14
Buffett's Tips for College

“The best education you can get is investing in yourself.”

—Warren Buffett, Speech at Ivey Business School, 2012

Introduction

According to Buffett, selecting a career and a spouse are the two most important decisions you'll make in your life. We'll focus on the career advice, although Buffett has weighed in on the marriage topic too. His advice? Marry someone who is a better person than you and who agrees with you on important points. In this chapter, we'll focus on college-related issues. For most people, starting a career begins after college, so we'll cover this important life decision in the next chapter. Roughly 70% of high school graduates attend college. Buffett has a lot to say on college and careers, and his comments will act as the backbone of this and the next chapter. For example, Buffett has said, “The best education you can get is investing in yourself.” That merits a Tip in our book, literally.

College: The Basics

Buffett readily admits that college isn't for everyone, but the odds are it will help greatly if you want a high-paying and/or intellectually challenging job. We briefly touched on this topic in Chapter 1 when we noted that income typically increases with your education level. Or, as Buffett liked to say in the Secret Millionaire cartoon series, “The more you learn, the more you earn.” (Tip 3)

College is a huge financial commitment, with many private colleges “all in” (i.e., tuition, housing, food, books) costing well over $75,000 a year. Multiply that by the typical four or five years that most people take to complete an undergraduate degree, and you get an astronomical $300,000 to $375,000 expenditure, assuming no financial aid from the school. Fortunately, two-thirds of students get some sort of financial assistance, and public colleges are often a high quality, cheaper option. We'll cover some of the sources of financial aid in this chapter, as well as discuss the different types of colleges. But when you're talking about six-figure expenses, it makes you pause and think if taking the money earmarked for college and putting it in the stock market, or some other investment, would result in a better long-term result.

We're writing this section under the assumption that college is in your future, regardless of your age. Graduate students often range in age from early 20s to 50-plus. But we know that college isn't for everyone. Some join the military right out of school, choosing to serve their country while gaining valuable skills and leadership experiences. Others become entrepreneurs and create and run their own businesses right out of high school. This was Buffett's preference, but he attended college on the advice of his father. In Chapter 1 we noted Buffett's early businesses ventures related to pinball machines, newspaper routes, farmland, and a gas station, all of which may be viewed as entrepreneurial activities. Yet others might be best served learning a trade (e.g., electrician, plumber, mechanic, chef) either through an apprenticeship or a trade or vocational school. It's a popular career path in Germany and has shown great results for that country, which often ranks among those with the lowest unemployment rates in the world.

An apprentice is someone who learns a craft by working side by side with an expert for a number of years. A trade or vocational school is focused on practical courses and the hands-on experience learning a specific trade. For example, if you want to learn how to be a mechanic, you might take some courses related to different systems of a car and work on cars as part of a practical lab experience. At these schools, you're less likely to take courses on English literature or advanced mathematics. Those attending a trade or vocational school typically spend one or two years there, in contrast to the four or more years at most colleges. We're not going to make much of a distinction between a college and university. A university typically offers several advanced degrees (i.e., master's and doctoral) programs and often places greater emphasis on original research. Most undergraduate degrees are called bachelor's degrees. The term has nothing to do with being single! The two most common bachelor's degrees are a bachelor of arts (BA) and a bachelor of science (BS).

A community college offers a two-year degree program, usually called an associate's degree, at a fairly low cost. This program takes two years for students attending full-time; of course, you may attend on a part-time basis as well. Community colleges are sometimes called junior colleges, JC, or JUCO for short. Most community colleges are state owned and cost a fraction of the amount of even low-cost public colleges. The figures can differ widely by state and college, but a ballpark estimate is that many community colleges cost about $3,000–$4,000 a year in tuition and fees. The acceptance rate is typically close to 100% for most JUCOs.

