Your greatest hidden asset

You're so money

Steven here from munny.club, a weekly newsletter where I share a different perspective on personal finance concepts. If this doesn't interest you or you don't find it valuable, you can unsubscribe at the bottom of this email. If you have feedback, just shoot me a reply!


Today's another short one, this time focused on your most valuable asset. It might come as a surprise, but for most people, your ability to work is incredibly valuable. Your future earnings are likely the most valuable asset for your financial future. It's important to recognize this, especially if you want to find ways to increase it

Let me paint a picture. If you make $50,000 and work for 40 years, the present value of all your future labour is about $1.8 million after tax. That means your career is “worth” nearly 2 million dollars as an asset. A quick bit of math will tell you that 40 * $50,000 would be $2 million before tax, but this accounts for some inflation and annual raises. This is how much your lifetime earnings are worth today. And each year, this asset, yourself, spits off a bit of cash that you live off. Do you own anything else that valuable?

Knowing this can do a few things for you. It can help you realize just how much or little you will make over the course of your lifetime and put some major purchases or dreams into perspective. But also, small changes can have a large impact over time. For example, if you were to make $60,000 instead, that would amount to almost $2.2 million, an increase of $373,000 over your working period. Over a longer time frame, each raise makes a significant difference.

More importantly, it's a reminder to take care of yourself and invest in yourself. If you get sick, burned out, injured, you're unable to work and provide for yourself or your family. Your asset will lose a significant amount of value. I don't mean to frame everything in terms of money, it's important to take care of yourself regardless of security.

Additionally, you have opportunities to invest in yourself and make that asset more valuable. Just like a raise has a big impact, those don't come for free. They are often a result of effort and improved skills, a $5,000 course could pay itself back 20x over the course of your career. Think about that next time you're looking to learn something new.

That's it for this week! As always, shoot me any questions you have.

Thanks for reading.

Steven