Home / Money / Personal Finance /  Opinion | Balance in your financial life leads to equilibrium in your overall life

Don’t you get bored? This is an old colleague who has seen me write on personal finance for years and years. The question got me thinking—why am I not bored writing about money? I found the answer in my yoga class of all places. Yoga maestro B.K.S. Iyengar did the same poses for over 80 years every day, several times a day, but he did not get bored because each time his pose was a window into a deeper reflection of what that pose was doing to his body and mind. Practice makes you proficient, but beyond proficiency is abhyasa, or study. After you get proficient, then comes the study of what your chosen vehicle shows you about yourself and the world and helps you go deeper and deeper. The meaning of seeing the universe in a drop of water or a grain of sand suddenly becomes clear. So, no, not bored of money and engaging with it yet.

The study of money and its meaning in our lives leads me to understand that it is finally balance that we strive for. And balance in our money lives has lessons for balance in the other parts of our lives. Let’s take asset allocation as an example. If personal finance advice must be compressed into just one mantra, it has got to be asset allocation or the spread of investments across different product types to reduce risk. Different asset classes (stocks, bonds, gold, real estate) address your portfolio’s need for liquidity, growth, stability, inflation hedge and stability. An over-allocation to one of these usually leads to disequilibrium in the portfolio and in your life. For example, over-allocation to real estate exposes you to not having quick liquidity and exposes you to the risk of delay in a tight corner. Financial tight corners are difficult situations in any family and can lead to strife and conflict. The first step of the work is to really understand asset allocation in the investment portfolio and implement it in life. This itself takes a few years of practice before you get proficient. But once you truly understand asset allocation, and proficiency builds, you find that it begins to influence another part of your life—the balance between work, health and leisure. Over-allocation to work has an impact on health and time with the family. Over-allocation to indulgences has an impact on health and then on your ability to earn. This is the stage of proficiency turning into a study of money in your life. Balance in your financial life begins to seep into your real life.

Asset allocation of your investments also makes you understand diversification better. If your invested money is to be diversified, should your income stream too not be diversified, or at least have the potential for diversification? Most people who have been through a proper financial planning exercise say that it makes them stop, pause and look at their lives in the long term. The mad, chaotic, super busy today makes us forget the big picture of a life cycle of events that ends with the intergenerational transfer of wealth—or our deaths—in politer words! If you wholeheartedly go through this process, there is no way it won’t impact the way you look at your today. Once you have begun to plan your money for your retirement, you do begin to think of what you will do once you retire. The romantic notions of strumming a guitar by the sea all day will begin to bore and look like work very soon once you think it through. Most people who are used to working 8-12 hours a day may take a lower work load, but will want to do something with their time. Thinking about either extending their expertise into income post retirement or giving time to a hobby or interest today so that it becomes a second career post formal retirement, is also a corollary of the financial planning process. Many people report a calming down of issues that used to worry earlier and a greater grip on the direction of life, once they become proficient at financial planning.

Those who have already embarked on this journey can only tell the others to strive for balance in their money lives. As we enter a new year and a new decade, we are going to be bombarded with even more information, even more decisions and even more conflict around us. Getting balance in our money is a starting point as a goal for this year. Getting balance in our lives is a good decadal goal to strive for. Wishing everyone equilibrium and balance for the New Year.

Monika Halan is consulting editor at Mint and writes on household finance, policy and regulation.

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