YOUR MOST IMPORTANT ASSET

What is your most important financial asset? Is it your home? Your superannuation fund? Your investment portfolio? Or perhaps you think it’s your sports car!

Well, the correct answer is… It’s you!

That’s right, you are your own most important financial asset. Think about it. The median wage of Australians working full-time is almost $90,000 a year. If the average working career is 40 years, then the average Australian will see more than $3.5 million worth of wages or salary pass through their hands. And that doesn’t take into account any pay rises at all! In addition, their employers will need to contribute more than $400,000 into superannuation on their behalf. So, your working life is worth almost $4 million – and that’s just if you’re earning near the average wage.

What’s more, you will use at least some of this $4 million to buy wealth-creating assets such as a family home, investments and assets in your superannuation fund. Without an income, none of these things are possible.

Even more importantly, you will use much of this $4 million to support the people you most care about – your partner, your kids, your parents – maybe even your favourite football team.

Most of us do not think twice about insuring less important assets such as our car or our house. Some people even insure their holidays. However, too few people realise that the most important asset to insure is themselves. In particular, their ability to earn an income.

That’s why we recommend that people treat themselves like their house or their car. Every year you need to pay some money to make sure that your asset remains in good working order. That it keeps doing the job you need it to do – putting a roof over your children's heads in the case of your home, getting you from A to B in the case of your car. And bringing in that monthly income, in the case of you and your good health.

So, if you haven’t already worked your way through this part of the Wages to Wealth program, make it a priority to do so (and if you’re struggling for time, maybe mark it in the calendar. And if you are already on top of this, then keep an eye out for Monthly Money in November, where we’ll give you a nudge to review personal insurances.

As always, please shoot us an email if you have questions or need a helping hand.

Cheers,

Dan and Dave