Assets and Liabilities – Your Life Balance Sheet
Your financial assets less your liabilities equals your net worth.
Your net worth is not your self-worth, but you can create wealth in both areas!
A broad definition of an asset is as anything that is, or could be, serving you and is expected to appreciate over time. It is usually recognized as tangible and monetarily calculable, such as cash, a home, business, investments, a vintage car, or a rare collector’s item.
It is easy to lose track of, or become disconnected with these resources in the busyness of life. It is important to know what you have, why you have them and to discern how you need to manage, cultivate and use them for purposes that speak to your soul. Life remains lacking if the only pursuit is to attain more. How can you start with the end in mind? Do you want to use these assets to fund a certain need or goal? For example, you have an investment account that is set aside for your future spending needs. Is it properly positioned in the market, considering the time frame you have, the economic environment, your risk aversion requisites, and tax considerations? You may want to build your business in order to sell at a future date, or pass on to a family member. If you know what your goals are with these tangible assets, you can create a plan to keep your trajectory on task and make strategic changes as life seasons unfold. Take another – asset – a cash value life insurance policy. Your original intent with this tool was to provide a death benefit for your family. As your life season has changed and your family is grown and on their own, it is important to look at if this tool is still an asset that is serving you. Do you still have a death benefit need? Can the cash value be used to provide cash flow now as partial withdrawals or should you terminate the policy? What are the tax considerations of utilizing this asset? What can you do to reconnect with your tangible assets and ascertain how they are working for you?
An asset may also be something more abstract, where a “market value” is undeterminable, such as relationships or character traits. Good, solid friendships, for instance, are treasured assets. A partner who is supportive, encouraging, and helps you to be a better version of yourself at work, at home, and beyond, is a priceless asset! I am blessed to have one. Good health is an advantage, as are positive personality traits. These too, need to be recognized, and worked on in order to grow over time. If you don’t eat healthy, exercise, and get quality rest and relaxation – your health becomes a liability. Are your personality traits or character qualities serving you? Are you likable, kind, positive, resourceful, honest, and generous? Your relational skills are powerful assets. God, self and other awareness as well how you engage with all three will impact your life for the betterment of all. This Spring, I have been a part of Roaring Fork Leadership’s first “Mastermind” group that has been cultivating conversations around habits, relationships and communication in order to foster leadership skills to impact our valley and beyond. Along with a couple’s study group we are involved with, “relational wisdom” by Ken Sande, I am nurturing and growing my asset base in how I live my life with intention and integrity. It is helping me grow my “self-worth”. What can you do to invest in and enrich the personalized side of your asset base?
In the materialistic world we live in, it is easy to be swayed in the direction that more stuff will make us happier. It is time we take a hard look at our personal life balance sheet to determine if the corporeal and dispositional assets outweigh the liabilities, and are they positioned properly to be used wisely. Living your version of true prosperity needs to identify, incorporate, nurture, protect, and utilize both valuable aspects.