Why Getting A PhD Is A Terrible Idea If You Are On The Path To Financial Independence

Hello from impostor syndrome land!

I do not mention it a lot on this blog, but the 4 year contract I keep mentioning as my current job is actually as a PhD student within natural science. In Norway, you are considered an employee as a PhD student, and you get a very real paycheck. Mine represents almost $50 000 annually before taxes, which is a whole lot of money to someone from a working class background who is used to making ends meet with a lot less.

It could’ve been a great tool on the path to financial independence. After all I have a four year contract of promised paychecks and flexibility unheard of in many other jobs. But don’t be fooled.

While full and tenured professors might make a decent side-income from publishing books and, in some fields, patenting, those jobs are few and far between – and they take decades to get to. For those of us aiming to be pursuing nothing but our own projects and passions after 10-20 years in the workforce, you wouldn’t even get close.

Life of a Phd student

Don’t believe me? At least 2 other personal finance bloggers I know jumped ship from the personal hell which PhD life can be:

And I will admit the same thought has struck me, more than once. But I am the breadwinner of our little household at the moment.

(Though I must admit, hard though it is, it can be a hell of a lot of fun controlling a million dollar instrument from the remote desktop in my own office. Or from the couch at home, or anywhere. But I digress.)

Read on for 4 reasons why getting a PhD is a terrible idea if you are pursuing financial independence.

1. The constant guilt of “I should be working”

When you can work from anywhere, you will inadvertedly be haunted by the feeling that you should be working from anywhere. With the laptop as your weapon, you can log onto the university VPN and have a world of articles and journals virtually at your fingertips. With remote desktop solutions and folders shared across multiple devices, you always have that draft you were working on within easy reach.

This amazing accessibility is great for the ambitious researcher, who can work even while on conferences, home sick, or during the weekend. For anyone striving for a semblance of a work-life balance and might want to build a sidehustle an hour or two each week? It can be tough. The guilt is always there at the back of your mind, niggling at you to write that draft, process those samples, or grade those lab journals.

Of course, this is a struggle a lot of millennials of the “burnout generation” are facing, and is not necessarily limited to academia. But academia is especially famous for it, even priding itself in how all-consuming a PhD is supposed to be.

I cannot tell you how often I have been told that my husband just has to accept that he will have to take care of the majority of the cooking, cleaning and grocery shopping at home. And while he graciously does so, it is no wonder most PhD students are either single, male or otherwise entrenched in old fashioned gender roles.

A PhD will never be “just a job”. That is just not the name of the game

2. Stagnant income

As I mentioned in the beginning, PhD positions are considered (entry level) jobs in Norway, and you are on payroll even if you can’t log hours or overtime. Contracts vary but generally fall into four year contracts paid by the university/projects your professor got funding for (25% or 1 year of this time has to be teaching, as payback to the university), or 3 years with no teaching obligations if the position is funded by the industry.

No matter the contract, your annual pay is set in stone. You follow inflation based raises of around 2% every year, but that. is. it.

No negotiation skills in the world will change the fact that for the next 3-4 years, your pay will not change significantly, no matter your performance. For industrious young career professionals who want to reach financial independence by advancing rapidly in the workplace, well… you’re stuck. Post Docs are no better either. If you stay in academia, you have to at least reach assistant professor before you get any sort of negotiating power, but that is at least 10 years down the line. If you’re lucky.

Of course, I live in cushy Scandinavia. If you’re in the US… well…

3. “After the PhD” syndrome

I have honestly lost track of all the times my friends or significant other have been giving me the stink eye when my answer to when I am going to do something is “after my PhD”.

Honeymoon trip to Japan? After my PhD. Much needed therapy for seasonal depression? Gotta wait until after my PhD. Writing short stories and ramping up my sidehustle efforts? That certainly has to take a backseat!

Anything to do with physical health like a dentist appointment or pulling those bothersome wisdom teeth? OK, maybe not after my PhD, but it certainly has to wait until summer when I don’t have a massive pile of teaching to do and students to take care of.

In short, it can be really difficult to make time for normal, real-life events while in the middle of a PhD bubble. Maybe it’s because all I’ve ever had have been temporary contracts, but I’m far too used to postponing appointments and trips until I’ve finished said contract.

