Accountants define an asset as: “…a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.” [1]

The accounting definition has three parts:

1. Resource Resulting from Past Events: The something in question which may be physical or intangible. It exists because of past decisions made by the entity (e.g. investment, purchase, leasing, etc.).
2. Control: The entity has domain over the ‘something’ today.
3. Future Benefits: Control and Past Events are only useful if there are the prospects of Future Benefits.

People follow a similar trajectory. For example, Over TIME, what Children learn gives them TALENTS to become productive adults and generate both financial and social TREASURE [2].

There are a number of models to further define and explain the development of Human Assets but I like the Four Human Asset (4Human-Assets) [3]. At the center is the person.

Each person has their own unique view of the universe connected through the other Assets (e.g. via Social, Physical or Financial Assets). Physical assets provides the base for the person but are Completed by the Social Asset. The Financial Asset can be seen as either a wedge separating the other assets or a key stone holding them together (more on this in the next blog).

Four Human Assets

1. Personal: The abilities and capacities of the individual to contribute to the other three assets. For example, being a good listener is a Human Asset that may contribute to better social assets. Having marketable skills earns money which allows for the purchase of physical assets (a home, car, food). Age, wisdom, good health are examples that are not transferrable or marketable but central to the value of this asset.
2. Social: The size and quality of the external interactions the person contributes to and benefits from. It includes family, friends, associates, neighbours, organizations, etc. Quality is measured in the degree to which the relationships are healthy and contribute to individual’s Personal Asset.
3. Physical: the more traditional concept of an asset. This is the control over tangible resources which provide current and future benefits. Tangible assets include homes, cars, furniture, etc. The line between a physical and a financial asset may be subjective; for example, how would owning a gold coin or a valuable painting be counted. Simply select one asset category or the other and move on.
4. Financial: A specific type of Physical Asset separated out because of its importance to financial literacy. Financial assets are the ‘Treasure’ a person has. It includes current income earning capacity, accumulated wealth (e.g. money in the bank, stocks) and a lack of debt. Intangible assets have no physical form but still have value. For example, owning a patent which is paying a royalty.

Don’t Model, Be Happy

The 4Human-Asset model is a metaphor to help individuals understand the need for this balance. It will be applied in a financial literacy training perspective that success is more than money or things; success is a life well lived and well loved. As always, let me know your thoughts!

Notes and References

1. 4.3 Definition of an asset; CPA Canada. “CPA Canada Handbook – Accounting; THE CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING.” Knotia.ca, 02/21. https://www.knotia.ca/.
2. Eagle eye readers will note the triplet of Time, Talent and Treasure woven into the definition. This has a long-standing place in religion as a way to define philanthropy or giving. These three sisters are often used to describe the resources needed to achieve a social objective. They can also be repurposed for creating better humans.
3. I have seen something called the five building blocks. It is the same as the four except that it includes a duplication to Personal in the form of Human. The provenance for the model is uncertain. Even after an exhaustive search, I was unable to find out more about it. I suspect the model was never published.