Most community colleges are geared toward students who live at home and who commute to school. Many students who complete their associate's degree move on to a four-year college. Most or all of the credits typically transfer to the new college, although this policy varies widely by school. If all credits transfer, then you could receive your bachelor's degree in the same 4–5-year time period, saving you a bunch of money. But transferring from a community college to a four-year college is not for everyone, despite the likely cost savings. You might have to start over, making new friends and joining student clubs. Many of your peers would have had a 2-year head start in these areas if they joined the college right out of high school. In addition, the admissions standards at most universities are much higher than community colleges, so there may be a transition period getting used to the increased academic rigor.

Getting into a College

Acceptance rates (i.e., the number of admitted students divided by the number of students who applied) range from the low single digits to the nearly 100% acceptance rate at most community colleges. In general, the most competitive colleges look at a range of factors including SAT/ACT scores, high school grades, SAT subject exams, extracurricular activities, volunteer work, and personal essays. If you are applying to graduate school, work experience may also be important.

Before taking the SAT/ACT, many high school students in the US take a precursor test called the Preliminary SAT (PSAT). It's good practice for the “real thing” and, as noted below, high-performing students are eligible for scholarships. Perhaps the most important advice for preparing for standardized tests is the same way you get to Carnegie Hall, arguably the most prestigious place for classical musicians to perform: practice, practice, practice. Practice may literally include taking the practice tests (some prior tests are released), utilizing websites such as Khan Academy, and reading books geared toward standardized tests (e.g., Kaplan, Barron's, or Princeton Review). If money isn't a big issue, you might want to consider taking a formal review course or using the services of a tutor.

There are literally thousands of colleges in the US, and most do a good job for their students. However, you really need to stand out to be accepted at the most competitive schools, including those in the Ivy League, Stanford, MIT, Caltech, the University of Chicago, Duke, and the military academies. This list of highly competitive schools is far from exhaustive. There are a multitude of great schools out there, and some may surprise you. For example, the College of the Ozarks in Missouri has an acceptance rate that rivals many Ivy League schools. Their motto is “Hard Work U” since most students graduate with little to no debt, due to financial aid, including scholarship and work study programs (discussed further below).

The top schools have boatloads of applicants with strong grades and standardized test scores. Extracurricular activities at these schools can make a huge difference. Extracurricular can be anything outside of your regular classroom work including sports, music, theater, community service activities, science competitions, entrepreneurial activities, publications, and a multitude of other activities. Although some schools prefer well-rounded students, others seek students who are what is sometimes termed as a “super spike”; that is, being world-class in some academic or extracurricular activity. There are a couple of other things that could improve your admission chances at competitive schools; one is within your control, and the other may be outside it.

Early decision refers to applying to a single school early (i.e., usually in mid to late October of your senior year of high school). It should be one of your top choices, if not the top choice. You typically receive your acceptance, deferment, or rejection letter by mid-December. The acceptance rates for early admission may be two to three times higher than those of regular admission at the most competitive schools. However, if you are given an acceptance offer, it is a legally binding contract. You should withdraw any pending applications at other colleges. It is unethical and may even result in civil penalties if you enroll at another school after receiving acceptance through the early decision process. In some cases, the early decision applicant is deferred and evaluated with the regular applicant pool and will receive a final decision during the spring. One downside of being accepted via the early decision process is that you can't compare financial aid packages if you are accepted at multiple schools.

Another factor that may improve your admission chances is through what is termed legacy admissions. This involves having a familial relationship at the university. The most common example is having a parent who graduated from the college that you are applying to. The rules vary for different schools, but it could also relate to grandparents, siblings, or other ancestors having attended, or even having a parent serve on the faculty of the college. Legacy admissions tend to be more relevant at private schools, but some schools don't take legacy relationships into the admission process at all.

Graduate School: Optional for Some Jobs, Mandatory for Others

Since we are on the topic of college, it is appropriate to mention a few words on graduate school. After all, Buffett got a master's degree in economics from Columbia Business School in New York City while he was in his early twenties.

