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Home > Investing > Do You Know Your Lifetime Earnings?

Do You Know Your Lifetime Earnings?

February 12th, 2010 Leave a comment Go to comments

Do you know how much you will earn over your lifetime?  Here’s a calculator to determine the amount. I entered my initial earnings when I started working as an adult and took a growth rate of 5%. 

When I calculated it for myself, I was surprised by the amount: well over $4,000,000. That’s a big number. And the calculation doesn’t account for those big jumps that can occur in your earnings when you move up in your career. I had one of those moments when I went into consulting and have had a higher billing rate ever since.

What I think is important here is not the number you calculate, but the knowledge that this number is finite. Also, unless you take some action to increase your earnings (opening a business, prudent investing, etc.) or are extremely good at creating your own luck, the range of this estimate is likely to be correct. So, if your estimate is $3M, it isn’t likely that your actual number will be $25M it will be in the range of single digit millions.

If you view your earnings this way, it will give you a whole different perspective on your finances particularly your debt and investing. For example, sales people that are selling cars, mortages, timeshares, etc. very often focus on monthly payments. If you look at the debt you take on from a longer term view in how it reduces your lifetime take home money, the lower payment may not turn out to be such a good deal.

Over time, I will talk more about specific ways to help you determine the impact your financial decisions have on your long term view. 

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