# Balancing Human Capital versus Investing/Savings



## eulogy (Oct 29, 2011)

I've been thinking lately about my human capital. For 2012, I made my yearly financial goals and all of them fall under the category of savings/investing. And it's a lot of savings for me, so it's a tough year. 

I did add in something small to get that would fall under the category of improving human capital.


I wanted to know what people think about finding a balance between the two. Typically improving my human capital will involve some sort of educational cost.

I've had human capital on my mind a lot lately. I guess the best way to explain is to just give the story.

I'm an engineer, but I have sort of an entrepreneurial side to me. I'm still in my EIT (engineer in training) stage and I've been sort of rethinking my recent job move.

Essentially, I started with my first job that happened to be in the commercial construction industry. I caught on pretty fast with the job and the work. I don't exactly view commercial construction as "engineering", but regulations make it so.

The work wasn't that bad, it was just some of the people there that really irritated me. The best way I could describe it was that it was dysfunctional. Toxic employees is the textbook definition of who I'm talking about. Even the boss ran things in ways that left designers in precarious positions.

Aside from the point, I received an offer for another job and took it. This one being in the utilities industry.

I find myself still unfulfilled. Surprisingly, the job doesn't have much "engineering" to it as well. 

But I guess the thing that is really starting to bother me is that this new job and the skills that come along with it are quite limited entrepreneurial-ly. Entering the utility sector has a lot of barriers.

The old job I caught on pretty quick. There is absolutely no barrier to the industry. The only barriers are based on your knowledge. A friend from my old job is going to eventually break out into his own business. He's doing work on the side (which he has passed some work on to me related to my expertise). He has mentioned that he would like me to be involved, but the fact that I left my first job and left this industry my knowledge bank isn't growing nor is my experience.

And this is leading to problems with me, in particular second guessing.

On the one hand I have a secure job with good pay. I have pretty good benefits and have a lot of paid time off (2 weeks vacation, 12 days flex). But the upside is steep. Working for years won't really yield me much of a change, other than my pay. Four years won't yield me more important responsibilities.

Comparing that too the commercial construction industry I could easily be pushed into a project management role and this experience is something I could immediately do on my own or with my friend (we both have complimentary disciplines that would work together). As slimy as the construction industry can be, there is a lot of money upside and my roles can be adapted from the actual work (design) to the management type role as I've done them.

I guess this is more of an aside to my previous question. I'm just trying to figure things out. I don't think it would sit well quitting a job after 5-6 months.

I appreciate any comments.


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## Plugging Along (Jan 3, 2011)

I actually think investing in one career or aka ‘human capital’ will give you better returns in the long run than just investing your money. You didn’t mention how old you are, but I’m assuming since you’re an EIT, relatively young, probably under 30. 

Here are my are my random thoughts:
-	There are actually a lot of parallels to investing with cash and investing in yourself. Both have to consider risk tolerances. The younger you are the more ‘risk’ you should be able to take on. I think that when one is first starting out their career, they should not worry about the money, the benefits, or stability as much. In the beginning, I always focused on finding jobs that would allow for advancement, had at least 2 directions which I could see myself doing, and had lots of learning opportunities. As long as the money was enough to pay my bills, then I didn’t worry about it. 
-	As for stability, nothing is ever guaranteed, and I think one puts themselves in MORE risk by looking for a stable job which they could stay at forever at a young age. This is leaving the control in the company, which to me is a risk. The company could downsize, you could actually hate your job in a few years, and not feel that you have learned anything, their could be a change in management. I am actually quite amazed at how many people look for jobs that they could retire it. Just remember no matter how good a company is, and how much they love you, everyone is ALWAYS disposable. I actually opted out of a golden DB plan, so I would never feel handcuffed to a company. I have enough confidence in my human capital that I know I will do better. 
-	You don’t always need money to increase your human capital. Often companies will pay for additional training especially if they see you as a high performer
-	The more variety and faster you can learn things, the better. I use to volunteer for every project that I could to learn something, often I wasn’t compensated and did it on my own time. This type of learning increases your human capital just as much as formal education. I’m in my mid thirties, and I have more experience than most of my colleagues who are all in their 50’s. 
-	Just like investing, the earlier you start increasing your human capital, the bigger the returns. 
-	The longer you wait to invest in yourself, the harder it is later. It’s harder to upgrade when you have a family, and young children to take care of. When you’re young, what you have to lose is much less. Your opportunity costs are lower, when you’re first starting you career, it’s not as big of a deal to quit you job to further your education. It’s much harder to leave a $100K job later, than it is a $50K job now. 

My advice would be if you’re learning much, see if the company will pay for your education upgrading. If not then find a company that you will be able to gain a lot of knowledge, or at least have them pay for your classes, ideally both. 


You have lots of time to rebuild your savings.


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## eulogy (Oct 29, 2011)

After originally posting this thread, I thought about it most of the evening.

Plugging Along, I agree with everything you're saying. It's pretty much bang on with the way I look at it. I'm in my late 20's, so I do have time on my side to work on human capital.

I realize that I can often get my job to pay for such educational experiences, but the one I have now doesn't seem to have that type of thinking. The way I see it is that someone more important or invested in the business will have these opportunities and the education they get will eventually flow down to others.

My previous job I took advantage of all the courses and stuff I could get a hold of. The year I left I probably got about $2000 of courses out of them, some seminars and if I stuck around for a few months longer I could of got some more.

It's sort of the situation I'm in. At least in the construction industry there is more opportunity for courses and such because the information isn't tough or hard to learn, but there is just such a wide range of it.

But I do agree that a lot of what I could learn I simply couldn't take a course or go to school for. I literally need to take on the projects because that's really the only way to learn. I just don't have that opportunity at my current job.