Some professions, such as being a doctor, lawyer, or professor, virtually require a graduate degree. For example, practicing physicians in the US are required to have an MD (doctor of medicine) or DO (doctor of osteopathic medicine) degree. Medical school typically requires four years of training after receiving an undergraduate degree. Furthermore, many doctors choose to specialize in a specific area, such as dermatology, cardiology, or neurology. This specialization path usually requires two or more years of additional training. Lawyers in America in the vast majority of cases have received an JD (juris doctor) degree, which usually requires three years of study beyond an undergraduate degree. Professors at top colleges almost always have a PhD (doctor of philosophy) degree, which usually requires three to five years of graduate education to complete.

Graduate degrees in education and business are among the most popular. Obviously, education graduate degrees are popular for teachers and school administrators. Many people in the business world hold a master's of business administration (MBA) degree. Most MBA programs require two years of full-time study, although recent trends have shortened this period to one or one-and-a-half years at some schools. Our advice on graduate school is as follows. Back in Chapter 1 we gave you some stats that showed, on average, the more education you have, the more money you'll make. So you should be biased toward getting further education if money is important to you. Obviously, if you want to pursue a profession that requires a graduate degree, such as being a doctor or a lawyer, you basically have no choice. For other jobs, if your career is going well, you may not need to purse a graduate degree, or perhaps you may pursue it on a part-time basis (i.e., nights, weekends, or online). If you feel stalled in your career or are not getting the job opportunities that you desire or deserve, pursuing a graduate degree may be a good path to jumpstarting your career or taking it to the next level.

If you go down the road of graduate school someday, you should take it seriously, studying extremely hard for the entrance examinations and, of course, after you enroll in your graduate school classes. For example, the MCAT is the standardized test for students pursuing medical school, the LSAT for law school, the GMAT for business school, and the GRE for a range of other graduate programs. You could certainly prepare for these exams on your own, but taking a review course and/or employing the services of a tutor may give you a further edge, as with the SAT/ACT. Not only is there usually a significant cost to attending graduate school (tuition is almost always higher for graduate programs versus undergraduate ones), but you will also likely stop or curtail your job while pursuing your full-time graduate degree, resulting in a double whammy of less income and higher expenses. Attending the best schools will give you a better chance at the most desirable jobs, since companies often limit their recruiting to a small number of target schools.

One more point on education: professional credentials. We strongly encourage you to pursue these if they are related to your desired career. Many professions, besides the obvious ones in medicine and law, offer professional certifications. Lawyers have to pass the bar exam to practice law in a particular state. Patients often look for doctors who are board certified, which requires the passing of certain exams by doctors. Many accountants pursue the certified public accountant (CPA) designation. We noted in Chapter 7 that CPAs are often considered the equivalent of black belts in accounting, and the designation is required to perform certain functions, such as audits (verifying a company's financial statements). Many financial analysts and professional investors pursue the chartered financial analyst (CFA) designation. Obtaining the CFA charter is not an easy task since it involves passing three comprehensive examinations, as well as having four years of work experience in the securities analysis profession.

Paying for College: Scholarships and Grants

The best way to pay for college is by not paying at all. How can you do that? By getting a scholarship or grant. Both are examples of free money, so we won't make much of a distinction between the two. A grant usually comes from some sort of government organization, while a scholarship usually comes from the college, its alumni, corporations, nonprofit organizations, and others. It's not easy to get one, and they can cover anything from a small part of your college expenses to the whole thing (i.e., a free ride). You are probably most familiar with athletes that are given scholarships to play sports, such as football and basketball. Not everyone on a sports team has a scholarship. Those without one are called walk-ons, since they literally just walk on the team after trying out and making the cut. Sports have a way of building school pride and a sense of community. Think Duke University basketball or Alabama or Notre Dame football. There is also some evidence, albeit controversial, that strong athletic programs result in increased alumni donations.

