Your Finance: Gauging your human capital

The end of the year is a good time to illuminate your personal financial situation in a different way. Instead of focusing exclusively on financial capital -- how much money you have accumulated -- look at your human capital.

This calculus of human capital, which economists wonkily define as "the net present value of your lifetime earnings," matters as much to your lifelong financial situation as the size of your nest egg.

When some people gauge their human capital, they find that they are not making enough money and decide to make some changes.

That could mean starting a second or third career.

Investing in your human capital means scanning your personal balance sheet like this and figuring out how to find a happier balance between work, family, leisure and passionate pursuits.

Here is what you have to do to run your own numbers:

Figure out a retirement plan: A general rule of thumb is that you need to cover from 60 percent to 80 percent of your pre-retirement income with savings, pensions and Social Security. There are plenty of retirement calculators available, including one at Bankrate.com.

Consider other major expenditures that are likely to crop up as well: weddings, travel, real estate, health care costs and so forth.

Be honest with yourself about your mental stability, too. You will have trouble moving forward if you are depressed.

Attend to your mental well-being now, and you can make better choices for your portfolio.

If you choose to switch careers, you will need to quantify how much to change spending and savings.

As part of that review, do a "lifetime balance sheet." As Boston University economist Zvi Bodie suggests, put your financial assets and human capital in one column.

On the other side, list liabilities such as taxes, retirement spending, pre-retirement consumption and other numbers.

Be ready to act: If your asset side comes up short, do something about it. The point of doing this analysis is to come to some conclusions about your life.