In my financial advising practice I help my clients to take inventory and check their wealth in five categories of assets that few have considered. Each of these categories represent a significant source of wealth or in some cases debt for the client. It is important to add strategies to build wealth in all five of these areas.
We start the process by defining the five asset classes and asking the client to rate the level of wealth in each account on a score of 1-10 with 10 being the highest and requiring no improvement. On the other end of the scale a 1 would need much attention and signify debt in this asset class. The five classes of assets are physical, mental, social, financial and spiritual.
Physical assets concern the body. Are you able to complete your day with little stress and do physical tasks as needed? This evaluation is different for each person. A professional athlete may need more from their body than a retiree. If you fail to pay attention to this asset you may find that your body will fail when you need it the most. Excercise, proper nutrition, stress reduction and rest are great investments that will offer a great a return on investment.
Mental assets concern the mind and intelligence. Many people brag about never reading a book since leaving high school. We live in a complex world and surrounded by fantastic amounts of information. Without leaving our homes we can discover and research many topics to enrich all areas of all live. There is just no excuse for ignorance. What systems do we have in place to expand our knowledge.
Social assets refer to our relationships. These would include family, friends and professional relationships. Do we spend time with the ones we care about and often let these people know how much we value them? Our professional relationships directly influence our career growth and income opportunities. If you research many of the rich and famous including Richard Branson you will quickly discover the high value they place on relationships.
Financial Assets are the most well-known but least important of the asset classes. If you have enough wealth in the other four areas it will never be difficult to rebuild financial assets. If you primarily value financial assets to the debt of the other areas it is only a mater of time till you will begin losing your financial assets. For example it is common to sacrifice health in the early years of a career while pursuing wealth. Later when your health becomes a debt you quickly begin spending wealth in the form of medical bills. My definition of enough financial wealth is the ability to do what you want to do when you want to do it without being concerned over how much it costs.
Last but not least is Spiritual assets.This is not necessarily religion. My experience is we all acknowledge a special connection to a greater power that is a source of peace and satisfaction. This connection requires time and attention which could be prayer, meditation or simply being in nature. The issue is honoring this connection and continuing to keep up our discipline and practices even when life gets busy.
I have listed these as separate assets but they are actually connected. Debts in one asset will be compensated for in another asset class. This can soon cause debt levels in all asset classes. For example debt in financial assets such as not having enough money to pay the monthly bills. This causes physical stress that may lead to health problems or even addiction. Relationships suffer and arguments break out that can lead to divorce. Mental assets are sacrificed by not being able to afford education or simply too stressed to learn. This can lead to feeling a victim and cutting off the spiritual relationship which increases isolation.
My advice is take an inventory and to make sure you have plans in place to cut debt and to increase wealth in each class. Create harmony in your life by not focusing on one area and sacrificing others.Share this article with those you care about and work together to create improvement plans and hold each other accountable.
Many of my clients learn to appreciate the value of these assets only when it is too late and they are faced with tragedy. You still have time and choice.
No BS Money Guy, Todd Strobel is dedicated to cutting through the crap and finding real world proven ways to make and save money. Todd Strobel is a licensed financial adviser with over twenty five years experience the financial industry.
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