Your Impact or Your Life?

For those of you who are personal finance aficionados, you will likely have heard of ‘Your Money or Your Life’ by Vicki Robin and Joe Dominguez. Published originally in 1992 and still popular today, the premise is simple in terms of thinking about money in much broader terms than just your finances.

The central idea is thinking about your life as a whole not just your finances in terms of a balance sheet – so it’s not just what you earn and what your spend, your assets and your debts, but also your time, what they call your “life energy”, and your satisfaction/fulfillment.

From there, you can see whether the trade-offs you are making in your life are worth it. You are working 90+ hours a week, you earn good money but you hate your job and you never get to see your loved ones – is your money worth your life?

 I think this framework applies even better when you add the lens of doing good in the world, so let’s take this idea of a balance sheet of your life – adding positive and negative impact as a lens

I call it yourImpact Balance Sheet – and it will be part of yourImpact planner when I launch it!

Here’s how to think about it:

1.      Divide up your balance sheet into the core areas of your life – your job, your side projects, your volunteering, your giving, your investing, your purchasing, etc. You can also include time spent with your friends and your family, and more.

2.     Score these core areas in terms of impact and fulfillment on a range + or – 5 for example. E.g. for your job:

• Does your job have on balance a positive or negative impact in the world? Are you working for a human rights non-profit but are traveling all the time which does not help the environment? Perhaps that’s a 4. Are you working for an oil company but in their innovation department which looks at renewables, perhaps that’s -2 or perhaps it’s +2 – it depends how you feel about it and also on their commitment – is it a tiny part of their budget which is more about greenwashing or is 90% of their R&D focused on innovation?

• How fulfilling is your job on a range + or – 5 again? E.g. you love your job, and your colleagues but are working 90+ hours a week and in a different city every week. Perhaps that’s 2. Or it’s 1 because you have 2 delightful kids at a home. Or it’s a 4 because you’re 24 and love the traveling and the hotel points. Up to you. Or you like the content of your job, but the workplace culture is toxic and you did not get that promotion you wanted. Maybe that’s a -3.

3.    How much does each core area bring to you in terms of earnings per year? Of course, a large part might be your job, but if you have side gigs, entrepreneurial ventures, or investments, they should generate some earnings too.

4.     How much does each core area actually cost you in terms of life energy i.e. time and money?

• Figure out the actual cost – for example, a job is not 40+ hours a week or 60 or 90. It’s also how much time you spend commuting and traveling, how many hours of sleep you lose on it, how much stress you endure, how much physical therapy or actual therapy you have to do. And it’s just a source of revenue – you will have to spend money too – on commuting of course, but also buying suits or clothes that fit the part, on said therapy, etc. You might find that this 90+ hour job is costing you a lot more than you realize and maybe the extra dollars after tax might not be worth as much as you thought.

• What % of your time do you spend on your core areas?

Now – take a step back - is this a balance sheet that works for you?

Are you having a positive impact in your life overall and are you spending the majority of your time on this? Are you enjoying the journey as you go? Is the trade off of money earned vs spent vs impact and fulfillment actually worth it?

You have a finite amount of time each week, each year, each decade. How can you move your balance sheet in small or big ways to maximize your impact and your fulfillment?

What would your ideal balance sheet look like and how could you get there?

Do not worry if you are not where you are yet – yourImpact balance sheet is just a snapshot in time – it’s a diagnosis and it allows you to track over time if you are improving. 

Try it for yourself and let me know how you get on!