There are many academic scholarships too. Why do schools award academic scholarships? Many schools want to attract the best and brightest students. Many of these students go on to achieve great success. This success attracts other strong students and may also result in alumni donations down the road. Many alumni want to pay it forward, helping others in a similar way that they were supported in the past. We'll expand on these concepts in our last chapter on philanthropy and charity.

A Pell Grant is one of the most common academic grants and is based on financial need. The awards range from several hundred to several thousand dollars. The National Merit Scholarship Program is one of the most prestigious academic scholarships in the US. Its awards are based primarily on PSAT and SAT scores and to a lesser extent on high school grades and extracurricular activities. Awards are typically about $2,500. Students can apply for the prestigious Rhodes, Fulbright, and Gates scholarships, which are primarily for students pursuing international graduate degrees.

How can you find out about scholarships and grants? The college that you attend will often automatically consider you for some once admitted. However, there are many scholarships offered by organizations outside of the college that you will attend. Scholly is one popular app that allows you to search for scholarships and grants that fit your personal profile. This app has indirectly helped students receive over $100 million in scholarship funds. That's a cool app in our book!

Some states, such as New York, offer free tuition for students attending state/city universities as long as you or your parents don't have too high an annual income—currently defined to be about $125,000. There is another catch with the New York program. After graduation you must live and work in New York state for the same number of years that you received the award. If you don't, the award will convert into a 10-year student loan that must be repaid. At least the loan would have to be repaid without interest, a good deal for any type of borrowing activity.

Paying for College: The Three-Year Plan for Super Achievers

Another approach to reducing your college expenses requires a ton of work, at least compared to most of your college peers. Although most students take four or five years to graduate from undergraduate college, a small percentage of high achievers graduate in three years by taking a high course load and/or by receiving credit for a bunch of AP classes. This may be a monumental task for most, but it's a technique worth mentioning, which may reduce your college expenses by 25% or more and get you into the workforce or graduate school a year before most of your peers.

Paying for College: 529 Plans

529 plans are tax-advantaged investment vehicles used for qualified educational expenses from kindergarten through college years. The name comes from Section 529 of the IRS tax code. The gains on the investment accumulate tax free as long as they are spent on qualified expenses. Qualified expenses include things such as tuition, room, board, books, supplies, and equipment. Some states also provide tax deductions for 529 contributions.

There are two types of 529 plans, savings plans and prepaid plans. Savings plans are more common. The money for 529 savings plans is placed into market-based investments. The amount varies with the performance of the underlying investments over time. Prepaid plans are offered by some states to purchase tuition credits (i.e., you buy something today that can be used to pay tuition in the future). They increase in value at the same rate of tuition for that particular college.

The investment vehicles are similar to mutual funds and typically contain a mix of stock and bond investments. As you approach the date that you need the funds (i.e., right before you enter college), many plans shift the investment mix to a higher allocation of bonds since they are less likely to crash over short periods of time. Money to 529 plans can be contributed by almost anyone, including yourself, parents, grandparents, relatives, and some other benefactor. The amount contributed to 529 plans can range from nominal amounts to several hundred thousand dollars. Accordingly, it might be a good, tax-advantaged way to sock away money for educational expenses.

Paying for College: Student Loans

We mentioned that many private colleges cost over $75,000 a year all included. Even families that have diligently saved over the years may not be able to afford all of the costs, after grants and scholarships. Typically, when you apply to college you also fill out a form called Free Application for Federal Student Aid (FAFSA), which helps determine your eligibility for financial aid. Loans are another form of financial aid. The vast majority of loans include interest, so you will pay out in dollar terms more than you have borrowed. A mix of institutions offer loans for both students and their parents/guardians. A recent online article by Forbes found that the average recent college graduate had $38,390 in student loans. That's some serious coin that could pay for a new car or be used as the down payment on a home.

The main US government-sponsored enterprise (GSE) focused on the student loan market is SLM Corporation, formally known as the Student Loan Marketing Association. Its nickname is Sallie Mae. A joke, probably not funny to those with large student loans, is that Sallie Mae is the only college friend you'll have for the rest of your life.

