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:
  
  
  1. 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!
     
     
     
     
  
  
  2. 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.
     
     
     
     
  
  
  3. 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