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You might think investing is only about buying stocks and bonds, but let's take a step back and consider investment a little differently. April is Financial Literacy Month, so it's a good time to consider investing in yourself.

Economists use the word "investment" to refer to spending on capital, which can be either physical capital, like tools and equipment, or human capital, like education and training.

Investment in human capital can mean getting a degree or a diploma. But it also means apprenticeship as a carpenter or electrician, or courses in writing computer code. You can think of human capital as the kinds of things you'd list on a resume: professional development training, work experience, certifications, community and volunteer work, and more. If a high school student compiling her resume is captain of the basketball team, I would encourage her to include that experience because it shows leadership and the ability to work on a team: These are valued skills in today's competitive work environment.

Why should you invest in yourself? For the same reasons that businesses invest in physical capital, and individuals invest in financial assets--for a payoff of more income in the future.

The median weekly earnings in 2016 for a professional degree-holder were $1,745, compared to $1,156 for someone with a bachelor's degree and $692 for a person whose highest degree is a high school diploma, according to the Bureau of Labor Statistics. And skilled professions are relatively well-paid--the median weekly income in 2016 was $838 for a carpenter and $1,013 for an electrician.

So it is true that education, skills, and training can pay. But it is less than ideal to earn more money and let it slip away because you don't know how to handle it. An important component of an individual's education and training should be how to manage personal finances.

And the benefits of investment in economic and financial education extend beyond individual income and wealth. Economic knowledge is part of a person's basic civic literacy and can enhance one's societal contributions. Being a productive member of society generally requires an economic understanding of the world in which we live.

The St. Louis Fed has tools to help people from preschool age to adults gain that understanding. We believe that better understanding of economic concepts and principles will result in better decision-making by consumers. That's why we created tools to give people the information they need to make better financial decisions.

According to a 2018 study by WalletHub, Little Rock has room for improvement when it comes to money management, ranking 217 out of 241 midsize U.S. cities. In creating the ranking, the personal finance website analyzed 10 key indicators of money management including credit score, average number of late payments and mortgage debt-to-income ratio.

The St. Louis Fed provides economic and financial literacy support by providing high-quality lessons, online modules, publications, podcasts, videos and other resources for people of all ages. Using them helps people increase their own human capital.

Anyone who visits our award-winning Econ Lowdown program at can browse through more than 400 lessons, articles and other activities to learn more about economics and personal finance.

Financial literacy includes knowing that one of the most important investments you make is in yourself.


Robert Hopkins is a senior vice president and regional executive of the Little Rock branch of the Federal Reserve Bank of St. Louis.

Editorial on 04/27/2018

Print Headline: Invest in you


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