On Sallie Mae's website they provide an overview of the different types of federal and private student loans, the latter of which are usually provided by banks. We reproduce this list below.

Types of federal student loans:

  • Direct subsidized loans are based on financial need.
  • Direct unsubsidized loans are not based on financial need. They're not credit-based, so you don't need a cosigner. Your school will determine how much you can borrow based on the cost of attendance and how much financial aid you're receiving from other sources.
  • Direct PLUS loans are credit-based, unsubsidized federal loans for parents and graduate/professional students.

Types of private student loans:

  • Private student loans are taken out by the student; they're often cosigned by a parent or another creditworthy individual.
  • Parent loans are another way to get money for college. A parent or other creditworthy individual takes out the loan to help their student pay for college.

There are some differences with each of these loans. In general, you should prefer a loan with a lower interest rate, other things equal. In addition to a low interest rate, you should prefer loans where the interest doesn't start compounding until after you have finished your education. That is, with some loans the interest “clock” starts ticking on the day you receive the loan, while with others the clock starts after you graduate or terminate your college studies.

By the way, if you are thinking about getting rid of student debt in a bankruptcy filing, you can pretty much forget it. Students loan debt can't be discharged except under extreme circumstances, where you have to prove it “will impose an undue hardship on you and your dependents.” We don't have time to go into the details here, but it's not an easy hurdle to clear. If you die with student loan debt, for government loans, the debt may be discharged, but it usually can't for private loans. Your estate, or what is left of it, may be on the hook for payments.

Paying for College: On- and Off-Campus Jobs

Going to college is a full-time job for most, but some students try to earn money by working during the school year. We'll cover summer internships later in this chapter, since they are often a stepping-stone to full-time, permanent positions. An off-campus job could be anything, from working at your local fast food joint to a job at the hippest or swankiest firm out there—think Alphabet (Google), Goldman Sachs, Apple, Amazon.com, and so forth.

On-campus jobs are often provided by the college itself. Sometimes it goes under the name work study and is part of the financial aid package a student receives. These jobs may include a range of positions, such as working in a computer lab, library, or student housing. For example, a preceptor is usually an upper-class student (i.e., a junior or senior) who acts as a sort of counselor and administrator on a dormitory floor. The preceptor usually doesn't have to pay for their housing and sometimes receives some additional pay. They generally have their own room, which can be a big bonus if you like to study alone or are prone to conflicts with a roommate.

Speaking of student housing, it's likely that the people who live in your dormitory or apartment building are, or will be, among the best friends of your entire life. Buffett relayed a powerful story about a Holocaust survivor and her litmus test for a true friend.

Bella Eidenberg was a Polish Jew who was at Auschwitz and some of her family didn't make it. Twenty years ago she said she was slow to make friends, and that the real question in her mind was always, ‘WOULD YOU HIDE ME?’ If you have a lot of people that would hide you, you've had a very successful life. That can't be bought. I know people that have billions of dollars and their children would say, “He's in the attic.”

A story that memorable deserves a Tip.

If you pursue a PhD or some other graduate degree, it may be possible to work as a teaching or research assistant. It's less common, but still possible, for undergraduate students to also receive assistantships. Students with these positions may help or fully teach an undergraduate course or help professors with research projects. These jobs are not easy to come by, but they often provide free tuition, benefits, and a modest, but livable wage. Academic scholarships, distinct from the teaching and research assistantship positions, at the graduate (usually doctorate) level are sometimes referred to as fellowships.

College is probably the best stepping-stone to getting a permanent job, so let's move on to that crucial topic. The process of getting a job often starts with creating a resume. Most people create their first resume toward the end of their high school years or near the beginning of their college careers. Let's talk a little bit about resumes, even if you have already created one.

