Finding Your Financial Balance As a Human BeingBy Jorge Ponga | Mon, 06/07/2021 - 15:35
A balance sheet is a financial accounting report that reflects the economic situation of an organization at a certain point and allows us to have visibility of where we are and from there make decisions that will impact the short, medium and long term.
On this occasion I want to approach our life as organizations usually do: through a General Balance of my own situation as a human being immersed in a family, social and organizational environment. With measurable numbers through different concepts and specific and key cuts in our lives a little over a year after being the protagonists of one of the great challenges of humanity, the COVID 19 pandemic.
The structure of the balance sheet in organizations is based on the mix of three key components: assets, liabilities and equity.
The first component, assets, is defined as the values with which the organization has dedicated to producing money.
The second component, known as the liability, represents the economic obligations and contingencies of the organization, such as payments, loans and purchases.
The third component is equity and it is calculated by removing the value of the liability from the asset, which may represent negative results or losses, as the case may be.
Let's now think about our personal balance sheet and detail our assets, starting with current assets, which is understood as the assets of the organization that can be converted into cash flow in the short term. We will represent it as the current job we have, the position we develop, the performance results that I will achieve and how they are reflected in my personal life and engagement.
In terms of individual compensation and related growth in my current job and professional career plan in order to consolidate the economic retirement plan ,which I aspire. Perhaps the questions are linked to, am I in the right company or work model? Is my growth plan the one that will lead me to consolidate my dreams and interests? Is my personal and work time balanced? Am I satisfied with what I do? Am I focused and consequently productive?
Fixed assets are normally a good that is necessary for the operation of a company and consequently does not become cash in the short term. In this area, we can find on the human side the time dedicated to learning and personal development. We live in a time where knowledge moves rapidly, has accelerated obsolescence and must be updated. Do I take the time to explore books and points of view? Taking a genuine interest in those around me and spending time chatting is another form of learning. Do I really exercise it frequently in my environment? Virtual models are usually a vehicle to achieve this and save time. Do I really exploit them? Do I think about dedicating time and resources to traveling and learning about cultures, knowing the history of my environment, city or neighborhood, reading and approaching experiences, the mastery that will open doors of knowledge and consolidate my platform?
My personal life plan, as a couple, friends and colleagues: Am I working on it and running it?
There are some assets called intangibles, such as the value of our brand and reputation. Let's reflect on the personal and professional side. What is my brand as an individual? Do I really reflect what I am or what I want to be in a casual personal or professional setting? This component is key, since it accompanies me on a day-to-day basis and if I don't work on it, I better polish it because it could work against me.
Another key intangible asset is relationships, which go hand in hand with our personal brand and connects with everything — family, friends and professional colleagues. It implies dedication and time, without forgetting the depth of listening, interaction and intelligence put into it. It is worth reflecting on where to invest time, and with whom. What groups and communities? Doing what? What role?
The liability represents an obligation or risk in an organization. In our personal balance sheet, it is related to the inadequate investment of our most important asset, time. Whether it is already related to little-exploited knowledge, permanence in a toxic or not very challenging job that will not lead me to fulfill any of my plans, personal or professional relationships. It distracts and does not contribute. It is the lack of a savings and investment plan that places me in a vulnerable situation due to lack of employment, economic urgency and/or retirement.
Net worth is the difference between assets minus liabilities. Its result should not be surprising in our lives. If we manage our assets and liabilities correctly, we will be less vulnerable to an unexpected situation and we will be able to react better. It will deviate us in time before the loss of a job or a promotion.