Because I don’t want the title of the article to intimidate anyone, let’s first define an intangible asset. Instead of citing detailed accounting guidance, here’s the simplest definition I could find: “an asset that lacks physical substance.” You see, it’s all too easy in the realm of personal finance to focus on those physical (read “tangible”) assets that have value—for example, cash, mutual funds, stocks, bonds, property, equipment, vehicles, and so on. However, becoming preoccupied with building tangible assets could lead us to ignore some of the most inherently valuable financial tools in our tool kit—the intangible assets.
In no particular order, below is a short list of intangible personal financial assets that should be nurtured to derive the most benefit to your financial landscape.
- Attitude: This one seems like a no-brainer, but you’d be surprised how many people totally overlook or ignore the effect attitude has on financial success. At the risk of sounding cliché, cultivating a positive attitude makes nearly anything possible. And by contrast, having a negative attitude can send you down a path that puts you years or even decades behind in achieving your goals.
- Relationships: Having meaningful relationships—personally and professionally—can be a significant benefit to your personal financial life. Not only does it bring you a network of support and encouragement when you need it, but you can also find financial role models or mentors who can lead you to impactful ideas or habits you didn’t know existed.
- Values: Each of us has developed a unique set of values shaped by the individuals who raised us, our religious or non-religious background, and our life experiences. The value set that’s engrained in us has a high propensity to affect our personal financial trajectory? As an example, do you believe it’s okay to steal to become wealthy? Or do you believe it’s better to earn a living and build your wealth?
- Background: This one is something we may not all want to acknowledge, but our background and the path we took to arrive at adulthood can undoubtedly influence our personal financial success.
- Career: Although this clearly results in tangible financial assets (i.e. a paycheck), one’s choice of a career has a significant and lasting impact on his or her ability to reach financial freedom. As a simple example, I’ll use the “artist, doctor, CEO”. Most people may think it’s easiest to achieve financial freedom and independence on a CEO’s salary. That may or may not be true; in fact, I’d argue, in some cases, it may be easier to attain financial freedom as an artist because your spending is likely so much lower.
- Hobbies: Like the item above, this one is tied to tangible financial assets, but it can still have a measurable impact on your financial life. For example, if you’re into car racing, you will likely spend more in a year than you do playing chess for a lifetime!
This is, by no means, an exhaustive list of intangible financial assets. On the contrary, it’s just a list of items that helps you think of “outside-the-box” ways of mastering your financial life. Remember—it’s not all about the money!