Your Resume: A Snapshot of Your Qualifications for a Job

A resume is a snapshot of your qualifications for a job. You usually send it to someone, or an organization, when you are looking for a job. It's also often posted online. It's good to keep your resume up to date even if you aren't looking for a job. You may be approached with a new job someday, even if you are happy with your current job. In fact, you are probably in a better bargaining position in that case, since to paraphrase a famous expression from the classic movie The Godfather, they'd have to “make you an offer you can't refuse.” That is, too good to pass up.

Your resume should fit on one page (one side), at least for students and recent college graduates. Why? Most people spend only a few minutes looking at a resume, so you need to make it short and sweet. As your career progresses, it is more acceptable to have a resume that is more than one page. In that case, your resume typically starts with a “summary” section, in case someone doesn't want to read the whole thing. In some industries, such as academia, it's common to create an expanded version of your resume, called a curriculum vitae (CV). For example, most professors create CVs that list all of their publications (which could measure in the hundreds), research grants, service activities, and so forth. CVs often span dozens of pages. Thankfully, we'll stick to the one-page resume here.

We suggest saving your resume in Adobe Acrobat PDF format since the formatting sometimes becomes changed if someone opens it on a different program (e.g., Microsoft Word) than the software (and version) that you used to create the document.

Putting Together Your Resume

We've created a resume for the fictitious Pat Jones and placed it in the Appendix. Sorry to all the real Pat Joneses out there, in case it attracts unwanted attention for you. We purposely chose the name Pat since it is gender neutral and can stand for Patrick, Patricia, and perhaps a few other names. We picked Kardashian, uh Jones, for the expression we mentioned earlier in the book, “Keeping up with the Joneses.”

We started with a resume template from Microsoft Word, but you can find a lot of free ones on the Internet. The sections of the resume that we'll cover: objective, education, work experience, and so forth, are very common, but you can change them a bit to suit your strong points. For example, some students like to include a relevant courses section, especially if they don't have a lot of work experience.

The top of your resume must include your name and contact information, such as phone number, email address, and physical mailing address. You could include other things as well, such as your own website or LinkedIn profile, a topic that we'll get to later the next chapter.

The Objective Section

The first formal section in most resumes, objective, lists your near-term career objective. If you are interested in a couple of different jobs or career paths, it's acceptable to have two different versions of your resume. Why shouldn't you have one resume with multiple objectives? You can certainly do that, but one part to getting a job, beyond your qualifications, is about “fit.” That is, a prospective employer will think about your passion to pursue this specific career and with their firm. If you give them mixed messages about your career goals, they may not feel confident in extending you a job offer. Hiring is an expensive and time-consuming process, and employers want to find someone who will stick around for a while, ideally for the duration of their full career.

Pat's objective is to get a summer internship as an investment banking analyst. Our general preference is to keep your objective short—one or two sentences—since your resume is a valuable piece of “real estate.” That is, if you have only one page to pitch yourself to a prospective employer, they are probably more focused on who you are and what you bring to the table. Your objective is a necessary piece of information but unlikely to differentiate yourself from other candidates for the job.

An internship is a temporary job, typically lasting two or three months and 40+ hours per week. It usually occurs over the summer, although it can occur at any time during the year. You can view it as a tryout for a full-time permanent position once you finish your college career. In fact, a good percentage of interns get a full-time offer. According to a survey by Vault.com, about 75% of interns get a full-time offer. With numbers like that, it shouldn't come as a surprise that getting a good internship is extremely competitive. As we mentioned earlier in the book, investment banks help other companies raise money by selling securities and providing advice on mergers and acquisitions, as well as offering many other services.

One last point on short-term jobs: a cooperative education, or co-op, job is sort of like an internship. It usually refers to a student working for an organization part time, while taking courses during the school year. It also often results in academic course credit. For example, a co-op student may work 20 hours a week at a firm, such as Johnson & Johnson, while carrying a full load of courses during the school year. The student may also be awarded 6 credits in a college course, let's call it Co-op 101, for their efforts, as well as payment for their work. As with internships, co-op jobs are typically meant for college students and are often a tryout for a permanent, full-time position.

