Every worker in Ireland is going to get money. Some people will get large amounts some people will get smaller amounts. If you are of average age and earning the average salary, which according to CSO figures released recently is 37.4 years of age earning €37,646, you will get €1,151,026. (it is important to note that the average wage is skewed by high earners, the median wage is closer to €28,000)

The younger you are and the more money you earn the more you will get. For example, a 24-year-old earning €50,000 a year will get €2,200,000 where as a 55 year old earning the same money will get €650,000.

The payment is what is known in the Financial Planning world as Human Capital. You see this money is not going to be paid today but instead will be paid to every working person in the form of their salary between now and when they retire. Human Capital is the value of all your future income.

I know it is a bit misleading to start by implying you are going to get all the money now when I am just talking about your remaining career earnings and adding up all your future income. But there is a reason I want you to think about your future salary in this way.

The CSO released figures on average earnings for every worker in the country, as mentioned it is now €37,646. The reality is that if you heard this figure it is likely you thought to yourself I am above that figure or below it and went on with your day.

But there is more to it than that. When you think about all your future salary as a lump sum it starts to have more meaning, but it also starts to highlight some things that become a little frightening.

Looking at our average earner, the person earning €37,646 per annum who is going to get over €1.1 million you start to realise some things.

It is scary as they will only put about €100,000 of the €1.1 million aside for their pension. Let’s put that into perspective, they are going to earn a further €1,151,026 and live off that for the next 30+ years but then they expect to be able to live of €100,000 for the next 30 years or so from age 68 to age 100. It doesn’t figure.

The same person will also spend approximately €195,000 on tax during their working life. You might say there is little can be done about that… but that’s what a good financial planner can help with.

Other big expenses the average person is going to spend on is €167,000 putting a roof over their head, €127,000 on transport, €34,000 on clothes and shoes and €28,000 on alcohol and tobacco.

When you start to see your income in this way you start to realise just how much money is at stake. It makes you think about things like, how much the electricity bill is costing and whether or not it makes sense to spend more money on things like cars than you do on things like having enough money to eat when you retire.

But it also should make you step back and think for a minute, what if I were to die? Could my family survive financially if they never got all my future financial income? The average life cover pay out is less than €100,000 in Ireland, that is a drop in the ocean when you consider your Human Capital. Let’s face it €100,000 won’t even cover the €125,000 food bill!

Ultimately it is your money, you earn it and you should spend it on whatever you want. But the key is, you should be conscious of what you spend it on.

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