Written by: Bill Sherman on Wednesday, 23 July 2008, 6:13 AM
Yesterday, I wrote that Social Capital can be compared to a bank account: you must make investments before you can make withdrawals. You can get “overdrawn” on social capital.
Let’s continue the metaphor of the bank account, and push it a little further. When you have a checking and savings account, you can make balance transfers. Capital works the same way.
Imagine that you receive an unexpected check in the mail for $1,000 in the mail. The giver has only one requirement. You must invest the money. You cannot “spend” it.
Many people might search for the best performing stocks and mutual funds. However, when you look at the concept of capital, you can make many different types of investments.
Let’s look at a few examples of how you could invest that money.
- Invest in Financial Capital–put the money in your savings account or retirement account
- Invest in Physical Capital–buy an asset that saves you time or increases your productivity
- Invest in Social Capital–treat your friends to dinner or go visit distant friends
- Invest in Human Capital–enroll in a college class, go to a conference, learn a new skill
Each of these choices could be viewed as investments (rather than expenses) under the right circumstances. The $1,200 dollars you invest today could yield much greater dividends in the future.
We’re always used to thinking about “spending” money. Some of us say we don’t have much money to invest. In fact, in a tight economy, some might say they have “no” money to invest.
Can you think about the money you do spend and find ways to leverage them into investments? It requires you to shift your mindset to a different way of investing your money (and your time).