Last night, I did decide to get a certain certification that's applicable to the construction industry. From there, I'll probably seek new employment from a competitor of my first job. The certification will make me a shoe in. And then I can start taking on big projects that are a learning experience I feel I can take away with me.

I guess that's what the tough choice is; stick with what you're doing that does earn you something good or take a risk for something better.


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## Mall Guy (Sep 14, 2011)

_"The longer you wait to invest in yourself, the harder it is later. It’s harder to upgrade when you have a family, and young children to take care of"_

I hear you on that one, what I learned from taking an MBA in my 40's was I should have taken it in my 20's!

PA is offering sound advise. Find something that is challenging, that keeps adding to your experience. I am in my current senior management position, do to the fact that I ventured into the many different areas of my industry, learned the different roles, and kept moving.

Think outside the box on what type of company could use your skill set, like a hospital or in-house at a large residential builder.

And quitting after 5/6 months . . . not great for the resume, but if you weren't working out, your current employer would take care of that for you. Remember, you work for YOU Co. And, it is likely that you will retrain or learn new skills 4 or 5 times over your career . . . "hired for life" and "job secure" . . . not so much anymore.


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## Plugging Along (Jan 3, 2011)

eulogy said:


> I guess that's what the tough choice is; stick with what you're doing that does earn you something good or take a risk for something better.


This is where the risk profile comes in. If you think you're an entrepenuer, then you will jump at what might be better. Almost everyone in my family all took the risks, and it paid off. Right now, you are just starting your career, so the money may be good, but it won't be hard to replace with an engineering degree that you already have. You have nothing to lose now, but everything to gain. Don't get me wrong, don't be impulsive about it, make sure you have something lined up, and a clear plan. 



Mall Guy said:


> _"The longer you wait to invest in yourself, the harder it is later. It’s harder to upgrade when you have a family, and young children to take care of"_
> 
> I hear you on that one, what I learned from taking an MBA in my 40's was I should have taken it in my 20's!


Yep, I thought I had a lot going on in my 20's with my career, so didn't get my MBA, thought I would wait till a little later, now with kids, I'm going to have to wait another 10 years or so. 

Go as hard as you can, and don't be afraid to take risks when you're young and don't have to worry about dependents.


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## crazyjackcsa (Aug 8, 2010)

If you do one really well, you don't need to do the other.

There is risk involved in both, especially in a depressed job market. I'm all for investing in yourself or investing in the market, or both, but you need to figure out the risk/reward.


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## loggedout (Dec 30, 2009)

It depends on your personality type, what your goals are and what level of risk you are comfortable with.

I'm an engineer too, but I don't have an entrepreneurial spirit, passion for my career nor a tolerance for a great amount of risk. That said, I've jumped around from jobs in different industries and sectors with the idea that I'd find something I'd like. I've learned a lot but really haven't found any work I've enjoyed. Also, I'm not sure how much of this it matters or really increases this unquantifiable "human capital" that everyone keeps talking about.

Honestly, I think it's often quite difficult to gauge which "human capital investments" are worthwhile and how risky they really are. That's what makes choices like leaving your job to try something else difficult. Recently, I was offered the opportunity to apply for a reasonably attractive "package" for a voluntary layoff, but decided against it, because I had no idea what I would do. I couldn't estimate the risk involved with leaving my job to go to school or look for another gig, with any degree of accuracy. But I'm the kind of person who sees the glass has a half-empty so take that for it's worth.

Anyway, good luck to you.


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## MoneyGal (Apr 24, 2009)

Human capital isn't unquantifiable. You just have to make a bunch of assumptions about how you're going to quantify it. 

Here's one calculator which will at least display the variables you might want to consider when quantifying the unquantifiable: 

http://www.qwema.ca/calc/humancapital.aspx


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## loggedout (Dec 30, 2009)

Okay so it's hard to quantify with a great degree of certainty.


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## MoneyGal (Apr 24, 2009)




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## hboy43 (May 10, 2009)

Hi:

I'd probably concentrate on getting the P.Eng. in the short term. Once that is nailed then have that heart to heart inside your head and go where it directs you. 

hboy43


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## eulogy (Oct 29, 2011)

Thanks for everyone's input. It really does help with putting things into perspective. I think deep down I knew what I wanted to do, but those "social" (or thoughts of social) forces pushing on me to stick with what I have now.

I think the comment about how it's harder to leave when you're making $100k than $50k.

I'm going to start a course next month to get my certification. Once I have that, I'll throw out the resume and see if someone bites. I feel bad leaving a job after only 6 months, but I have to put my interests first.

Thanks again everyone.


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## Causalien (Apr 4, 2009)

When I got out of the world, I immediately joined a startup before the word "startup" is coined. So my beliefs might be out there with the crazy.

Human capital, is the most important thing in the world. The most precious and rarest of human capital, is a like minded entrepreneur friend who wants to start something. Out of everyone I graduated with, only 1 other person wants to start his own business. 

Out of everyone I've worked with previously as a clog in the machine, only 2 wants to start (and have the courage to start) his own business. If I was in your shoes, I'd hit up that friend and start something right away.

And let me tell you about all those people who talk big then chickened away at the last minute. 

But, the above is only true if you have a safety cushion for at least 2 years. If you can't feed yourself, human capital can't help much. Sure, they can bring you bacon once or twice and offer you a place to crash, but you need to have that handled before you can jump.


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## eulogy (Oct 29, 2011)

> If I was in your shoes, I'd hit up that friend and start something right away.


This is something I'm willing to jump into right away, though my friend isn't ready financially for it. I do feel I need more experience in this field, so that's why I'm going to try to find another job in this market. Hoping I can get a few big projects and that should hopefully cover most bases.


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