The Importance of Human Capital in the Family

In an earlier blog (https://www.purposefulfinancialplanning.com/blog-01/five-family-capitals)

I introduced the Five Family Capitals: Human, Intellectual, Social, Financial and Spiritual.


This week I will discuss the first of those (Human Capital) in more detail.


Human Capital is made up of the individual family members – and the skills, talents, knowledge, dreams, aspirations and history that each member of the family possesses.  It also consists of the values, passions, and spirituality of each of the family members. In his book “Family Wealth – keeping it in the family”, James E. Hughes, Jr, says that “Every family wealth preservation plan must begin and end with the acknowledgment that the most important assets a family has are its members.”


The human capital of a family consists of the individuals who make up the family. Families who understand that the growth of their human capital is the first priority of their long-term wealth of the family has their priorities right. The physical and emotional well-being of the individual members of the family must rise to the top of the list of priorities that a family has.


Each of us is unique – like a fingerprint – bringing to the table a blend of values, experiences, skills, knowledge, dreams, hopes, talents, values, passions and spiritual beliefs that is unique in this world.


None of my five children are the same – they have different abilities, different interests, different styles, different aspirations and dreams – and they bring those differences to the table to make our family greater than any one of us. There is not a day that goes by that I don’t learn something from someone in my family – or get a perspective that I had not seen.


Warren Buffet said: “Investing in yourself is the best thing you can do. Anything that improves your talents; nobody can tax it or take it away from you. They can run up huge deficits and dollar can become worth far less. You can have all kinds of things happen. But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold.”


This applies to the human capital in families – but is multiplied by the synergistic effect of the family.


When I sit down and really talk with my clients about this concept, they tend to list this one as the greatest assets any family or individual can have.


Don’t underestimate the power of the Human Capital aspect of a family.


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