The Law of Capital

The law of capital : Your most valuable asset, in terms of cash flow, is your physical and mental capital, your earning ability.

You may not even be aware that, unless you are wealthy already, your ability to work is the most valuable asset that you have. By utilizing your earning ability to its fullest, you can bring thousands of dollars each year into your life. By applying your earning ability to the production of valuable goods and services, you can generate sufficient money to pay for all the things that you want in life. The amount of money that you are paid today is a direct measure of the extent to which you have developed your earning ability so far.

The first corollary of the Law of Capital says: Your most precious resource is your time.

  

Your time is really all you have to sell. How much time you put in and how much of yourself you put into that time, largely determines your earning ability. Poor time management is one of the major reasons for poor productivity and under achievement in every industry in America. It is the number one problem for both managers and salespeople in every field.

  

The second corollary of the Law of Capital says: Time and money can be either spent or invested.

  

To a certain degree, your time and your money are interchangeable. If you spend them, they are gone forever. You cannot get them back. They become sunk costs in your life. 

On the other hand, you can invest them, in which case you get a return on them that can go on and on. If you invest your time or money in becoming more knowledgeable and better skilled, you can increase your value. By increasing your ability to get results for yourself and others, you increase your earning ability, your personal cash flow, sometimes for your entire career.

 One of the smartest things that you can do is to invest three percent of your income every month back into yourself on personal and professional development, on becoming better   at the most important things you do.

  

There is nothing that will give you a bigger and better “bang” for your buck than reinvesting some of your time and money back into your capability to earn even more. All wealthy and successful people  have learned this sooner or later,  and all poor and unhappy people are still trying to figure it out.

The third corollary of the Law of Capital says: One of the best investments of your time and money is to increase your earning ability.

  

The purpose of corporate strategic planning is to increase “return on equity” or ROI. This requires organizing and reorganizing corporate activities so that the company is earning a higher return on the capital invested in the organization. In your work life, your personal equity is your mental and emotional capital. Your job then is to earn the highest possible return on your human capital, to increase your “return on energy.”

  

Identify the things you do in your work that represent the highest value uses of your time.   Focus more and more of your time on doing those things that represent   the greatest contributions   you can make to the most important results that you can achieve. Continually look for ways to increase your return on energy.