The Essentials: Your Two Greatest Assets
Updated: Dec 15, 2019
As a financial planner, I spend a lot of time talking about net worth. This number shows up front and center on your Centered Financial Dashboard. Your net worth is a key measure of your financial progress as it shows the value of your assets less any debts that you owe. While it is important to measure net worth, in this post I am going to talk about two important assets that don’t show up on your net worth statement, your time and your health.
“The key is in not spending time, but in investing it.” – Stephen R. Covey
At some point we all have reminders of our mortality. A few years ago, I was in a car accident that I am still amazed that I walked away from. It was an experience that I will always remember, because, all of a sudden, time seemed like it was going to be taken away from me instantly. In reflection, I feel like that experience was really a turning point in my understanding of what an asset time is and how important it is to choose how we invest it. The adage to live like each day is your last is very well known, but sometimes I have found that it is difficult to really know how to put this advice into practice. Here are 3 questions that I think are helpful to make sure time is invested well:
Is this important or is it urgent? Stephen Covey popularized the Time Management Matrix based on President Eisenhower’s approach to managing time. I remember this being drilled into me early in my career and I still think it is a valuable tool. Basically, Covey divided activities into four quadrants shown below. If we are not careful, our time will be consumed by urgency. These are items that pop up and put pressure on us whether they are important or not. It is more effective to prioritize based on importance. The goal is to spend the most time in important and not urgent activities. Here is my basic action plan based on the matrix:
Important/Urgent: Take action and get it done.
Not Important/Urgent: Evaluate and delegate as much as possible.
Important/Not Urgent: Prioritize time for these items. Plan for them each daily, weekly, monthly, and annually.
Not Important/Not Urgent: Have some fun with these items, just don't get consumed by them!
What goes with you? We all have to do things in this life we don’t want to do. Typically, on a daily basis. Whenever I get frustrated with how much time I am spending on mundane tasks, I take a step back and try to remember how things fit into the larger scope. While I always strive to excel at everything that I do, I remember that money, things, and tasks completed don’t come with me when it’s all over. What is everlasting? In my opinion, it’s the energy that we create in our relationships, the difference we make in people’s lives, and the memory or legacy we leave through our example.
Does this accomplish my purpose? The Centered Financial philosophy is to plan your finances around your core purpose. We each define this for ourselves. With each activity, create the habit of evaluating how that time gets you closer to your purpose or draws you away from it. Increase time working on your purpose and decrease the time spent away from it.
We all need down time. Don’t beat yourself up if you are not productive all of the time. We all need to recharge so that when we do have productive time it is optimized.
“It is health that is the real wealth, and not pieces of gold and silver.” – Mahatma Gandhi
Just like any good investment, your health is an asset with multiple dividends that can create a ripple effect of wealth in many different areas of your life. Here are 3 reasons why your health should be a daily priority.
Productivity equals more money. The world will largely pay you what you are worth, and the bottom line is your earnings are typically directly related to your productivity. If you are unable to work for health reasons, your earnings can quickly deteriorate.
Longer productivity equals even more money. The goal of any career is to turn your human capital into financial capital. This just means that as our working years get shorter, hopefully our savings gets larger until we have enough money to replace our earnings. If our working years are cut short, then there is so much more pressure on our savings to make up the difference. The longer that we can work in any capacity, the more opportunity that we have to invest in other wealth building activities.
Spending less money on health care allows you to spend more money on your purpose. When I first started in this business, I took a class where I was assigned to interview people in retirement. I remember asking one person, “What was one thing about retirement, that is different than they expected?” The answer has always stuck with me. The individual said that she always thought that she and her husband would be able to do more in retirement like travel. However, dealing with poor health had kept them home-bound for most of the years since they retired. This person is not unique. According to Fidelity’s annual Retiree Health Care Cost Estimate, a 65 year old couple retiring in 2019 can expect to spend $285,000 in health care and medical expenses throughout their retirement. A daily investment in healthy habits can go along way to help reduce this bill, and allow us to spend money in other areas of our life.
This is not the typical financial planning post but planning for your time and your health are very similar to planning for your money. To be successful, you have to build consistent habits that you repeat on a daily basis. It really comes down to choices. We choose how to prioritize our time, how we handle stress, what substances we put into our body, and how much exercise we get. If we increase our consciousness when making these choices, we can reap the priceless rewards that these two assets offer.