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The 4 Most Important Kinds Of Human Capital And How We Can Protect Them. Thumbnail

The 4 Most Important Kinds Of Human Capital And How We Can Protect Them.

There are 4 main types of human capital. Before we dive into those different forms, we first should define human capital and why it's such an important part of anyone's financial journey. Human capital is what you put out into the world every day. The different forms of human capital is how you do it. And what you put out into the world is directly correlated with what you get back in return. And what most people want back in return revolve around the core values of their life. So better understanding your human capital and making sure it's always in alignment with your core values is the best working definition of financial wellbeing that I know.

Key Takeaways: 

  • The most valuable kind of your human capital is time
  • Why attention is about being in the moment
  • How your talent is your unique gifts to the world
  • Your financial resources is your way of creating your best version of change

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The most important piece of us that we can give to the world is our time. It's the only finite element in our life that we can never create more of. It's also something that no one knows how much they have. Because of that, it's an extremely precious asset and when you give it out it better be in service to something that is very important to you.

People tend to get in trouble when they spread themselves to thin. When this happens, they are unable to show up 100%. They will be their physically but their emotional intelligence will be lackluster. And you would think that this would be most detrimental to the people who are requiring your attention at that time. In reality, it's actually you who suffers the most. When you can't control your time and you spread yourself to thin, you sacrifice your best self for a suboptimal version. Putting this into the world will bring suboptimal results back and you don't want that.

So knowing that time is your most important piece of human capital, what can you do to protect it? You should take on the mantra of "If it's not a hell yes, it's a no!" This phrase comes from Derek Sivers and it simplistically states that if there are multiple areas of your life that are requiring your time, you should only commit to the things that bring a "Hell Yes" emotional response. Everything else should be a respectful no. It's going to feel rude and a little mean at first but the time freedom this create will allow you to bring you best self to the world much more often!


Attention may seem very similar to time, but it serves a different purpose. It has more to do with your focus within the moment than it does your physical location. Attention is understanding, within the moment, what takes presentence. The example I like to give is when a mother or a father make it to their child's first basketball game. They have decided to give their time to an important core value of their life, which is their child. But while they are there, they are not present. Instead they are spending a significant part of their time on their cell phone. Their attention is not on what is truly important to them.

So why does this matter? Because when we misplace our attention, we miss little details. And everyone knows, the little things are what manifest into the big important things. This puts you at a slight disadvantage in every area of your life due to the compounding effect. These little lack of focus episodes, repeated over and over again, can transition into big regret. It's always the little things that people regret missing the most.

How can we refocus our minds so that we can focus our attention on the important things in life, regardless of how seemingly insignificant they may seem in the moment? My best piece of advice is to work on improving your concentration. When you can concentrate your mind, it becomes easier to control your attention. Better concentration will help tune out the other attention sucking pieces of your life. Increased concentration will sharpen your attention which will lead to it being distributed into the world in a much better way.

Human Capital


Talent is sharing your unique abilities with the world. You're a great singer? Great, you can use that skill to entertain guests at a non-profit community event. You're a skilled craftsmen? Fantastic, you have the ability to create things of need for people who don't have that same ability. However you act in the world is your form of sharing your own unique talent with everyone. It can be through a hobby, job, volunteering, etc. It doesn't matter what you are doing as long as you are giving your unique ability to whatever task is requiring it.

The biggest way talent is wasted in the world is through unmet potential. When we have the ability to do something and we chose not to do it, that is literally stealing human capital away from ourselves and others. Natural skill in our world is a rare commodity because it's so hard to replicate. So when that ability is neither nurtured or acted upon, it can leave a big void in the world. And it may be something small that ends up making the biggest difference. 

In order to show off our talents and meet the potential we were destined to achieve we all need to fight fear. Overcoming fear is usually the single biggest obstacle we face on our journey of delivering our talent to the world. And most of the time that fear is a result of our own self deprecation. A common acronym for fear is "False Evidence Appearing Real." To over come what scares us most, we need a mentality shift. You have to have a belief in yourself and an unbreakable resiliency to power through the false evidence that fear presents. If we can do this, we will share more of our talent with the world and will almost certainly receive far more in return. 

Pharmacist Money


We can't discuss human capital without the monetary component. Money sometimes gets aligned with words like greed and selfishness. But that isn't fair. Money can be a positive and powerful form of human capital if it's managed correctly. Philanthropy is a great example. Money is an easy way to show our commitment to the things in the world that we care deeply about. Of all the human capital we have, money is the easiest to quantify. It has an exchange value with almost everything else we come in contact with.

We get in trouble when we start to value money as a goal instead of a tool. More money means very little if we don't have a specific way of how we want to use it. So instead of looking at money as a scarce resource, flip your mindset to instead see it as a means to an end. Money shouldn't hold significance unless it is clearly attached to a bigger end goal. And as long as those goals are aligned with your core belief system, you should have no problem distributing your monetary resources in a way that best exemplifies you as a person. 

When we can create change in the world that reflects our core values through our financial resources, we become extremely influential. That influence can cause ripple effects in our society that can have lasting effects. That is how you want to focus the money aspect of your human capital!

Bottom Line

Creating perfect alignment between our human capital and our core values is the ultimate financial goal. But it can be much easier said than done. The first step in this direction is creating self awareness of how you allow your human capital to show up in the world. Once we understand this, we can work to become better at it. Because the closer we can get to that perfect calibration, the happier we become. And that is what it's all about!

Derek Delaney is a Minnesota (Minneapolis / Rochester area)  Fee-Only financial advisor serving clients across the country. PharmD Financial Planning provides professionals and families with financial planning and investment management with a focus on tax-efficient retirement planning.

As a fee-only, fiduciary, and independent financial advisor, Derek Delaney is never paid a commission of any kind, and has a legal obligation to provide unbiased and trustworthy financial advice.

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