Human Capital – What is it?

In this article, we define human capital and explain why it is important.  To begin,
human capital is defined by Wikipedia as the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.  The key word to focus on is "stock."  I go back to a lesson that was taught to me at a young age.  The lesson went like this:
You are your own business and you own 100% of the stock in your business.  Your employees are each dollar you have.  Some you will put to work, they will earn you more money (employees) and your business continues to grow.  Others you will put to work and they will cost you money.  The more you increase your human capital, the more employees you have working for your business.
Increases in human capital means the increased probability that your business will grow.  Human capital are the tools to build your personal business.  Items such as education, discipline, leadership skills, etc...  Human capital is the development of the tools that improve your business.  Your outward behavior is your personal branding.

The Importance of Human Capital

Human capital is important because it is what separates us from others.  Ask yourself, "What am I doing that my competition is not?"  For most people, the competition consists of anybody that wants to do the same job you are doing.  "What am I doing that differentiates myself from them?" is a question you need to ask yourself frequently.

Human capital is extremely important in the development of your career.  See the FitBUX Article titled Keep Developing Human Capital for an example.  Another example is provided to us by CFO magazine.  They recently highlighted an AICPA Survey in their October 2015 issue.  In the survey, they state that only 12% of respondents had no difficulty hiring good candidates.  This is another way of saying candidates didn't have the necessary skills.  In short, their human capital development was lacking.

If you have any questions or would like us to write about a specific topic, please let us know by clicking here.

 

Want personalized student loan help? Sign-up today, it's free.

Free Student Loan Analysis

Related Post

Income Share Agreements vs Federal Loan Programs When it comes to non-federal income share agreements (ISAs for short) there are a few key differences between them and federal loan programs. Fede...
Does Refinancing Make A Difference? In this article we answer the question "does refinancing make a difference?" More importantly, we illustrate how much of a difference it can make. We ...
The Solution to Control Rising Tuition Rates   By: Joseph Reinke, CFA, CEO of FitBUX This article discusses: Why tuition rates have increased at a record pace; and Two benefits o...
Rate Increase and Your Student Loan Takeaways: If you have a variable rate student loan, then your loan may be affected by a rate change. If you have a variable rate loan, you need...
Public Service Loan Forgiveness – Getting the Most... By: Edmund Lau, CFA If you are new to Public Service Loan Forgiveness (“PSLF”), please be sure to read our first and second articles in this series...

1 Comment on “Human Capital – What is it?

Leave a Reply