The problem is that all my previous contracts were 6 months or shorter. 4 years to postpone life is… not healthy, to say the least.

4. Loss in employability

Now, if you manage to persevere and come out at the other side with a PhD – go you, you deserve that diploma!

But the other side of the coin is that… if you were difficult to employ before. It’s even more difficult now. I graduated with a master of science in 2012. Pshaw, you say, that was years after the great 2008 recession! You were fine!

The lesser known oil crisis

Except Norway is a tiny country in the backwater of the world. Like a tiny, unimportant piece of gaming design we suffered a few years of lag. 2008 wasn’t so bad for us, a few international companies did suffer, but what really hit tiny-oil-nation Norway was when the oil price plummeted in 2012.

I tried entering the workforce just as thousands of skilled oil workers with years of experience and the sympathy of the masses were let go and countless sad stories were published in media outlets of the poor family man who could not pay his mortgage or provide for his children.

Us poor graduates with no family and limited financial responsibility? Yeah, we were passed over like yesterday’s news. I worked whatever and wherever I could, first a year as a kindergarten assistant and cantine worker, then as a temp in the big city of London with my partner. When three years had passed and I still had no permanent position, I got desperate and applied for a PhD position back in good old Norway. By this time though, my trust in employers to provide a job, even when you studied the “right” fields like science, was permanently scarred.

The curse of being overqualified

The problem? While it provides us much needed stability at the moment, I am permanently ruining my general employability within a plethora of fields. Most hiring managers will consider you overqualified if you graduate with a PhD. People who will assume you will get bored and subsequently leave after only a short time on the job. And while my current position is secure, it is temporary, and we know a recession is coming.

If you stay in academia, you are looking at many more temporary contracts in the years ahead, many of which might force you to change city and country multiple times over.

When you are overqualified, especially if you are a woman, a lot of people will be intimidated by you, hiring managers included. Of course, that does not mean you should be ashamed of your achievements – but it is a very real challenge which can make it more difficult to get a job further down the line.

Is it all dark skies?

Of course, it isn’t all bad. As I’ve mentioned, I enjoy the highest annual salary I have ever seen in a field which is, historically, more shielded than most from recession and financial uproar. It can also be a lot of fun to see the light go off on the face of a student who finally got it, or getting lovely thank-you notes after a successfully completed laboratory course.

And of course, going from 3-6 month temporary contracts to a whooping 4 years has done wonders to our financial stability and mental health. Even if I have to pay for it in crippling impostor syndrome, late nights and existential crises.

Is there anything I have forgotten to add to the list? Anything you want to add from your own experience? Curious minds want to know!

24 Comments on “Why Getting A PhD Is A Terrible Idea If You Are On The Path To Financial Independence

  1. I agree a PhD is a terrible investment for most people, in my field of chemical engineering all it does is virtually guarantee you can be a professor for fairly low pay compared to working in industry. Engineers with lower level bachelor degrees can generally do much better than that if they have talent. I have a daughter who works for a university in the US monitoring and helping improve the academic performance of their athletes. She is in the athletic department so isn’t a professor and only has to have a masters degree, which she does. However she is getting a PhD for free from the college over an extended five or six year period as a fringe benefit. In her case as long as she works for universities the PhD will be worth a bigger paycheck and might offer her more possibilities in the future. I think it is a smart move for her because in academics there is no such thing as being overqualified. Interesting post!

    • Sounds like your daughter is making it work while at the university anyway, that’s great!

  2. I love this topic because I spent a lot of time thinking about getting a PhD this past year. I ultimately decided not to get one and reflected about it in a recent post as well. I will look into the other blogger’s articles with the two links you mentioned.

    I have a friend who tours to Norway frequently (Lissie) and she has completely sold me on the country! She also mentions the role of oil when discussing the dynamics of its economy and says it’s quite fascinating. I’m just dropping her name to see if you have heard of her? She’s an awesome musician and it is a small world!

