Are You Wealthy in More Ways Than One?

Wealth is often measured by money in the bank, real estate, cars or other material possessions. The traditional way to measure one's wealth or personal net worth is to add up all the assets, subtract the liabilities and the difference is the net wealth of an individual. Although I do these calculations as a professional, I also like to consider things like time commitments, stress levels and appropriateness of debt, among other things.

Have you ever considered if you are "time affluent" as the online columnist Laura Rowley has observed? Do you have all the time you desire to be with friends and family and enjoy the material possessions that you have acquired or do you find yourself spending all your time acquiring the material possessions?

Do you have unnecessary stress in your life? Is some of this stress related to financial decisions and burdens that may have been unintentionally placed upon yourself or your family? Do you make other poor decisions because of the stress that you are feeling?

Finally, are you comfortable with the amount of debt you have taken on? Have you ever considered the appropriateness of your debt? Even if you can afford the payments is debt always necessary to acquire what you really need in life?

I don't want to sound like a psychologist, since I'm not trained as one, but finance definitely involves more than a net worth statement or debits and credits. In addition to preparing professional financial statements and using institutional money management techniques, I like to assess how balanced people are in their lives and how financial decisions are adding to or detracting from ones total "wealth" in life. I think this is something we can do better with, especially as Americans in an economy that seems to be all about acquiring things.

What's Ahead for Taxes?

As tax time comes around, many people are wondering what the future holds for taxes in the United States. If President Obama gets what he wants, tax rates will go higher for higher-income Americans. His recently proposed budget has the Bush tax cuts going away at the end of 2010 for individuals making $200,000 or more and couples making $250,000 or more (sounds like a marriage penalty to me).

The budget proposes that the top two tax rates would go from 33 to 36 percent and 35 to 39.6 percent. Capital gains taxes are also proposed to go from 15 to 20 percent for this same group of high-income Americans. It is also expected that the estate tax will be reinstated retroactive to January 1st at a 45 percent rate.

No one likes to see tax rates increase, and these changes aren't a sure thing, but we do need some fiscal changes at the Federal level in order to protect the future generations in America. As opposed to playing political games with tax policy, I would prefer that the President and Congress enact fair tax policy for all Americans so we all have "some skin in the game," as opposed to deciding who is rich and who is poor and who should be rewarded or punished for his or her political leanings. I would also appreciate greater consideration of the spending side of the equation. Consistent, increased spending seems to be a given, despite the economic ups and downs that American households face. We would all be on a path to bankruptcy if we increased household spending year after year without considering where the income was coming from.

All this being said, these tax changes can be managed and muted somewhat by staying informed of what's ahead and working with a licensed financial professional, when needed. We should do our best as citizens to influence the policies in Washington and then stay informed to deal with the good or bad consequences of those decisions.