How much is the bare minimum cost of living?

“The best investment you can make is in yourself….. you are by far your biggest asset” — — — Warren Buffett

This Lunar New Year, I was profoundly reminded of how much can change in a year, as there was one less person in our home. It made me realize more deeply that the simplicity of the New Year celebration is so precious. Just being able to meet and chat with family and friends, without all the elaborate rituals, is a blessing in itself.

Because of this simplicity, I prefer to focus wholly on myself, my family, and friends during this festive season. It’s a time to listen — both to oneself and to loved ones — and to recharge.

For this holiday, I set a checklist of goals for myself, which included exercising, reading, online courses, and spending quality time with family and friends. One particularly significant checklist item was to draft my own income statement and balance sheet. But I’m not just talking about these documents in the traditional financial sense. It’s not only about monetary gains and expenses but also viewing my income and expenditure from an “investment” perspective.

Starting with the balance sheet, we usually consider our “tangible assets,” like cash, stocks, bonds, real estate, and so on. But it’s equally crucial to evaluate our “intangible assets,” such as language proficiency, professional experience in a specific field, certifications, personal branding, and networking. These may not be quantifiable and thus often overlooked. However, they play a significant role in determining our “income” on the income statement.

How is your salary determined? We often get too comfortable in a job, thinking that seniority will naturally lead to promotions and raises. But if we look at it from the perspective of personal capabilities and the value of time, more experience should mean better problem-solving efficiency and accuracy, which in turn justifies promotions and salary increases. Such “experience” is one of the “intangible assets.” For salespeople, their network and relationships matter; the more unique contacts they have, the higher their value.

So, if you want to boost your “income,” besides investing in “tangible assets” (like buying property or stocks), you also need to invest in your “intangible assets.” Offer your skills and experiences to society to effectively elevate your worth.

Moving on to the income statement’s “income” and “expenses,” this year feels like the right time for me to heavily invest in myself. Many would have heard from the news about the bleak economic outlook for the first half of 2023 and the layoffs at major tech firms. But instead of being pessimistic, I see it as an opportune time to invest in oneself.

This year, I’ve divided my expenses into three categories: “Savings 20%”, “Living Expenses 60%”, and “Self-Investment 20%”. While the “Savings” part is self-explanatory, for the “Living Expenses,” I’ve calculated the bare minimum I need for a decent lifestyle. For example, a wholesome meal can be quite simple and affordable, roughly costing $150. Taking various factors into account, I’ve derived my budget for “Living Expenses.” It’s also a good exercise to differentiate between “needs” and “wants.”

Does this approach make life feel constrained? Not at all. Every expenditure beyond the basic becomes an act of “self-investment.” For instance, spending an extra $250 on a lavish meal could be seen as investing in networking with a colleague or indulging in a gourmet experience to elevate one’s lifestyle.

As I’ve shared in online book clubs, rewarding oneself with a small amount after establishing a good habit can also be seen as “investing” in oneself. From this perspective, every dollar spent is a tool to further one’s objectives.

Moving away from a money-saving mindset and embracing an investment creation one, both tangible and intangible assets can benefit from the magic of compound interest, as Einstein called the “eighth wonder of the world.”

Doesn’t it feel invigorating to know that every action you take is contributing to your personal growth?

Let’s get started right away!

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