In Singapore, all of us understand that education is important. In spite of what the government says, paper qualification cannot be ignored. The best jobs in the market are very often awarded to students from prestigious universities with relatively good grades.
A 2014 Fortune article highlighted the fact that 40% of S&P 500 CEOs have a Masters in Business Administration (MBA) in any given year. If moving up the career ladder sounds like something you are striving for, then getting an MBA should be on your to-do list.
Here are 5 steps you need to consider and plan for if you intend to pursue your MBA.
Step 1: Choose a realistic basket of Universities to obtain the MBA from
This is the first and toughest step to take. Unlike other specialized masters such as MSc in Finance, Engineering, Computer Forensics, etc, an MBA is more of a networking and an idea exchange program, where great minds are put together in a confined location to create the next big idea or solve the next great obstacle.
Knowing what we really want going forward is critical for the choice of the university offering the MBA. For finance related careers, we would generally look at universities like the University of Pennsylvania (Wharton Business School), New York University (Stern Business School) or London Business School.
For entrepreneurs, the likes of Harvard Business School, Massachusetts Institute of Technology (Sloan School of Management) and Insead Business School would make sense. For an all-rounder MBAs, we can look at our local universities such as National University of Singapore (NUS Business School) and Nanyang Technological University (NTU Business School).
There are multiple other business schools that offer really good programs (Cambridge University, Oxford University, KAIST, University of Hong Kong and Tsinghua University) that we can also choose from.
Your ideal destination for future work or entrepreneurship should also play a part in your decision. For instance, if you intend to progress further into China and Mandarin-preferred corporations, a prestigious Chinese university would be a good choice.
Step 2: Know the difference between actual cost and opportunity cost of the MBA
Knowing the actual cost of an MBA is easy. You just need to spend 15 minutes searching on the Internet for the tuition fees and expected living expenses for the universities that you are keen on.
At the lower end of the spectrum, living expenses, books and MBA fees would
|NUS (Asia)||SGD 75,500|
|Cambridge (Europe)||SGD 120,700|
|Cornell (USA)||SGD 185,300|
The above costs are subjective and would vary depending on the lifestyle you live. Nonetheless, they should give a relatively good gauge on how much we should expect to spend on an MBA.
Be mindful that MBA tuition fee goes up annually due to increasing cost faced by the business schools (an average of 3% increment on average per year).
The tough part would be to understand what the opportunity cost is. For guys in Singapore, TIME is of the essence, having already spent two precious years of our life performing national service, taking a two-year will prove to be another huge expense we might not want to incur.
Furthermore, the loss of income during those two years taking our MBA needs to be considered. Be mindful that the loss of income is exponential, because the potential CPF contributions from our employers of 17% of gross monthly income as well as the CPF interest gain of 2.5% – 5% would be something that we will forgo.
Step 3: Decide when we will take our MBA
Most prestigious MBAs require a minimum of 2 years of working experience. However, the sample size from universities shows that most of them have students that have about 3 years or more worth of working experience.
We can then ask how many years we need to prepare ourselves to undertake another milestone in life. Remember, other areas of your life such as getting married or even having kids would need to weigh in heavily on your decision.
Step 4: Starting a savings regime
With an end goal of $X in mind, we can now put in place a saving regime. Back calculate how much we might need in X years time. From there, we will be able to calculate how much we need to set aside monthly from our paycheck to ensure we will lead a dignified life as a student again.
Always be realistic and truthful with how much we can save every month. With the cost of MBAs nowadays, we can safely say that the annual bonuses that we might obtain will need to be entirely thrown into our tuition fund.
For the years up until the MBA commencement, we would advocate that we should spend as little as possible and save up as much as possible. There goes our Starbucks coffee, after-work beers and lavish restaurant outings.
Step 5: Relook at your goal and plan annually
The last thing we would want is to realize that at the end of X number of years, we do not have enough to save for the MBA of our choice, even when we are able to enter that year’s MBA class.
Revisit the website to obtain the latest details of the MBA, to see whether have the focus and cost changed. This will help in repositioning our choice of MBA that we made a year(s) ago.
In a nutshell
If looking at the sample universities and cost above have not scared you, then you are either very well prepared, or have no idea about the magnitude of the task ahead of you.
Early planning and decision-making would be critical. Even if you ultimately don’t pursue the MBA, you will at least end up cash rich.