Throughout our working lives, the money we earn is expected to go a long way. Our incomes pay for places to live, transportation, household expenses, and things like travel or activities. These incomes even go toward paying for educational and medical costs for our children. Working to earn a living is something most people do in their lives, and they may work for 30, 40, or even 50 years before retirement.
What happens when you stop working? Will the money you made during your career be enough to secure your financial future? In this series of blog posts, we’ll discuss important tips for you to help ensure a healthy and safe financial future.
Earning Power Defined
When talking about finances, a common term one might here is “earning power”. In the simplest terms, this means a person’s ability to earn an income while he or she is working. Income can come from several sources, including:
- Investment income from stocks, bonds, real estate, or other assets
- Job income (the salary you bring in as you work)
- Your spouse’s income (salary, bonuses, investments)
- Other income sources like monetary gifts, bonuses, pensions, and retirement funds
Your current and future earning power can do a lot of things, and few people truly understand how earning power works without some illustrative numbers. Say, for example, that a 30-year old couple brings in a combined salary of $100,000 a year for their entire careers. Without any raises, this couple will earn $3.5 million over the course of their careers. Of course, the more money you make, the bigger your earning power. A couple that earns an average of $500,000 in combined salary may make as much as $20 million over a career! Even a smaller combined salary, such as $50,000 over a lifetime career, can bring in $2 million, and that’s without ever receiving a raise. So, you can see that working and earning a living is a person’s most valuable asset.
What Do You Want to Do with Your Earning Power?
When thinking about finances, only you can decide what you wish for when it comes to your earning power. This is directly related to how you want to live your life; both earning power and lifestyle are linked tightly. You will have many decisions in life on what you want to do with your money and how you want to enjoy life, such as:
- Do I want to live for today, or keep an eye on the future with savings and retirement investments?
- Do I want to own a house? Where do I want to live? What sort of house would I buy?
- Do I want to work for myself at some point by establishing my own business?
- Will I pay for my child’s education? If so, what sort of college or university will they go to?
- Do I want to travel, or engage in a leisure activity?
- Do I want to start and maintain a collection of valuable items, such as cars, jewelry, or historical artifacts?
- What sort of lifestyle do I envision for myself?
Again, only you can provide the answers to these questions. More importantly, only your earning power can help you achieve your goals and dreams; doesn’t it make sense to want to protect that financial potential? Let’s get started on talking about the tips you’ll need to secure your financial future.
Stay tuned for 12 TIPS FOR SECURING YOUR FINANCIAL FUTURE.