Your Greatest Asset is Your Ability to Earn Money.
The biggest asset that one has is their earning potential over their lifetime. What I have found is that, especially with the young people right out of college, they get these great degrees from these schools and the jobs out there, the job sector in our country, is not matching up with their higher educational degrees that they have.
I’m finding that a lot of the jobs out there for the younger generation, they’re not matching up to their higher educational degrees that they received. Once you get out of college, you’ve got all this debt to pay back on those school loans. What I’d like to impress upon you is that, even if you’re not matched up to what you went to school for and what your degree was about, and you’re currently in a lower paying job, your earning potential is over your lifetime is still incredibly powerful.
Your earning potential is the amount of money that you will make throughout your lifetime. No matter what type of job you have, no matter what your income is, it’s going to add up over the duration of your lifetime and become the total net worth of the wealth that you have accumulated.
Why Is Your Earning Potential So Important?
Most people make money, they put it in the bank, they pay their bills, they spend money, and that’s what they do throughout their life. That’s a routine. But I want to show you how powerful, how important it is to save for the future. Because you’re going to live a pretty good lifestyle during your working years, but then there’s going to come a point when you’re going to retire and you’re either going to have to change that lifestyle or you’ve had a plan together that will help you have the same lifestyle when you retire as what you did during your working years.
Here’s an example of what your earning potential could be.
Let’s imagine a 25-year-old, right out of college, you’ve got college debt. You might still be living at home, but you are making some money. You haven’t been matched up to your higher educational degree yet, but someday you will. So, right now you’re 25, you plan on retiring at 67. You’re making about $45,000 a year. You’re probably not very happy with that, but hey, you’ve got to start somewhere. Your income growth, let’s say is going to grow about 3% every year. You might not have a lot of money in the bank, so let’s just say you have $1,000 saved at this point.
On that $1,000, or any other type of investment you have, you can get a 5% return. If that’s the case, when you retire at age 67 your income potential – the amount of money that you have earned – will be $3,691,044. That’s a lot of money passing through your during your lifetime!
How Will You Proceed?
If you’re like some people, all you do is spend that money. Are you going to be one of these people that spends all your money and then if there’s any leftover, will save some, or are you going to be one of those that saves money for my future and then I’ll pay my bills and spend what’s left over?
If you look at your wealth potential, if you invested every dime that you ever made from the age of 25 up until you retire at 67 (we know you can’t do that, you have to live!) but, let’s just say you did. Your actual wealth potential in this scenario is $10,168,618. That’s the amount of money that you would be worth had we invested everything that you’ve made on a $45,000 a year salary.
What’s important to get out of this is the fact that you’re going to make a lot of money over your lifetime and you’ll probably make more than what you’re making now. You have to discipline yourself to save some of that money. Put it in a compounding entity, a financial product where you’ve got compounding interest, and over the next 40-45 years, you’re going to have a nice nest egg when you retire. You will be able to live the same lifestyle when you retire as what you’re living now.
Don’t Shortchange Your Future.
As you can see, you’re going to have a lot of money pass through your fingertips, even more than what we’re showing you here because someday your higher educational degree is going to match up to a better paying job for you, but you have to deal with what you have right now and right now there are a lot of financial pressures.
For example, how are you going to pay your mortgage? You’re going to have taxes. How are you going to pay your taxes? How are you going to fund a major capital purchase like purchasing a car, paying for your child’s education, your credit cards.
Being Wise About Your Money
During your lifetime, your standard of living and how you manage your money is going to have a direct proportional effect when you retire as to how much money you have and what type of a lifestyle you can have at retirement.
In working together, we can eliminate some of these areas where you’re going to be losing money unknowingly and unnecessarily, like how you pay your mortgage, how you pay your taxes, how you fund your qualified plan, how you’re going to pay for your kids’ college, and how you fund major capital purchases.
If we can fine tune these necessities and eliminate some of the losses, we’ll be able to bring more money back to the table and you’ll have more money to put into your future, so that when you retire, you can have the same lifestyle, if not a better lifestyle than what you’re living today.
This is Rodney Jones and that’s your financial news for today. If you want to learn more about the power you have in your earning potential, I’d love to have a conversation with you. Just give me a call or shoot me an email.