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When asked most people would say that their home is their greatest financial asset (note that I said financial asset – I could argue that my greatest assets are my family and health, but that’s for another post). However, think about it. What gave you the financial resources to buy the home in the first place? Your career of course! Another way to state is that your earning power gave you the financial capability to purchase that home and everything else you have in your life! Everything in your life really starts with your earning power!
Let’s take an average millennial earning $60,000 per year. Assuming a 35-year career and realizing an annual raise of only 2% per year allows that person to amass nearly $3 million in earning power! Obviously, the objective is to continually improve the trajectory of those earnings – leading to even more total earnings during a career.
However, life often gets in the way and has other plans for us! Layoffs, poor supervisors, office politics, ever changing industries, excessive personal debt (including student loans, auto loans, etc.), illnesses, poor fit between what we want and need from a career and what we do well, etc. all wreak havoc with our earning power. Every day, week or month that we don’t maximize our full earning power is a day, week, or month of earnings lost forever! Even more reason to make sure that we protect, nurture, and grow our earning power throughout our career.
Here are a few tips to ensure that you maximize your earning power throughout your career, allowing you greater capacity to save and invest for your long-term goals and eventually achieve financial freedom:
- Align your purpose, your passions, and your paycheck: too often I have heard from young adults that the career they pursued during college is not the career they thought it would be. Many are disillusioned with their chosen career path as it does not match up with their purpose and/or their passions in life. Some earn a handsome paycheck, but without the alignment to one’s purpose and passions the money may seem unimportant. Devote time to discovering your purpose in life, your passions that drive you to succeed, and the paycheck that appropriately compensates you for your commitment of time to the career. Hint: if you feel “stress” getting out of bed in the morning then it’s time to consider a career “reboot’.
- Discover your natural abilities: what leverages your purpose and passions are your natural abilities – those things that you were born with and seem easy for you to do. News flash: with all due respect to your purpose and passions, your employer will pay you for how well you understand and apply your natural abilities to help them achieve their Rest assured that you will be at peak efficiency AND near perfect personal harmony when you are utilizing your natural abilities in your career. A recent study indicates that millennials were more apt to leave their current jobs not because of a poor boss (although still a valid reason) but because their employer/boss did not fully recognize and/or utilize their natural abilities or help them align their purpose and passions to their current job responsibilities. Better understanding your natural abilities and articulating how you can apply them on your current job is exactly what employers want to know! 2% annual raises? More likely you will position yourself to realize significant salary increases once you discover your natural abilities and better apply them to your job!
- Continue learning and improving your earning power: I am sorry to disappoint you but your expensive college degree has a very short “shelf life”. You must continually “reinvest” in yourself, learning new skills and discovering new horizons. There is an old saying, “If you are not growing, then you are dying.” The same holds true for your career and thus for your earning power – you need to get busy growing it. Devote a portion of your time and earnings to keep learning new things, assuming new responsibilities, and understanding how to best apply your natural abilities to the tasks at hand. Just as you ‘remodel” your home or reinvest the proceeds of your investment portfolio, so too must you reinvest in yourself to keep your earning power in peak condition.
- Adopt good personal financial habits to help capture and grow those earnings: At some point we all want to call it a day and do something else with the time we have remaining. We desire to pursue another purpose or apply our natural abilities in another way – it’s called financial freedom. The path to realizing financial freedom is to diligently capture a portion of your earnings throughout your career (and if you have found one that leverages your natural abilities and matches your purpose and passions you will have had some wonderful personal memories to capture as well) and put them to good use during your “encore career”. Realize that if you start working full time at age 23 and put in the 35-40 years mentioned above, you will only be in your early 60’s – way too early to do nothing with the remainder of your life. You will find a new purpose and/or passion and the good personal financial habits you formed early and used throughout your career will “finance” the 2nd half of your life!
Protect, nurture, and grow your earning power as it is your greatest financial asset!