Is Getting a CPA Worth It? An Accountant Shows You 2,000,000 Reasons It Is

The Financial Controller
4 Apr 202216:00
EducationalLearning
32 Likes 10 Comments

TLDRThis video script explores the financial benefits of obtaining a CPA license over a 30-year career span. The speaker shares personal experiences and uses an Excel model to demonstrate the incremental salary increases and future value of the extra earnings, estimating an additional $1.6 million in retirement savings due to the CPA premium. The script serves as motivation for those considering the CPA exam and provides a template for viewers to gauge the potential monetary value of certification in their own careers.

Takeaways
  • 📈 The video discusses the financial benefits of obtaining a CPA license, particularly its impact on salary over a 30-year career span.
  • 💼 The speaker shares personal experience transitioning from an auditor to a financial analyst with a 20% salary increase after getting the CPA license.
  • 💡 The video is aimed at motivating individuals considering the CPA exam, highlighting the long-term financial advantages of having the certification.
  • 📊 An Excel model is used to demonstrate the incremental value of the CPA license, factoring in salary increases and the time value of money.
  • 🔢 The base salary increase attributed to the CPA license is estimated at 10%, based on data from Gleam CPA Review.
  • 📚 The model accounts for various roles and corresponding salary bumps, especially emphasizing the importance of the CPA for higher positions like VP and Chief Accounting Officer.
  • 📈 Year-over-year salary increases are modeled, with significant jumps associated with role changes and transitions between firms.
  • 🏦 The future value of the extra money earned due to the CPA is calculated using a compound interest formula, assuming an investment interest rate of 7%.
  • 🚀 The model shows that even without additional salary increases beyond the baseline, the CPA could result in an additional $648,000 by retirement age.
  • 🌐 The speaker acknowledges that experiences may vary, and the model is based on their personal trajectory in New York City, suggesting that regional factors should be considered.
  • 💰 The potential additional earnings from having a CPA are substantial, with the model projecting over $1.6 million in incremental value by retirement, assuming a 7% interest rate.
Q & A

  • What was the immediate impact of getting a CPA license on the speaker's salary?

    -The speaker experienced a 20% increase in their salary immediately after obtaining their CPA license.

  • What is the main purpose of the video according to the script?

    -The main purpose of the video is to motivate people who are studying for the CPA or considering taking the CPA exam by demonstrating the potential financial benefits of having a CPA license over a 30-year career.

  • How long is the typical career span the speaker has observed for accountants?

    -The speaker has observed a typical career span of 30 years for accountants.

  • What is the estimated additional monetary value of having a CPA license over a 30-year career according to the speaker's model?

    -Based on the speaker's model, the additional monetary value of having a CPA license over a 30-year career ranges from approximately $648,000 to potentially over $2.3 million, depending on various factors including the rate of return on investments.

  • What is the assumed retirement age used in the speaker's model?

    -The assumed retirement age used in the speaker's model is 55 years old.

  • What is the starting salary used in the speaker's model for someone starting in public accounting?

    -The starting salary used in the speaker's model for someone starting in public accounting is $50,000.

  • What percentage increase in salary does the speaker attribute to the premium of having a CPA license based on Gleam CPA Review?

    -The speaker attributes a 10% increase in salary to the premium of having a CPA license based on Gleam CPA Review.

  • What is the assumed interest rate used for calculating the future value of the extra money earned due to the CPA license?

    -The assumed interest rate used for calculating the future value of the extra money earned due to the CPA license is 7%.

  • How does the speaker account for year-over-year salary increases in their model?

    -The speaker accounts for year-over-year salary increases in their model by starting with a baseline of 3% (inflation rate) and then adjusting it based on promotions and job changes, which can range from 7% to over 40%.

  • What roles are typically reserved for someone with a CPA license according to the speaker's experience?

    -According to the speaker's experience, roles such as VP of Accounting and Chief Accounting Officer are typically reserved for someone with a CPA license.

  • How does the speaker suggest using the model for different experiences or locations?

    -The speaker suggests that the model can be built differently based on one's own experience, location, and circumstances, such as staying in public accounting or working in tax for the entire career.

Outlines
00:00
📈 The Financial Impact of a CPA License

This paragraph discusses the career and financial benefits of obtaining a CPA license. The speaker shares their personal experience of a 20% salary increase after getting their CPA and ponders the overall value over a 30-year career. They introduce an Excel model to calculate the future value of the extra money earned due to the CPA, factoring in salary progression and the impact of the CPA on various roles. The model is based on the speaker's 15 years of experience in accounting and includes different roles, year-over-year salary increases, and the incremental value of having a CPA license. The speaker emphasizes that this is a personal model and encourages viewers to adapt it to their circumstances.

05:00
📊 Modeling Year-Over-Year Salary Increases with a CPA

The speaker elaborates on the year-over-year salary increases, starting with a baseline of 3% to represent inflation. They detail how salary bumps occur with promotions or when changing firms, and use their own career trajectory as an example, including specific percentage increases for various role changes. The paragraph also explains how to use Excel for data validation to create a dropdown menu for selecting year-over-year increases. The speaker calculates the extra money made due to the CPA and its future value, considering an investment interest rate of 7% over a 30-year period. They provide a formula for calculating the future value of the additional earnings from the CPA and give an example of how it compounds over time.

