When we think about measuring ROI, or your return on investment, we usually think about just that—investments. We think purely in terms of our actual financial investments, be they stocks or real estate.
But what if we stopped and took stock of our lives in the same way? What if we looked at everything with such an intentional eye, examining the value we’re truly getting not just in our financial lives, but in the daily decisions we make—our jobs, education, and even our relationships?
We’ll find that these things actually have a profound impact on our financial health and long-term wealth.
When we think about finance in a holistic way, you will find that you have more time, energy, and resources to pour into things that impact your wealth and financial security.
Principles for Measuring ROI
Ask “How Are We Doing?”
This is the big question to ask. Routine self-assessment is necessary when it comes to measuring your ROI. This is setting your benchmark. You are deciding where you want to be and looking at the reality of where you really are. Understand that every action in your life has a return on its investment because you are always investing something and gaining something in return. You may be spending time, money, or energy, but you spend something and you gain something.
Maybe you go to the same coffee shop every day and spend four dollars on a specialty drink when you could spend one dollar on a plain coffee. There is opportunity cost there, not just in the monetary cost, but in the caloric gain. Going out of your way to get there also costs you time and gas, when, perhaps, you could have brewed a pot of coffee at home.
This is just one small decision that adds up and impacts your wealth over time. This money could be directed to other endeavors where the ROI is better.
The question of “how are we/how am I doing?” can be applied to any scenario once you decide what you really want out of any given situation. Where do you want to be financially? How do you want to develop socially, relationally, in your skills, or education? Once you have these benchmarks in mind, you can measure any habit, scenario, or endeavor against time, energy, and cost exerted.
From there, you can develop a game plan to get where you want to be in life and in your wealth.
Related Article: 4 Essential Habits for Achieving Real Estate Investing Goals
How to Measure ROI in Your Life
When we consider how to measure the worthiness of the endeavors of life, it’s important to know how. After all, in financial matters, it is much more clear. You understand that it usually comes down to money invested versus capital gained. But when it comes to life, returns and what one invests looks a bit different.
These are some areas where the investment of your time, money, and energy can result in a return on investment:
Education and Mind: A huge part of bettering ourselves, our lives, and our long-term wealth comes down to education and mental capacity. The mind can be your thought process, your self-talk, and the things beyond a formal education that you can invest in to grow your mental processing power.
Relationships and Family: Friends, marriage, social reach and influence, your bond with your family: you can invest in and reap rewards in all of these areas. The wealth you earn in these relationships may not results in a monetary gain in most cases, but they can impact other areas of your life, and can certainly impact your quality of life.
Income and Wealth: The most straightforward metric. Your income relates to cash flow, be it by investing or by your job. Your wealth has to do with what you are worth in terms of assets.
Creativity, Spirit, and Joy: Is what you’re doing bringing you joy? Does it leave you feeling fulfilled and satisfied? Is your creativity ignited? There are, of course, many intangible metrics that you will have to “gut check” when it comes to assessing your life and the worthiness of your time and effort.
Where to Measure ROI
Your Career
One obvious place to assess is in our careers. We spend so much time throughout our lives at our jobs. It only makes sense to evaluate from time to time whether or not our careers have us set on the right path. This, of course, is why having your standards set is valuable. While you may have met standards of income and wealth in your career, it may be taking you away from family and relationships, or stifling your joy, creativity, and failing to challenge you mentally. These, ultimately, are crucial for sustaining you in the long-term.
Your Lifestyle
We already mentioned coffee. There are many other areas of life that deserve assessment in a similar way: is this really giving me a good return for what I am putting into it? Whether it isn’t truly making you happy or the money and time spent just isn’t worth it, there is so much bloat to be cut from life. You would be astonished how much clutter and noise can be removed simply by recognizing what is really leaving a positive impact. You will be able to think more clearly and invest in the things that truly matter.
Your Investments
Lastly, you must consider your ROI in your investments. This goes beyond the obvious monetary equation we’re all familiar with. Obviously, we all want a comfortable return. But when we consider our investments and financial health, we also must consider other factors as well. For example, how much time and energy does it take to maintain your investments? Will your strategy be sustainable 10 or 20 years down the road? For example, if you take on real estate investing alone as a landlord or begin as a flipper, you may find that this is too physically demanding of your time and resources.
A turnkey solution offers long-term sustainability and peace-of-mind in that you can rely on a team of experts and their experience to grow and maintain your wealth over time.
Evaluating ROI must be a holistic effort to truly be effective for securing financial freedom. These are just some areas of life that demand evaluation. Once you begin the process of assessing your goals against what you pour into your life day-to-day, you will begin to have a clearer picture of where you need to course correct to secure the life you really want.
Invest in lasting wealth. Our advisers are ready to plan your real estate portfolio with you.