    Anyhow, it’s interesting that you view it as a tiny backwater country. I certainly don’t. My husband and I live in the US in a small town with a lot of Norwegian immigrants, and we literally have a week-long festival devoted to Norway in the summer! If we ever get tired of the US, it’s where we are going for sure!!! Everyone here is obsessed with Norway.

    Take care!

    • Interesting to hear how many other people are considering pros and cons of a PhD as well. I only refer to Norway as a backwater country in terms of political importance and, in this case, economic reaction. I am quite happy to be stuck in Scandinavia. 😉

  3. I have a few college friends that have gone the PhD track here in the US and it’s amazing just HOW LONG some programs last – many of them are just getting their degrees now, and I graduated from undergrad a full decade ago come May.

    • Yeah, the US programs blows my mind. I am so happy my contract has a set time limit!

    • Hahaha yuuuuup that’s why I said “No thanks!” I also have several friends who are just now graduating, or just graduated recently, and don’t get me started on then trying to find a post-doc, and how little those pay forever…

      • Yeeeeeeeeah…

        Don’t look at me, I’m just bringing home the bacon until Mr. Frugasaurus gets his writing gig off the ground!

  4. It’s always interesting to read about PhDs from different countries.

    When I did my PhD in the UK, there was a very strict time limit of 4 years. You did all of your research in the first 3, then wrote it up in the final year, submitting as soon as possible. This meant that the “one more year” syndrome that you describe above, and that I typically associate with US PhDs, doesn’t happen. If you want to extend by a year, you need a very good reason!

    Wages for PhD students over here are tiny compared to Norway! You typically get a tax free stipend of about £14,000. If you factor in tax and National Insurance, this might be equivalent to around £19,000 per year, which is on the low end of graduate jobs in the UK. And that doesn’t include the fact that you don’t get any pension contributions during this period. There is a decent jump in earnings once you graduate and get your first job, to around £29-34,000, but again this is less than everyone who has been working for 4 years already and worked their way up the corporate ladder.

    I find that the temporary fixed-term contracts are both a blessing and a curse. When I first finished my PhD, I had the opportunity to work in China for two years, which was awesome. But now that I want to settle down, it is much more annoying!

    I can certainly relate to your feelings of imposter syndrome. I imagine it happens across all disciplines and jobs, but seems especially prevalent in academia! Nonetheless, I think it’s worth sticking with it until the end. The sense of pride and satisfaction I felt on completion has rarely been matched since. Good luck!

    • It’s the same in Norway. You are hired for four years if funded by the industry (which includes 1 year of teaching) or three years if you are funded by the industry (no teaching required).

      As for the wages, they are indeed higher since you are legally considered an employee. But they are not tax free like a lot of stipends in the UK and other countries. So you can instantly subtract around 35% in taxes.

  5. We’ve seen the same sort of effect of people getting PhDs which seems to make them less employable over time outside a specific area.

    Speaking as someone who has been doing hiring for some years, I always wonder why anyone with a PhD applying to “lower” positions doesn’t explicitly address this. It’s a very weird mismatch to get a PhD holder apply to, say, an entry level position without acknowledging they have any idea that they may be over qualified. The few times I interviewed people with PhDs, they were literally using that interview to find out about other openings in the companies and not actually interested in the position they had applied to so that was a sad waste of both our time.

    I don’t think holding a PhD makes someone a bad fit in and of itself but it would really help their case if they actually wanted the job they applied for!

    • Good point. Though I must admit – I’m not really sure how to address it in a good way.

      • At this point, I’d be happy with someone just directly stating they realize that a PhD might make them seem overqualified but they are making this choice consciously because X (fill in their reasons for going this route). That’s all! Just something that makes sense.

  6. I did my PhD in Estonia and similarly to you I had a decent salary which didn’t change significantly during those years. I needed an extra year after the 4th year and I used it to publish 3 papers and to write the thesis itself.
    I left academia after graduation and began to take the first steps towards financial independence (i.e. goal-oriented money saving, bought first stocks, payed more attention on my spendings). My new job in a totally unrelated field brought me a huge pay rise during the first 2 years of employment. That encouraged me to save more & invest more, then work more to save more and invest more. That cycle builds up huge motivation. In academia your’e lucky if you find one thing to motivate you getting up from bed in the mornings.
    I think I wouldn’t be half as far as I am now with investing my savings if I hadn’t left academia. I would be way to occupied with the guilt of not working during weekends and still sobbing about my hysterical supervisor, who at that time was the most unpleasant person in the world.

