

My experience is that an MBA from a top tier school (think Harvard) will open doors.  You might well end up doing management consulting, and working for a company like McKinsey.

I think this nails it.  If you go to Harvard, Stanford, and maybe a few others (Wharton, Tuck, maybe 1 or 2 more), then it can be a great investment - very realistic to make $1M+ in private equity or similar.  Also, I would only do this if in mid-20's.  If you get into your 30's, the career boost is lower and opportunity cost is higher.

I know a guy whose firm specifically takes interns from Columbia Business School only. Having said that, when I was finishing up at St. Joseph's the dean wanted me to take an interview with a large accounting firm on his recommendation. But it wasn't like St. Joseph's was funneling graduates into high-income positions. I happened to receive the school's top award, had published work, had experience, and was both at the IRS and had just been the CFO of a fairly large charity (large enough to be audited).

And that's the difference. You go to an ivy league school, they say to the top 10%, "come down this golden path." You go to your local school while working 2 jobs and your truck's heater doesn't work, and you have to be a star who also catches the eye of someone willing to take a chance on you.

marcus_aurelius

  • 5 O'Clock Shadow
  • *
  • Posts: 46
Re: Does an MBA make sense?
« Reply #19 on: January 21, 2022, 12:06:06 PM »
The following advice comes from my real life experience. I went to UC Berkeley at age 33 to get a part-time MBA. It was one of the best decisions ever.

  • The ROI from a top 10 school can be very high. I will stay away from lower-ranked schools (say, below rank 15). My income went from ~$85K to ~$180K within a few months of graduation. This was in 2008.
  • The degree itself has a short shelf life. If youíre doing it to change careers (I wanted to go from software engg to marketing), you should do it quickly, ideally during the MBA or right after. I know people who did their MBA to get into Top 3 consulting or investment banking but didnít move fast enough, and were unable to make that move later on.
  • For a top 10 school, I think a loan may be worth it but of course depends on the interest rate and your circumstances. In my case, my employer paid, so it was a no-brainer.
  • The actual knowledge itself is not useful. You can get a few books on marketing, accounting for $100 and read them, but the network from a Top 10 school will open doors for you in the future.
Hope this helps! Ping me if you have any questions.

Viking Thor

  • Stubble
  • **
  • Posts: 166
Re: Does an MBA make sense?
« Reply #20 on: January 21, 2022, 01:26:08 PM »
I did a full time MBA 20 years ago and it was good for me but I wouldn't recommend now.

In my case I was early career and post MBA  got a high paying job at a Mega Corp that otherwise I couldn't have obtained. At least not without a lot of years working toward.

Now you don't typically need an MBA to get good mega Corp jobs. It just gets you like one rank higher than undergrad level, and that step you could make just by working there a couple years.

And once you have the entry job no one cares if you have an MBA or not. They care only about job performance.

I think the value of an MBA has declined from what it used to be.

w@nker

  • 5 O'Clock Shadow
  • *
  • Posts: 38
Re: Does an MBA make sense?
« Reply #21 on: January 22, 2022, 07:10:56 PM »
Ivy League MBA changed my life, and I would do it all over again.  Absolute no-brainer.  If you arenít looking at a top 10 program, though, you need to think through the scenarios and recommendations being made above.  The value and ROI starts fading as the pedigree value fades.  There are very good comments in this thread.