Easily the number one question I get asked here at MeaningfulMoney is about finding balance in finances. So, what do I mean by balance? Well, it can mean lots of things, from balancing the split of your savings going between pension and ISA to balancing the needs of today with building wealth for the future.
Check Your Motivations
Ask yourself: why are you doing what you’re doing? Everyone’s motivations are unique to them, but what are yours, really?
‘To get rich’ is not a motivation. Money is never an end in itself, remember, but a means to an end. So, what is that end; what is your motivation for building wealth? To put it another way, why would you NOT just blow every penny that comes in, in case you die tomorrow?
For many, building wealth is about freedom. Freedom to spend time how I want, with whom I want and wherever I want. Now, in some ways, I can do that now. I own my own company; no-one’s counting the amount of annual leave I take, and I can order my days how I like.
But I don’t yet have the freedom not to work at all – I do still need to earn money – so I clearly haven’t cracked it – I’m not free yet, at least not according to that definition.
For many, providing for their loved ones is a motivation. For others, it’s being able to support causes that are important to them. Motivations are essential for finding balance because they provide a ‘why’ for everything you do.
Make your balancing decisions in the light of that ‘why.’ I suggest you take time to write down your motivations, if you haven’t already, and keep them near to hand at all times.
Revisit Your priorities
Hang on, aren’t these the same thing? Well, no, not really. Your motivations are the reasons for doing what you’re doing and your priorities are more about the things you want to keep close. You could call these goals, and a goal could be a priority, but still, this isn’t quite it. Your priorities don’t have to be financially related, even.
I think you can define your priorities as the things you want to achieve, the values you want to promote and the legacy you want to be known and remembered for. Achievements. Values. Legacy.
If you have a list of things you want to achieve, put them in order. You could put them in chronological order – when you want to achieve them, but better to put them in rank order. If you have a list of things you want to achieve, but could only choose one to actually attain, which would it be? Surely that would be your number one priority goal.
Values and legacy are somewhat connected, I guess, but are not quite the same thing. Values are things which are important to you, and can be external as well as internal. Maybe your values include being generous with your resources and prioritising your family and friends over and above your own personal success.
If that’s the case, then it should inform the way you dedicate your financial and other resources. Your legacy is how you want to be remembered. It’s about how many people show up to your funeral and the stories they tell each other about you at the wake. You want this to be about the mark you have left on others, and on the world at large.
All these things will have a greater or lesser effect on how you make decisions in the here and now. While your choice of socks isn’t going to have much bearing on your legacy, deciding whether or not to accept the chair of governors’ role at your local school might well do so. In making that decision, you’ll want to bear in mind the impact of taking that role on your family time.
Priorities change all the time as life changes around you. When you form a long-term partnership with someone, that changes things, as does the arrival of kids, or a new role at work or at your place of worship. Because priorities change, you have to stay on top of them; revisit them regularly.
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