SOME young adults can count on their parents to meet the cost of their tertiary education. Others have to work and save towards the cost or seek loan funding.
The Student Revolving Loan Programme provides low-cost funds. Government and other funding agencies may provide scholarships, grants or low-interest loans. Commercial banks can also provide funding just as they would to a small business. An example can be given of a graduate teacher who was desirous of undertaking a MBA. He prepared a detailed project proposal and approached a commercial bank.
Within a week, he received approval of the loan needed with a two-year moratorium on repayment of the principal. The bank manager had been impressed with the initiative and innovation of this applicant.
This kind of approach to career advancement will be even more relevant in the years ahead. Your career will be your own small business. Unfortunately, the cost of training is increasing daily and many employees are daunted about taking any funding responsibility.
When the employer meets the cost of training and development, there are usually conditions attached – say, a bond to return to the company, the employer requiring access to examination results, or the employer circumscribing the training specifically to the needs of the company.
Whatever the conditions, they must be weighed against the potential to realize a better return, and greater flexibility through full or part self-funding.
Self-funding gives the employee full scope to explore the potential of the services he will eventually offer. There may be flexibility to work for another employer or for oneself, to emigrate or to offer a contract for services arrangement.
Also, additional training will not always mean higher pay. More and more in the future, additional training will be absolutely essential to retaining even the current job. There will be many other small businesses out there trying to get their services sold, too. It takes time to recover the returns on the investment in training. That brings to the fore an important consideration – insurance coverage. The potentially high cost of training may be lost if the trainee suddenly or prematurely dies or becomes incapacitated. It is therefore important to insure this asset represented by the trainee and his health.
Term insurance is relatively cheap and can serve the purpose for life insurance during the training and for the first few years after completion.
In some cases, training will be undertaken that offers the trainee a leapfrog movement in career. It is usually easier to see the return on investment in such situations. However, even where there is no significant movement in an individual’s career, additional value may be created by the very firm being able to survive or to operate at a different level as a result of the new contribution.
Incremental income may justify the investment, but increased job security, job competence and the reduction of on-the-job stress will also be measures. Â
• Louise Fairsave is a personal financial management advisor, providing practical advice on money and estate matters. Her advice is general in nature; readers should seek counsel about their specific circumstances.