    • It is interesting to see how similar the PhD experience can be across borders. Your experience does sound very similar, although you are a good handful of years ahead of me. Makes you wonder why PhDs are still so popular.

  7. I have to say I disagree that it’s a terrible idea. I would say it was the best decision I ever made to achieve “fatFI” easily. I did my PhD was in quantum field theory at a well known UK university in the mid 90s. I got a funding grant which paid for all costs and gave me a small stipend which I found easy to live on (but not to save). I completed the PhD in the 3 year grant period, aged 24.

    I decided to leave academia and applied instead for jobs in finance. I found that the PhD got me any interview I wanted. It was key to getting that first job in Quant Research at a US investment bank, which led to an Investment strategy role, then to prop trading and finally as a portfolio manager at a hedge fund. Without it I never would have got a look in. The PhD still opens doors 20 years later. It’s always a talking point.

    I would definately recommend both my children to do PhDs, if they wanted to. Not only was it a hugely enjoyable period of my life but it’s only an extra 3-4 years over an undergraduate degree, so you can still go back into the world of work in your mid 20s but with a qualification that is highly valuable. Undergraduate degrees have been completely devalued over the past 20 years. The companies I work only increasingly only interview people with a minimum of a MSc or PhD from a small selection of universities. So I would argue that a good PhD is increasingly heading towards being the minimum qualification to get a job.

    • Interesting perspective, I was not aware that it was still possible to get a PhD straight after undergrad in the UK, that is certainly not allowed in Norway. I you want a PhD you are looking at spending 3 years doing undergrad, 2 years doing a master program, and then 3-4 years doing the PhD at the bare minimum.

      If PhDs ever become the “bare minimum” to get a job, that’s a world I certainly don’t want to live in.

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  10. I have a PhD and I just got a permanent job (just before I turned 40). I have lived, studied, or worked in 5 different countries. The US was one of them (where I did my PhD, which took 6 years) but sadly, Norway was not. I was also the primary income earner in my small family (no kids, one spouse, one dog) for 3.5 years out of the 5 years have been married so far, an all of those on a permanent contract, and one year of which my partner was in expensive graduate school. That being said, I was not supporting someone while doing my PhD. I have constantly used summer school teaching and extra courses and activities to pay for or supplement my income and I was exhausted by it. I have no savings. We are just about to buy a house and we are both now just entering 40. I still believe that we can catch up although it will be hard. All this being said, I don’t think getting a PhD is a bad choice at all, although, I admit that I was lucky / won the lottery as I actually have a permanent job in academia now. While I agree with most of your post, the one thing I do not agree with is the curse of being overqualified. I think having a PhD qualifies you for a lot of things and also gives you a lot of skills that employers look for. There are a lot of science to data science programs, for example, and I know a number of my friends and former students who have moved into industry. Being able to show that you can maintain and manage long term projects, can organize and analyze data, can write effectively, can present, and can work both in terms (lab work) and independently. These are all skills that employers are often looking for. I think if you come into industry being like, I don’t want to be here but the academic job market is tough so I guess I will do this, then people don’t really want you because no one wants to be second place. But I think especially in Europe, life beyond the PhD doesn’t have to be an academic career. I also think there is room to pursue outside projects from academia but managing your time and the expectations of what kind of scholar you want to be is really hard. It’s especially hard for first generation students who often expect a lot from themselves and have less understanding/support going in. I honestly think academic life is its own type of freedom. I understand FIRE but I think for me, the academic life and the independence I in FIRE are intimately related. Just my two cents.

    • Sorry, that should say I was also the primary income earner in my small family (no kids, one spouse, one dog) for 3.5 years out of the 5 years that I have been married, and for all of those, not on a permanent contract …

    • Thank you for your comment. I think it somewhat speaks for itself in that you consider having a permanent academic job as “winning the lottery”. I admire your attitude and think you are lucky in comparing FIRE and academia. For me, the two could never be comparable, but it is great that you see it that way!

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