The Education Section

The education section lists where you went to school and relevant academic performance and awards. Specifically, it usually includes where you went to school, your grade point average, honors, scholarships, and other relevant information. It generally starts with your most recent information. For example, if you're in college, start with your college education information. If you are in high school, start with your high school information. In fact, once you start college, most people drop the high school education part of their resume. Perhaps the main exceptions are if you went to a prestigious high school (such as the Philips Exeter Academy), were school valedictorian/salutatorian (i.e., ranked first or second in your class, respectively), or won some prestigious honors or awards (e.g., Regeneron Science Talent Search).

Our Pat Jones is what most people would view as a star student, attending Princeton University and having graduated from Princeton High School, generally ranked among the top public high schools in the State of New Jersey and the US. We generally advise listing your grade point average since prospective employers often filter on it to weed out candidates from the many applications they receive and assume the worst if you don't include it. However, some schools suggest (or even require) omitting it since they don't want to foster a cutthroat environment and would prefer the emphasis to be on the other parts of your resume. If an employer really wants to find out your GPA, they can simply ask you for an official copy of your transcript, which lists all the courses you have taken and their corresponding grades.

We advise listing not only your overall cumulative GPA, but also the GPA in your major field of study, especially if it is higher. Of course, you want to get the best grades you can, but one way to offset a relatively lower cumulative GPA is to have a strong GPA in your major. If your grades are not strong, and especially below a B or 3.0 average, hopefully you have strong work experience or other skills to offset it. Pat has a 3.8 cumulative GPA at Princeton, a 4.0 major GPA, and an (unweighted) 4.0 GPA from Princeton High School to boot. Pat's resume also lists an expected graduation date, honors (e.g., Dean's List or Honor Roll), and scholarships such as the Princeton Class of 1966 Scholarship and the National Merit Finalist Scholarship. Some people also include their SAT/ACT scores in the education section, especially if they are impressive (i.e., 90th percentile and higher).

The Work Experience Section

Include relevant work experience, even volunteer positions, that you think may be related to the job you are seeking. In general, try to quantify your accomplishments with specific dollars, percentages, and other numbers. Highlight any promotions you received, or leadership skills developed. If you worked at a place that is not a household name, make it easy for the reader by briefly describing the firm.

Pat worked at Starbucks as a barista, a person who prepares or serves coffee drinks, during the summer of 2018. Virtually any job is a good job, and Starbucks is a great firm and one of the best restaurant stocks of all time. However, a job at Starbucks is not Pat's ultimate career ambition. Notice how Pat described some valuable skills learned, such as the ability to work in a fast-paced team environment and the development of strong interpersonal and customer service skills. Pat also gained some leadership skills by training five new employees and periodically working as shift supervisor. It was a productive summer job for Pat!

The combination of skills that Pat gained while working at Starbucks is useful for most jobs. Pat also made an impact by streamlining the customer order and pickup process, resulting in a 10% increase in store profits. If you want to work for a for-profit firm, uncovering ways to make the firm more money would be a nice feather in your cap when it comes time for a promotion or asking for more money (i.e., a raise).

Pat then interned at BlackRock, the largest asset manager in the world, in Princeton, New Jersey, during the summer of 2019. Pat quantifies working for a large ($30 billion) mutual fund, the BlackRock Strategic Income Opportunity Fund. Pat also helped create some “pitchbooks,” which are usually PowerPoint or PDF presentations meant for customers or prospective customers. We'll get to the skills section next, where expertise in Microsoft Office would be a plus for most employers.

A quick word on switching jobs. When you're young, it's okay, and perhaps expected, to try out a number of jobs. However, once your career begins in earnest, we would suggest staying a minimum of two years at each position, unless you really hate it or are treated improperly, to avoid getting the reputation of being a “job hopper,” that is, someone who quickly leaves jobs on a regular basis. It takes awhile for a firm to train someone to be very productive, so they find it disappointing when someone leaves right when they get up to speed. The firm will have to then go repeat the time-consuming and costly process of finding someone new and training them. Someone reviewing your resume down the road may think, “This person leaves their job every year or two, so they will probably do the same thing with my firm.”

