In society, we are given suggestions about how we can save and budget for our future. The popular consensus is that we should cut back on our current expenditure and relocate our money from one area to another. The issue is we can only cut back so much before our quality of life begins to deteriorate. The purpose of utilizing our money is to make life better today and in the future therefore at some point, we have to make more money. We have to increase the amount that’s coming in while still managing it according to our goals. In this way, we can achieve our goals faster and begin living the life we desire.
We can increase the value of each hour we are working by increasing our capital. We will discuss a few different types of capital we can increase.
- Human capital
- Social capital
- Economic capital
Human capital is the accumulation of knowledge, experience, and skills that individuals possess. By increasing your human capital you become more attractive to employers and can better justify your worth in your job. It is important to continue to grow because even if you’re giving 100% in your field just as quickly as you entered you can be replaced by someone more qualified and knowledgeable.
“You can be the best player on the team and a couple bad performances can have you sitting on the bench” – Brandon Miranjie
The greater your human capital the more options that become available to you and you are less reliant on your current job. You can increase your human capital by receiving higher education or gaining more experience. The traditional route of receiving a four-year degree is only one way of achieving this. The four-year degree is becoming less of a guarantee for a job and it is more necessary than ever to differentiate ourselves. Taking online courses or gaining experience through internships can dramatically increase your human capital. Even courses not in your field can make you more well-rounded and attractive to future employers. Internships are a great way to explore the field you would like to go in. It is much better to figure out you hate accounting after a 4-month summer internship than after you get a four-year degree.
The opposite is also true. If you become very knowledgeable in one specific area you are justified in charging a premium for your services and make more money. This is exactly why a neurosurgeon makes more than a nurse. The neurosurgeon has accumulated enough human capital in order to make their time more valuable than a nurse. The neurosurgeon’s pay is then justified for the time they have put in through the development of knowledge, experience, and skills.
Social capital is the relationship between people who live and work together in order to make sure a society functions effectively. Increasing your social capital can also be known as “networking”. You are developing professional relationships within your field and exchanging information. These relationships can better help you meet your aspirations and be a safety net if you were to lose your job. Your network can support you as long as your relationships are more than exchanging business cards and they are deep and meaningful.
You can increase your social capital by keeping in touch with people in your field, alumni, etc. Now more than ever people are available on social media on various platforms. Dedicate a certain amount of time in the week to reach out to someone you know and connect with them. It is very difficult to see the value in connecting with someone in the present-day but it can be a massive benefit in the future if you ever look to change professions or lose a job.
Economic Capital is the ownership of land, stock, cash, etc. The more economic capital you have the more opportunity you have to improve your health, skills and overall improve your quality of life. While the benefits of increasing your economical capital are very good actually doing so can be a struggle. The easiest way to increase your economic capital is to get another source of income. This could be a second job or maybe a side hustle/passion you would like to pursue. This can be difficult as we are constantly faced with scarcity in our lives and it always seems like we never have enough time to do the things we want to do. We can also increase our income in our current positions, the cost of hiring an employee and going through the training and onboarding process is very expensive. If you simply ask your supervisor/boss for a plan in order to get a raise or simply asking for a raise while presenting what you have done for the company it is very likely they will offer you an increase in salary. While this should be done with caution. Done appropriately it can yield massive benefits.
We can see how important your capital is to improve your quality of life and your economic position. Take the steps to set yourself down the right path and plan for your future.
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