Often in my coaching sessions I am asked "what are the measurements of success?" or "how do you know you have succeeded?"
This question always raises interesting philosophical and moral points. The first being what do we use to measure our success. Financial metrics? Free time? Happy wife? (probably the most important if you are married...).
I have found that combination of both metrics and non metrics work best.
I look at the following metrics on a monthly basis:
- growth in Assets
- reduction in Liabilities
- Interest earned from deposits
- Interest paid on credit cards and mortgages
- Cash flow from employment
- Cash flow from properties
- Cash flow from investments (dividends)
- Cash flow from trading activities
The ratio of 6, 7, 8 to the total income line is what you should manage from a year to year basis. As soon as 3+6+7+8 is greater than 5 you are effectively financially free. The investments that can generate 7 and 8 are a subject of other articles.
Shameless plug - I provide coaching on item 8. for more information please go to www.easyoptiontradingpost.com
For the non financial metrics I reflect on how much time i actually dedicate to "paid activities" including research of investment opportunities. And I ask my wife if she is happy. If she says no, I adjust my time allocation. Immediately. Its that simple.
Focussing on the right measures will ensure that you do more of the right things and less of the wasteful activities. And you will have a happy wife.