Personal Finance column: Assets and liabilities — your life balance sheet | PostIndependent.com

Personal Finance column: Assets and liabilities — your life balance sheet

Danielle Howard
Personal Finance

Danielle Howard

Your financial assets minus your liabilities denotes your net worth. While your net worth is not your self-worth, you can create wealth in both areas.

A broad definition of an asset is as anything that is, or could be, serving you and is expected to appreciate over time. It is usually recognized as tangible and monetarily calculable, such as cash, a home, business, investments, a vintage car, or a rare collector's item.

It is easy to lose track of or become disconnected with these resources in the busyness of life. It is important to know what you have, why you have them and to discern how you need to manage, cultivate and use them for purposes that speak to your soul. Life remains lacking if the only pursuit is to attain more. "He who dies with the most toys … still dies." It is living a life, using your financial resources, to sustain hope, and avoid regret. How can you look at your financial assets differently?

What if you started with the end in mind? Do you want to use these assets to fund a certain need or goal? For example, you have an investment account that is set aside for your future spending needs. Is it properly positioned in the market, considering the time frame you have, the economic environment, your risk aversion requisites, and tax considerations? You may want to build your business in order to sell at a future date, or pass on to a family member. If you know what your goals are with these tangible assets, you can create a plan to keep your trajectory on task and make strategic changes as life seasons unfold. Take another asset — a cash value life insurance policy. Your original intent with this tool was to provide a death benefit for your family. As your life season has changed and your family is grown and on their own, it is important to discern if this tool continues to be an asset that is serving you. Do you still have a death benefit need? Can the cash value be used to provide cash flow now as partial withdrawals or should you terminate the policy? What are the tax considerations of utilizing this asset? What can you do to reconnect with your tangible assets and ascertain how they are working for you?

An asset may also be something more abstract, where a "market value" is undeterminable, such as relationships or character traits. Good, solid friendships, for instance, are treasured assets. A partner who is supportive, encouraging, and helps you to be the best at work, at home, and beyond, is a priceless asset! I am blessed to have one. Good health is an advantage, as are positive personality traits. These too, need to be recognized, and worked on in order to grow over time. If you don't eat healthily, exercise and get quality rest and relaxation, your health becomes a liability. Are your personality traits or character qualities serving you? Are you likable, kind, positive, resourceful, honest and generous? Your relational skills are powerful assets. God, self and other awareness as well how you engage with all three will impact your life for the betterment of all. This spring, I have been a part of Roaring Fork Leadership's first "Mastermind" group that has been cultivating conversations around habits, relationships and communication in order to foster leadership skills to impact our valley and beyond. Along with a couple's study group we are involved with, "relational wisdom" by Ken Sande, I am nurturing and growing my asset base in how I live my life with intention and integrity. It is helping me grow my "self-worth." What can you do to invest in and enrich the personalized side of your asset base?

In the world we live in, it is easy to be swayed in the direction that more stuff will make us happier, and that hard assets define our self-worth. It is time we take a hard look at our personal life balance sheet to determine if the corporeal and dispositional assets outweigh the liabilities. Are they positioned properly and being used wisely? Living your version of true prosperity needs to identify, incorporate, nurture, protect and utilize both valuable aspects with diligence, wisdom and care.

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Danielle Howard is a Certified Financial Planner practitioner. Her office, Wealth By Design LLC, is in Basalt. Visit her at http://www.wealthbydesign4u.com. Advisory Services offered through Cambridge Investment Research Advisors Inc., a Registered Investment Advisor. Securities offered through Cambridge Investment Research Inc., a broker/dealer, member FINRA/SIPC. Cambridge and WBD are not affiliated.