10:01
💼 The Cumulative Value of a CPA in Career Advancement

This paragraph continues the discussion on the financial benefits of a CPA license, focusing on the speaker's career progression and salary increases at different stages. The speaker provides specific percentages for salary increases associated with role changes and transitions between public accounting and private industry. They illustrate how these increases, compounded over time with the CPA premium, can lead to substantial additional earnings by retirement. The speaker also notes that the model does not account for bonuses or equity, which could further increase the value of having a CPA. They highlight the importance of adapting the model to individual circumstances and locations, emphasizing the conservative nature of the 7% interest rate used in calculations.

15:02
🚀 The Motivational Power of CPA's Financial Projections

The speaker concludes by reflecting on the motivational aspect of the financial model for a CPA license. They invite viewers to share their experiences and thoughts on the model's assumptions in the comments. The speaker also encourages viewers to like the video and offers additional resources, such as online courses on financial metrics, KPI dashboards, and accounting interview skills. They mention the possibility of direct interaction through Patreon, where supporters can access templates discussed in the video and ask questions.

Mindmap
Keywords
💡CPA
CPA stands for Certified Public Accountant, a professional certification that demonstrates a high level of competence in accounting and finance. In the video, the CPA is central to the discussion as it is used to quantify the financial benefits and career progression opportunities it can bring. The script mentions a 20% salary increase upon obtaining the CPA license and uses it as a basis for calculating the lifetime value of having the certification.
💡Future Value
Future Value is a financial term referring to the amount of money an investment will be worth at a specific time in the future, taking into account compound interest. The video discusses the future value of the extra money earned as a result of having a CPA license, using it to illustrate the long-term financial benefits of the certification.
💡Salary Increase
A salary increase refers to a raise in an employee's wage. The script provides examples of salary increases at different stages of the career, such as a 20% increase when transitioning from an auditor to a financial analyst, and uses these to model the incremental value of having a CPA over a 30-year career.
💡Career Progression
Career progression is the advancement of an individual's professional status and rank within a particular field. The video script discusses how obtaining a CPA license can accelerate career progression, allowing individuals to reach higher positions such as VP and Chief Accounting Officer, which are typically reserved for those with the certification.
💡Excel File
An Excel file is a spreadsheet document created using Microsoft Excel, used for organizing, analyzing, and storing data in a tabular format. The script mentions using an Excel file to model the financial benefits of having a CPA license, demonstrating the use of Excel for financial modeling and analysis.
💡Year-Over-Year Increase
Year-over-year increase refers to the percentage growth or decline of a value over a one-year period. The video script discusses various year-over-year salary increases at different stages of a career, such as a 7% increase going from year one to year two as an auditor, to model the incremental financial impact of having a CPA license.
💡Retirement Age
Retirement age is the age at which an individual typically stops working and starts receiving retirement benefits. The script assumes a retirement age of 55 for the purposes of calculating the future value of the extra money earned with a CPA license, reflecting the potential for earlier retirement due to financial planning and investment.
💡Compounded Interest
Compounded interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. The video uses the concept of compounded interest to calculate the future value of the extra money earned due to the CPA license, with an example interest rate of 7%.
💡Investment
Investment refers to the allocation of money with the expectation of generating income or profit. The script discusses investing the extra money earned from having a CPA license in an index fund in the stock market, highlighting the potential for significant financial gain over a 30-year career span.
💡Patrons
Patrons are supporters who provide financial assistance, typically on a subscription basis, to creators or artists. The script mentions that the Excel model used in the video will be available to Patreon supporters, indicating a method of supporting the creator's work and gaining access to additional resources.
💡Qualitative Aspects
Qualitative aspects refer to the non-numerical or subjective elements of an experience or situation. The video briefly mentions the qualitative benefits of having a CPA license, such as pride, recognition, and professionalism, which are not quantified in the financial model but are considered valuable in the broader context of career advancement.
Highlights

The presenter shares their personal experience of a 20% salary increase after obtaining their CPA license.

The video aims to motivate CPA exam candidates by illustrating the long-term financial benefits of having a CPA license.

A detailed Excel model demonstrates the future value of additional earnings due to a CPA license over a 30-year career.

The model includes year-over-year salary increases, starting salaries, and the impact of CPA on salary progression.

The presenter emphasizes that the model is based on their personal experience in public and private accounting sectors.

Different roles and their associated salaries are outlined, with and without a CPA, showing the incremental value of the license.

Salary increases are modeled with a baseline of 3%, representing inflation, with additional increases for promotions or role changes.

The presenter discusses the premium on salary for having a CPA, estimated at 10-15%, based on Gleam CPA Review data.

The model calculates the future value of extra earnings by applying a 7% interest rate to simulate investment growth.

The presenter explains the formula for calculating the future value of money, incorporating principal, interest rate, and time.

The model projects an additional $648,000 in the bank account at retirement age without considering salary jumps beyond 3% increases.

Year-over-year salary increases are detailed, showing significant jumps when transitioning from public to private accounting.

The presenter discusses the impact of role changes on salary, such as moving from an accounting manager to a senior manager.

The model shows crossing the million-dollar mark in additional earnings due to the CPA license, even before considering higher-level roles.

The presenter explains how the model accounts for salary increases when moving between firms or receiving promotions.

The model projects an additional $1.3 million to $1.6 million in earnings by retirement, depending on the interest rate applied.

The presenter notes that the model does not factor in qualitative aspects of having a CPA, such as professional recognition.

The video concludes by inviting viewers to share their experiences and thoughts on the model's assumptions and accuracy.

The presenter offers online courses and Patreon membership for further learning and direct interaction.

Transcripts

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CPA ValueCareer GrowthSalary IncreaseFinancial AnalystAccounting CareerExcel ModelRetirement SavingsProfessional CertificationInvestment ReturnsCareer Advice