When asked to name their most important financial asset, many people say, “my home” or “my car.”
Yes, a home can be a significant financial asset, but the value of a home pales in comparison to your lifetime earning capacity or earning potential. A doctor who earns $300,000 per year over 30 years has a lifetime earning capacity of $9 million. Compare this to a home with a value of $400,000 and you can clearly see that the human financial asset is far more important.
Protect Your Lifetime Earnings
All professionals invest in themselves. Economists refer to this as developing human capital. One of the distinguishing features of doctors is that they spend more time, money, and effort on building their human capital than most other professions. Your return on this investment comes in the form of the lifetime earnings you receive. These lifetime earnings are needed to: pay off student debt, cover a home mortgage, make car payments, fund children’s college education, and provide enough for a comfortable retirement.
Safeguard your earning capacity
Traditional safeguarding comes in the form of life and disability insurance. Insurance is discussed in a separate chapter.
But there’s more. Your emotional and psychological wellbeing are also crucially important to ensuring a long and productive career. All of these must be nurtured and protected.