Managing Our Greatest Financial Asset


What matters most to your employer is your output. If your superb and satisfying input produces output with little tradable value, then money simply will not flow in your favour (as I write this I’m becoming very aware of my manager over my right shoulder that will make a judgment on this piece of writing later today). The efficiency of this output is called production, which as we have established has a tradable value, your income, which when optimized provides value to you and to your employer. It is this production is our greatest financial asset.

Finding the value of human production has been the cause of great interest, great angst and almost every civil war. Academics have tried to define it, corporations have tried skewing it in their favour and politicians seek to control and create standards which work towards their interests (which is us or the corporations depending on the situation). The important thing is though we all know what our income is, do we really understand our own personal productivity, and how do we measure our own greatest financial asset and increase its value?

1. Our yield or rate of return 2. Our risk 3. Our cash flow and 4. Our liquidity

Cash Flow: Our personal cash flow is the one which we are probably the most aware, every week, fortnight or month our income comes in. If you have the option to change your wage between these time scales then experiment, because how you budget can have a real effect on your financial health.

Liquidity: This is a measure of the speed an asset can be converted to cash. As property cannot be easily turned to cash it is not considered liquid, funds in a brokers account is the opposite. But what’s your personal liquidity? You know how much time you spend working for cash? If there was a way you could create more cash from less time wouldn’t you take it? Do you have friends who earn a comparable income in less time? What are they doing that you are not?

All of this is traded off against risk. The less risk the less reward and conversely also. In the financial services industries asset managers are also called risk managers because there is a direct correlation between the two. Risk managers balance rate of return, against risk, against cash flow, and against liquidity in order to produce value in their portfolio. We could all put some resources into managing our greatest financial asset, and there are plenty of people who sell advice, remember every institution will have a bias and independent advisers will have too. That’s by no means a suggestion not to use them, just a word of caution. In closing, perhaps some personal study in risk and asset management is in order so we can get more value from ourselves, our greatest financial asset.

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