152-Measuring Your Biggest Asset: The Lifetime Value Of Your Income

http://radicalpersonalfinance.com/patron You've probably heard that your income is your biggest and most important tool in your wealth-building toolbox.  It is. But it's hard to see and feel that when you simply sit down and look at your net worth statement. Today, I want to share with you a technique that has been useful for me. It's primarily a framing technique: it allows you to actually see the value of your income as compared to your current financial condition. It's been incredibly useful to me and I hope it's incredibly useful to you! Notes: Calculate the lifetime value of your income. Then, think about what you can do to increase that number. There are three primary levers to push: The higher your starting income, the better. Focus on starting from a position of strength (higher wages). Look for high-skill or high-education industries. Focus on a difficult industry. Hard work pays! The higher the annual increase, the better. Build and apply knowledge, skill, and ability. Be in an industry which will reward your increases. Look for big-jump increases by constantly job hunting. Establish yourself as a leader in your industry. Look for industries where competition is low and you can gain a competitive advantage. Look for exponential growth and leverage opportunities. The more years of income, the better. Start earlier. Can you simply get started now without waiting for formal credentials? If it's too late for you to start earlier, can you help someone young start earlier? Work longer. But consider if you'll be able to persist. Look for work that you can do for longer. (Be careful of laboring jobs or mandatory retirement programs.) Look for work that you'll want to do for longer. (Does it integrate with your lifestyle? Do you gain satisfaction and enjoyment from the work itself?) Look for work where your age and wisdom will be an advantage. (Plan ahead for ageism and be prepared to overcome it.) Look for work where your lifetime knowledge and experience will be an asset, not a liability. Your homework: Calculate the expected value of your life's income. Is it enough? Play with the variables and see what kind of alternatives you can create.  Links: Patreon Page for Radical Personal Finance Instructional video for how to make an income spreadsheet Bonus episode for Irregulars with details about my Dallas trip