Life Asset Allocation

In the personal finance world, we like to discuss asset allocation and rebalancing our funds. Where will you put your money? How much will be in stocks or bonds? Will you choose an index fund or buy individual stocks? With the stock market plummet of the past week and people freaking out, I thought about how we undervalue ourselves while we focus so much on money. If we were to manage our lives like we manage our assets, we would ask ourselves similar questions. Let’s explore the possible life allocations:

• Work – You spend a great deal of your life working. But within “work” are many choices, just like saying you’ll invest in “stocks” doesn’t cover the whole story. You could plan to throw 100% of your life assets into work for a few years and then decide to stop after a number of years. You could decide to work for yourself and see where that individual stock goes. You could find a job that allows you to allocate 50% or less of your life to provide you plenty of life assets to invest elsewhere. This investment decision is the one we focus the most on because it is the one that funds our financial allocations, but we sometimes neglect the other life investment options.
• Relationships – If you’re married and/or have children, this investment option is necessary. You’re automatically enrolled in the plan. But it’s still up to you to decide your allocation. Family also includes parents, siblings, and extended family. Relationships also include friends. These are investment options that are often easy to ignore. You’re not automatically enrolled in these varieties of relationship investments and it takes conscious effort to invest life assets in these relationships. We also know based on the research about regret that regret involving relationships is felt the most deeply
• Entertainment – The investment options available in this portfolio are nearly endless. Possibilities range from cultural experiences and travel to Facebook scrolling and app playing. What percentage of your assets do you currently allocate to entertainment? Are you happy with the choices within that investment? Is it time to drop some choices and pick up others for a better return?
• Health – Exercising, sleeping, meditating, and eating healthy all require a major life investment. It’s easy to allocate life resources elsewhere. It’s so much easier to dine out than cook yourself, or browse on devices instead of sleeping or meditating. It’s easier to do more work rather than work out. And it’s easy to say that our investments in work trump investments allocated into health. Work investments have immediate, tangible rewards ($). Health investments give slow, steady returns. It’s a conservative, long-term investment. Have you allocated enough here?
• Self – Other than investing in your health, you are a tangible asset that deserves specific investment. What are you worth and how could you improve your own equity? Learning a new skill, taking a class, reading a book, and creative expression are all possibilities for increasing your return. Do you spend enough time building equity in the most important asset you already have?

In finances, it’s good to rebalance investments. Sometimes stocks take off and your allocation becomes too stock-heavy and you have to adjust your investments to account for that. This is true in life as well. We need to take the necessary time to rebalance our life allocation. In some stages of life, our life investments are nearly 100% in relationships. I can say that right after each one of my three children was born, I didn’t do any work, and I struggled to allocate anything to my personal growth or my health (though, amazingly, we always manage to invest in entertainment… our choices just become less wise within that category). After a few months, I had to consciously rebalance my assets and diversify again. Sometimes work is busy and we throw everything we’ve got into that. There’s a reason diversification is a good thing. Make sure you are actively managing your own life investments and are happy with the returns you’re seeing.

What are your life allocation percentages?