A Really Enjoyable Life

Some people achieve financial success. Others live fulfilled lives. Most of us want to achieve both.

Few realise how close they are to doing just that.

Mention  “year end deadlines” and accountants the world over can’t help but give a little shiver at the thought of mountains of work ahead. But there is only one real time year end, the 31st December, and those year end niggles begin earlier than the deadline.

It is a fact that there is something about arriving in December that turns up the volume on those inevitable questions that push their way forward and demand to be answered.

• “Is my life better at the end of this year than it was at the beginning?”
• “Did I do everything I said last January that I was going to do this year?”
• “Was this year more fulfilling than last year?”
• “Do I feel better this year than I did last year?”
• “Is my personal net worth higher or lower than it was at last year end?”
• “What is the most important thing to me in my life right now?”
• “Have the last 12 months taken me closer or further away from that thing?”

These questions hover during the indulgences of the holiday period. And then comes a brand New Year complete with new intentions for the next twelve months.

If your life were a business, you would be giving some stern accounting advice about the general lack of written plans, measurable targets and the all important comparison of budget to actual at year end. If Mr. Businessperson came to you, at year end, with some general idea of his income, a mental calculation of his expenditure, a vague idea of where that money got spent and a feeling that his business is worth more this year than it was last year, it would be very hard to assess to any degree of certainty if any of it were actually so.

How do You Want to Live?

But more and more it is becoming clear that with the demands of today’s lifestyles and the challenges in the worldwide economies, that keeping an eye on the bottom line of life is no longer optional. The business side of life has one purpose. And that is:

To generate the finances to allow you to lead the life you would like to lead.

What happens when spiraling lifestyle costs, increasing demands on resources, an expanding lifestyle, lowered provision of health care (with more and more people opting to pay for private healthcare), increasing Professional Indemnity and insurance costs mean the need to earn enough just to stand still takes all your time and there is no time to stop, get quiet and think about how you really would like to live?

And that’s without mentioning the burgeoning consumer debt that as a nation we have taken on, or the huge increase in property prices that have left many struggling to meet their new mortgage commitments.  Austerity has become the new fashion, an up-market pseudonym for keeping up appearances on a shoestring.

Work-Life Balance

Much has been made recently of the need for  “work-life balance” and there is no doubt that this has gone some way to improve the quality of the life among busy professionals. Many have addressed the balancing of working patterns with family life, time for exercise and social events and the other elements that go to make up a happy, healthy individual. And that’s great.

But there is a more important balance to be addressed and that is the balance of an individual within themselves.

The interesting thing that we have found working with professionals is that they are imbibed with a great sense of how to achieve professional success. There is a very clear roadmap, usually including college or university, followed by training, in turn followed by increasing management roles or branching out into business, solely or in partnership. Once on the path, there is a proven strategy to follow; one where many have successfully gone before. Significant positions and commensurate income are the reward.

What happens after that is not so clear at all and very few have gone before. Zig Ziglar, the grandfather of human behaviour studies, uses the phrase “from success to significance”. When you have gotten to where you have been working all your life to get to, where do you go from there? What do you do when you have achieved the goals you set out to achieve?

In other words what happens when you have security and comfort but no freedom.

And how are you going to pay for this new freedom? What impact will the changes you might want to make have on your financial stability, future and dependents?

Each person has all the answers themselves, but there are few people out there asking the questions.

The Coaching industry has tried to fill this role to some degree. However our experience is that sitting down with a client to find out what they want to do with their life invariably comes back to the question of finance. Even if you can remember or get to the point of knowing what you really want out of life there remains the question of how to use your current income and assets to provide for what you want, usually with some reduction in active time spent generating that income.

From Comfort to Freedom

Frank Brake of Brake Bros. who sold his British company for over £400m describes the successful business mans need for some form of wealth management to “bridge the gap between business and personal finance” a demand for  “persons of a certain calibre with whom they can sit down at a table, who is discreet and understands them and their needs”

Most often, we find that this does not point to a major life change but some subtle additions or redirection that turn a life that is working just fine into a life that truly enjoyable and fulfilling. After all most of the hard work has already been done to achieve a certain level of comfort. All that remains is to take what has been achieved and use it as a foundation for building a new kind of structure, one that is built around the things that are most important to you.  That’s the reward that so many get so close to but few step into, that’s the move from comfort to freedom.

End of Year Reflections

This year add these items to your end of year reflections.

• What is my Personal Net Worth?
  If you have this information from last year, check if there has been an increase or decrease in the last 12 months. If you do not maintain a personal Net Worth statement, start this year. After all if you don’t keep records how will you really know when you are winning.
• How much were my personal expenses last year and on what were they spent?
  You will want to know exactly what does your current lifestyle cost. But also ask yourself whether you actually really enjoyed the things you spent your money on. Were they worth the time you had to spend working to earn the money for them?
• Do I consistently earn more than I spend?
  Also calculate how much of what you earn comes from passive sources and how much from active work.  If you are not consistently earning 10% more than you are spending and increasing your ratio of passive to active income, consider making these specific targets for the next 12 months.
• List the 6 most important areas of your life.
  Then ask yourself how satisfied are you with where you are in each of those areas. Give yourself a score between 1%  -100%.  What makes up the existing %? What makes up the missing %? The areas can include career, health, family, finances, etc.
• Choose the most important item from the most important area you have identified.
  If there was one thing you were going to do differently next year regarding that item what would that be? Write it down and write why it is so important to you. Then choose three action items specifically to achieve that target and schedule them in your diary.
• Finally if you have dependents sit down with your family or partner and find out if all the things you are working to provide for them are the things that they want in the year ahead.It is amazing how often the earner of the household will be striving to provide things they think are important to the ones they love when the ones they love have completely different ideas about what they would like provided.

Taking a little focused time to align who you are, what you do and what you earn can result in less stress, better relationships, better career management, (by taking the financial stress out of decision making so you can decide based on what you would really like to do), earlier retirement, financial stability and growth even into later years, a longer life….a really enjoyable longer life.

This article was written by Kevin O’Malley and adapted from an article which originally appeared in Accountancy Ireland, the journal of The Institute of Chartered Accountants in Ireland