Getting your CPA sets you ahead of the pack of prospective accountants and results in greater job opportunity. With this comes an increased salary. But how much? The real question is not if it will result in bigger paychecks, but if those paychecks end up being worth the time, effort, and money put into the process. Your career revolves around making good financial decisions, so it only makes sense for you to determine the value of getting your CPA license. It seems pretty cut and dry when you look at the total sum of money. But, you should also consider where you are at in your career, your age, what opportunities for upward mobility already exist, what sacrifices will need to be made, and what your goals are to decided it it's right for you.
Some advice from the Journal of Accountancy might help. They said:
Knowing the net present value (NPV) of obtaining a CPA license is important for those who are considering sitting for the CPA exam and for those mentoring new hires in their companies.
With that in mind, consider these things:
What will you put in? What will you get out?
You will want to know for yourself, or for those your company is bringing in, how the long-term payoffs of obtaining your CPA license are likely to play out given any particular circumstance. These decisions can be hard to make because of the number of different factors put into the equation. Of course, there is the daunting amount of study time required, the money spent on CPA Exam review, the sacrifices made in free time, and the inevitable decrease in the time spent with family and friends for a while. This is going to take weighing out the options of what you want at the moment (short term goals and enjoyment of life now) vs. what you want the most (long-term goals and possible fulfillment). Asking yourself if the end result justifies the sacrifice for you is a good place to start. The quality of life and income are likely to go up when you obtain your CPA license. However, will it be worth it for you?
The number, flat out.
That is the net difference a 22-year-old can expect to make on top of what they would have if they did not get their CPA license and worked in a small company until the age of 65. The actual average boost in salary is $220,242, but after deducting the cost of taking the exam and retaining the certification of CPA, you get $129,449. This is all according to "Assumptions for lifetime NPV of passing the CPA exam" in a write-up from the JoA (you can read it in its entirety here.) They also say these estimates are conservative and the actual increase in lifetime wages could be higher. Keep in mind these costs may be offset if an employer is willing to cover the incurred costs or further incentivize employees to attain the CPA license.
It takes around 400 hours of study time to pass the CPA Exam, which comes by way of a lot of sacrifices. It can be done in a short period, or spread out depending on the person taking the exam. The guideline set by the AICPA is 18 months, or you will need to repeat previously passed exams. Do the math and you'll see a profit of about $324 per study hour when you break down the lifetime net-value of a CPA license. That does make studying a little more appealing.
How much longer will your career be?
This is where things get a little tricky. A 38-year-old professional who gets his/her CPA license still significantly increases his/her earning potential but is taking more time off in his/her career when her/she are already earning more money than a professional at an earlier stage in his/her career. Also, upward mobility or the opportunity to work for a larger company where salaries are increased could also happen earlier in the corporate ladder of your career./2017-cpa-exam-testing-windows-and-score-release-timeline
Are you going to retire?
One big thing to consider is that those increased wages could allow the 22-year old who got their CPA license to make the same amount of money as if they didn't, but will be able to do it 2.7 years earlier in their lives.
The numbers speak for themselves, but the decision is going to come down to each person weighing the options of their life and career. If you need any help or input, feel free to talk to one of our CPA Counselors live right now by clicking on the dialogue box in the lower right-hand corner of your browser!
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