The Skills Section

The word “skills” is broadly defined here. Urban Dictionary uses the term “mad skills” to describe “someone who has just pulled off something intensely difficult or seemingly impossible—by way of their immense skills at the task.” Like soccer star Carli Lloyd scoring three goals in the first half of the 2015 World Cup final game or Pat Mahomes throwing 50 touchdown passes in his first full year as an NFL quarterback. You don't need Pat Jones's mad skills to have a solid resume. Just work with what you've got.

We purposely gave Pat a wide range of skills, including being fluent in several foreign languages as well as computer languages. Our all-star student Pat has what you would call both left-brain (analytical) and right-brain (creative) skills. It's also a positive from the perspective of an employer if you have experience with widely used software programs. For example, Pat has experience with Microsoft Office (Word, Excel, and PowerPoint).

Pat also cites knowledge of Bloomberg and Aladdin, two widely used software applications in the financial services industry. Wrapping up Pat's skills section is an item noted as financial modeling and valuation skills. Recall, these skills refer to the formal process of building spreadsheets that project a firm's future balance sheet, income statement, and cash flow statement. Valuation, or estimating the value of the firm, is often one key output of the model. These particular skills are desired, if not expected, of investment bankers, Pat's dream job.

The Activities and Interests Section

A resume often wraps up with a section that we've labeled activities and interests, which is exactly what it sounds like. If you don't have a lot of work experience, hopefully you have some strong things to talk about here. For example, if you were an officer in a student club, it provides evidence of some leadership skills, among other things. The ideal employment candidate has strong grades, good work experience, and some evidence of leadership skills.

Pat was the vice president of the Tiger Investments Club at Princeton. Pat also engaged in a lot of volunteer work, helping out with the Special Olympics and the Trenton Area Soup Kitchen. The interests part of the section is also crucial. The people interviewing you want to know something about your personality, especially if they are going to be working 40–100 hours a week with you. Yes, some jobs, such as investment banking, often do require you to work 80–100 hours a week, usually for a few years—thankfully, not for the rest of your life. Interests tie to your personality and the elusive “fit” element, which employers often seek. Pat has interests in Jazz, hockey, the saxophone, and world travel. Maybe the person interviewing you likes one or more of these things as well. Having something in common with the interviewer or developing some sort of rapport can only help you on an interview and will probably relieve some stress.

Cover Letter

A cover letter is often attached to the top of the resume, at least if you are giving someone a hardcopy. Otherwise, it is typically included in an email where your resume is attached. The purpose of the cover letter is to more fully explain your qualifications, fit, and desire for the job, but they aren't as widely used in today's electronically dominated world. Sadly, a lot of employers barely read them since they are often overwhelmed with the number of applications they receive, but we encourage you to create a thoughtful one.

The cover letter usually consists of a few paragraphs in prose, rather than the bullet point and short sentence form that is the structure of most resumes. There are several websites you can refer to for sample cover letters, such as ResumeGenius.com. As the name indicates, they have sample resumes on their website as well.

We'll close this chapter with a cautionary Buffett Tip on the importance of building a solid reputation. He said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.” People are often willing to give someone a pass for mistakes made as teens and high schoolers. However, your reputation and career begin in earnest during your college years. And one bad decision can really affect it. Not that it's impossible to recover from mistakes made during your college years and beyond, but you want to start off on the right foot. Similar to building a solid credit score once you get your first credit card. So file that Buffett Tip in the back of your mind and think twice about doing something that might hurt you down the road.

Appendix

Appendix

Illustration of the resume of a candidate by the name Pat Jones - his objective, education details, and work experience - to obtain a summer internship as an investment banking analyst.

References

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