Sunday, October 10, 2010

Presentation at Bar Camp 6 - Quarter Life crisis

Bar Camp 6 was a blast. I made a presentation entitled "The Quarter Life Crisis".

Too bad my laptop which runs Ubuntu would not project itself to the audience but thankfully I rehearsed my presentation a number of times and could run without the slides. For the benefit for the folks who might not have managed to understand the gist of what was presented, here are the points I raised.

1. Gen-X and Gen-Y have a different expression of the quarter life crisis. For Gen-X, the conflict is between isolation and intimacy. This means that resolution would mean finding someone to settle down with. Gen-Y's crisis is a conflict of role versus identity, many young people feel that they want something else out of life than the current jobs they have. The talk focuses on Gen-Y's quarter life crisis.

2. Human capital, or the present value of unearned income can shed light on important life decisions.

3. Human capital is increased by obtaining more qualifications, astute career management or monetizing your hobbies.

4. Human capital is protected by life insurance.

5. Wealth can be given away in financial capital ( assets ) or human capital ( creating a trust structure to insist on providing education for beneficiaries ).

6. Illustrations were supposed to be done using a demonstration of online tools at qwema.ca. but this did not take place so results were narrated to the audience.

7. First illustration is about a diploma holder who wants to get a degree. The change in human capital for a $20,000 degree can reasonably be as high as $1.1 millions dollars. This supports the idea that education is very often the best for of investment.

8. The second illustration is about a executive who wants a mid-career change to become a lawyer. The change is even more dramatic, enhancing human capital by $1.5 million dollars. But as the retirement age is reduced from the earlier assumption of 65, the value of the career change becomes smaller. To succeed as a lawyer beyond his current circumstances, he needs to work up till the age of 52 to "break-even".

9. The third illustration is about a banking IT professional who wants to risk everything to join a startup. The cost to human capital was found to be high and up till $1.2million of losses can occur. But it was emphasized that there is no price for self-actualization and people have a right to pursue their dreams.

10. Marriage is generally positive to a couple's finances dues to economies of scale and diversification in the couple's human capital pool.

11. Each child was estimated to reduce human capital by $250,000 but it was emphasized that children produce services and comfort at old age which can be beneficial to the parent.

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