Investing in Yourself

money self development wealth

Hard to Soft

My friend introduced me to the concept of converting hard assets into soft assets, aka, money into skills.

In terms of businesses, soft assets are things like brand image, knowledge, skills, goodwill, education, or employee loyalty. They are in contrast to hard assets: the machinery used to build products, the services provided, the office space, the computers, etc.

Soft assets for an individual include things like their education and skill set, their confidence, their networks, and even the elements of their home and family life that empower them.

One of my greatest soft assets is my health because it enables me to perform consistently at any job I do. I never get sick and I can tackle task after task without fatiguing.

Soft assets cannot be lost or stolen, but they cannot be directly converted into cash in the same way a car could, for example. They are still highly valuable, however, since they enable an individual to create value and amplify the effect of their work and their hard assets.

For example, if you have a good neighborhood reputation, you can use that soft asset to generate wealth with your snow shovel by offering to shovel neighbors' driveways. Without this reputation, you might find it extremely difficult to start a snow-shoveling business without a lot of capital, such as a plow truck, and expensive marketing.

With the money you do make, you can choose to spend it on that red wagon you've always wanted, or you can buy a lawn mower to make even more money during the summer.

You could even use it to learn the things you need to live your dream.

The Education Marketplace

Much like a monetary investment, educational investment has variable value. Poor choices can result in a poor return. For example, investing in the knowledge of how to develop SEGA Dreamcast games would have been a poor investment, since the system never went anywhere. On the other hand, the decision to invest in leadership and people management skills is pretty solid no matter the times you're in.

I've been toying with this idea of converting hard assets to soft assets. I have never really thought about money in this way. Instead, I've always viewed it as a thing to be consumed so that I could live, rather than a thing that I can use to cultivate more wealth.

I can't help but notice that this is also the difference between factory farming--which tries to get as much from the land as possible and kills it--and traditional farming--which builds up the land's ability to produce by keeping closed cycles.

Instead of getting frustrated about all the obstacles I see on my path to success, I've been trying to re-cast the problem in terms of which skills I need to acquire.

So I asked myself, "What are some limitations of mine that are preventing me from moving forward in my intended direction?" The list I came up with was happily quite short:

The difficulty arises when we realize that a soft asset takes effort: you actually have to learn a new skill. You can't just buy a skill like you can buy a printing press.

So, when you have a surplus of time or money, how do you use it? Do you spend it to consume or distract yourself, or do you allot at least some of it to creating more value? Please share your thoughts in the comments.

Photo credit: on Flickr