When many of us think about what we’re “worth” to a company, many of us don’t really think about our human capital. However, it’s important to understand your human capital, as well as how you can leverage it to improve your financial situation in your career and in life in general.
What is Human Capital?
At its most basic, human capital is a measure of the skills and knowledge that you have. These skills, and the knowledge and expertise that you have, can contribute to economic value. In many cases, these items are hard to quantify. However, they are valuable and with your enhanced human capital, you can add to the economic value of a company and even enhance your own personal economy.
Adam Smith, the famous economist, pointed out that, “Those talents, as they make a part of his fortune, so do they likewise that of the society to which he belongs.”
Think about your talents, and your expertise, and how they can be improved to add value. That’s your human capital. How you use your human capital can determine how much money you make at your job, or how you manage money in your personal financial life.
Identify Your Strong Points
Evaluate your situation, and identify your strong points. Then, consider how they can be used to add value. If you communicate well, this is a soft skill that has a great deal of application in today’s business world. Someone who communicates well, whether it’s through writing, speaking, or presenting, can be a very valuable asset.
Specific skills knowledge can also be valuable. Your proficiency on a specific type of vital software can be desirable. Look at your talents and skills, and realize that they can bring something of value to a company. This is a point you can bring up during salary negotiations, or when you are asking for a promotion. Look at how your human capital can enhance the company, and use that as a way to leverage your position.
You can also use your human capital in your own financial situation. Do you have good technical knowledge? Do you have an eye for good design? You can start a side business in web design. You can also apply qualities such as organization and planning to your money management technique to improve the way cash moves through your personal economy.
Improve Your Human Capital
One of the great things about capital is that you can use it to make even more money. The same is true of human capital. You can improve your abilities and skills, building on your raw talent to become even more valuable. Adam Smith pointed out that, “The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labor, and which, though it costs a certain expense, repays that expense with a profit.”
Taking the time to improve your skills and enhance your knowledge can mean effort, and possibly expense. But, in the end, you will be able to apply your improved human capital in a way that results in profits.