Your Greatest Financial Asset

Here are some thoughts from the book The Net Worth Workout: A Powerful Program for a Lifetime of Financial Fitness (see my rating for details) on your greatest asset. Their thoughts:

What if I were to ask you to name your greatest asset? If you're like many of my clients, your answer might be your home, 401k plan, investment accounts, perhaps even your car or a piece of artwork. But the truth is, it's your ability to earn a living. Sure, you may live in a home that's worth $250,000 or even have over $300,000 in investment assets. But if you're thirty-eight years old, earn the typical income of $43,000, and plan to work until you're sixty-seven, then your "asset" is $1,247,000 -- not assuming any raises. What else do you have that is worth so much?

As I've said a ga-zillion times, your career is your most valuable financial asset, offering you many financial benefits. You can make the most of it by getting a college degree and managing your career to its full potential. Doing this well can earn you millions of dollars in extra income throughout your lifetime.

It's funny how most personal finance books ignore this fact -- this is the first book in the past few years that I've seen discuss the issue. But I'm in 100% agreement, and that's why I write so much about developing your career. It is by far the top asset for the majority of people reading this blog.

For more thoughts on getting the most out of your career, see these posts:

• The Career Intensity Guide to Getting a New Job: Get in the Game - Create Visibility

• 4 Key Qualities that are Essential for a Successful Job Search

• More Education Equals More Pay

Comments

[KMC]

This is also why it's critical you carry adequate disability insurance. If you get disability through work, it's often at 50-75% of your salary. You should consider another (outside) policy to fill in the gap.

[Lord]

It may be an asset, but it is a depreciating one. Even if you can expect some raises from there, it will only be a limited amount of time before you can expect cuts, potentially quite large ones if you are terminated. Invest what you can to maintain it as long as possible, but realize it is only a matter of time before it will be gone.

[tinyhands]

This is very true. If you'd like to see the calculation for yourself and determine the value of your stream of income, treat it as a fixed annuity with a duration from now until your anticipated retirement. There are plenty of annuity calculators on the web.

Protecting that asset with insurance is especially important if you have dependants.