The Balance Sheet of Life

Where you are today is because of the decisions you made in the past, and where you will be tomorrow is based on the decisions you make today. As with many a New Year  phrase like “Out with the old and in with the new” will be bandied about by many and like many a good phrase will go in one ear and out the other. Just like that, all the good intentions will go out the window within a matter of days or weeks.

When we take time to examine our balance sheet, we will come to realise that it’s not much different from a financial one except that it is far more valuable in my opinion. The best investment anyone can make is in themselves. Investing in their education, expertise, knowledge and skills. Understanding and leveraging your intellectual property is priceless and will give you a good indication of your assets and liabilities.

Remember where you are today is based on the decisions you made in the past, where you will be tomorrow is based on the decisions you make today. Now let’s look at the three phases of life.

Phase one the accumulation phase. For many, this will come about in their twenties and early thirties. Having secured some type of education it will be time to leverage that to forge a career. Once established we tend to see the acquisition of a permanent residence, starting a family and all the trappings associated therewith.

Phase two capital appreciation generally starts around the mid-thirties to the late forties. If everything has gone to plan, your chosen career path is now paying big dividends and you’re now able to capitalise on the gains made during the accumulation phase.

The third and final phase capital distribution gearing up for retirement. This is where you get to enjoy the fruits of your labour. You’ve followed the plan and navigated the challenges of life. To this end, your ideal balance sheet should look like this.

It’s time to celebrate, your debt-free, with no more loans or credit card debt to worry about. It’s time to experience life on your own terms and be a guiding light for the next generation.