$51,000 per Year: Be an Accountant or Get a Masters?
I got an interesting question in my email inbox:
"My daughter may be graduating from [a college in Florida] with bachelor’s in accounting this spring. She qualifies for a program which allows her to earn the master's degree in accounting for an additional year.
Currently, she has been offered a job with accounting consulting firm in northern VA with pay of $51,000 beginning next September. Her draft budget shows that, with all taxes taken out, she would actually be making about $35,000. Her dad says “not good enough for that area.” If she chooses the 5th year program to earn her Masters degree in accounting…wonder how much more she would make at entry level with that. Can you give me some insight?"
This has all the elements of a career choice: cost of living in a new location, earning a higher degree vs. working, and what salary is reasonable for a location, job, experience level, and employer.
Is $51,000/year a fair wage for your job? Find out with the PayScale Salary Calculator.
$51K Good Money for Recent Accounting Graduates
The writer had a couple of further thoughts and one more question:
I fear she will be giving up a great opportunity with a solid job with good benefits and potential for advancement and international travel (and she could later get the Masters in BA or something she really likes…says she does not love accounting). How much can an entry level in accounting expect to save the first few years anyway?
Mom (RN) of college daughter stuck in the middle who knows little about business world
Let’s start with the easy question: is $51,000 per year good money for a recent accounting graduate?
As faithful readers know, we look at the pay by major for recent graduates every year.
The short answer is that the typical bachelor’s accounting graduate, from the typical school, hired by the typical employer somewhere in the US, earned $46,000 per year, after 3 years on the job. (Note: all numbers in 2008 values.)
Using this crude estimate, it looks like $51,000 to start is good money!
No Accountant or Salary is Typical
However, almost no one and no job is typical, so this national median is not particularly useful to answer the mother’s questions.
Fortunately, the PayScale salary survey makes figuring out what a starting accountant, working for an accounting consulting firm, in northern Virginia should be paid easy.
I do not know all the details of the position, so I guessed a larger firm (800 employees), a location outside the DC beltway, and skipped several question that could be important.
Even with these caveats, we get a clearer picture for the salary of a starting accountant in northern VA:
The bottom axis is the percentile; e.g., “75%” marks the 75th percentile, so 25% make more than $51,118 per year in base salary. 50% of starting accountants make between $43,372 and $51,118 per year, while 80% make between $38,810 and $54,574.
As we can see, $51,000 is good, just shy of the 75th percentile, but not atypical for the area: 25% of starting accountants make about that much or more.
We also see that there is not a lot of room to make more. Only 10% make more than $54,574, so the top end of the range is only about 5% above the current offer.
Does an Accounting Master’s Pay?
The current offer is likely reasonable for the job, area, and employer. Would taking another year for a master’s in accounting pay?
This is a harder call. These two charts from the PayScale Research Center, say a Masters of Science in Accounting pays more, on average, but not enough to make up the lost $51,000 (plus cost of tuition!) of the lost year of working anytime soon:
An accounting master’s is good for $5,000 more to start, $7,000 per year over the first 4 years, $11,000 per year over years 5 to 9, etc. Somewhere about 7 to 10 years out, typically, is the breakeven point, where the lost income from the extra year is overcome by the higher annual wages.
However, Mom (RN)’s comments about the daughter’s interest in accounting are far more important than any averages: would the daughter even stay in accounting for the 7 years it takes to see the advantage of a Master’s?
By the way, even in broad averages, Masters of Business Administration salaries are better than those for a master’s in accounting. It would be a double win, money and happiness, since the daughter likes business administration better.
Is Northern VA More Expensive Than FL?
The Payscale Cost of Living Calculator can be used to compare costs in two cities. I picked Gainesville, Florida and Arlington, Virginia, not knowing the true details.
At first blush, it looks like it takes 37% more money to live in Arlington than Gainesville.
However, the real answer is that buying a 3 bedroom house in metro DC is (was?) much more expensive than in metro Gainesville: 104% more for the same house in VA than FL. All other expenses (food, gas, car, etc.), are about the same in Northern VA compared with Gainesville.
Our cost of living calculation is based on an executive who buys a house, not a recent college graduate renting an apartment with friends.
Can the daughter find an apartment in a safe location a reasonable commute from work within her budget? The odds are good, even if she only has $1000/month for rent.
If it were me, I would find a room in a run-down two-bedroom in Georgetown, and enjoy the night life of the big city. Can the daughter afford this? Absolutely; she is making much more than most of the political staffers who go to DC after college.
It’s Not About the Money…
Mom (RN)’s signature tells it all: she is “stuck in the middle” between her daughter and husband.
I have a son in college, and a daughter finishing up high school. It is hard to think of them as adults, making their own trade-offs between career, location, money, education, and happiness, and for me to stop trying to guide (make) their decisions. Just ask my kids how much I still (try to) meddle 🙂
On the bright side, Mom (RN) and Dad’s daughter is clearly no slouch. She has completed a tough major, done well enough to get a good job offer in a very down economy, and is thinking ahead about what she enjoys when making future education plans.
Only If it were this easy for all parents: their daughter is not going to New York to try to become an actress instead of doing a master’s in accounting; she is going to Virginia to earn an above average salary as an accountant!
Should you move to Northern Virginia for higher pay in a new career? The PayScale Salary Calculator is a quick and easy way to compare positions. When you want powerful salary data and comparisons customized for your exact position or job offer, be sure to build a complete profile by taking PayScale’s full salary survey.