When it comes to investing, we often only look at the return on investment to measure our successes. This can be self-limiting by adding pressure that is counterproductive. There is so much out of our control. We can diversify investments (always a good strategy), but we cannot control how the markets perform or how global events affect the economy.
It’s important to balance return on investments with living your best life. How can you measure how well you’re doing this?
- Living well within your means
- Investing time, energy, and resources in people and engagements that energize you
- Allowing yourself to have experiences and fulfillment whenever possible
- Not comparing yourself to others who may live with a different set of circumstances
- Living purposefully
- Not allowing your identity to be defined by numbers
Discovering the Big Picture
Money is a vessel that can help you navigate where you want to go in life, not something that should control you. When you focus on your best life, your investments serve you, not vice versa. Too many people feel as if life is little more than “getting ahead” of someone else’s definition of what a successful life ought to be.
The best financial conversation you will ever have is to ask yourself, “Who and what really makes me happy in life?” and then arrange your finances to keep those people and experiences front and center in your life.
Too often in our financial lives, we don’t look at the big picture. We move pieces around by replacing investments, insurance policies, debts, purchases, and the like while paying too little attention to long-term and holistic perspectives.
Finding the Balance
How can you balance the books between quantitative and qualitative factors in developing a financial plan? When we complete a plan with our clients, we pay as much attention to their non-financial goals as their financial ones.
In the traditional financial planning model, the primary components include asset management, risk management, debt management, tax planning, estate planning, and income planning. While each area is essential to your financial well-being, there is an underlying assumption inherent in the solely quantitative approach used to perform these functions — everyone is essentially the same, and the only thing that really needs to change from one person to the next is which numbers get plugged into the formula. This is probably not an assumption you would want someone to make about you.
Your values and principles with money are not the same as everyone else’s, nor should they be.
The most important aspect to be derived from the numbers is to achieve the quality of life you desire. The numbers do not exist to drive life but to support it.
When you achieve balance — and as a result, true financial freedom — you will still be confronted with issues that organically come up for all of us.
- Your time, energy, and overall definition of success
- Personal health and well-being
- Your role in parents’ and/or children’s futures
- The legacy you want to leave
It is important to understand the impact of money on every area of your life. By engaging in a financial planning process focusing on what’s happening in your life — adjusted financially to facilitate those happenings — you will reach the ultimate goal of using your money to create a better life.