As we embark on a new year, our minds are filled with the possibilities of what might lie ahead for us. What we want to accomplish. What we want to do to make our lives better for ourselves and our families. As Maria and I sat down to talk about our family goals, it was striking how many of them were related to money (get a raise/make more money, pay off debt, save money for various goals, etc…) or things (do projects around the house, build a new shed, buy a new vehicle, etc…). It is very similar in the world of business, where the beginning of the year is used to establish objectives which usually end up being related to the financial and performance goals for the year. It is no wonder with this mindset that our world is so heavily influenced by decisions that are dominated by money, seemingly at the expense of everything else that is right in the world.
I think that we all inherently know that a healthy lifestyle is not defined by how much money we make, or how many things we have (despite what the TV might tell us). Many of us feel in our hearts that true wealth is represented more by a balance of love, family, friends, nature, continuous learning, rich life experiences, and having been able to contribute to something larger than ourselves. Being an engineer/scientists by training, I find that I thrive on “rules” by which I can provide structure to my surroundings, thoughts and feelings. Unfortunately, even with a fairly religious upbringing, I lacked a system that could comprehensively describe what a successful life looked like to me; one that balanced the needs of a modern world with those more basic needs of my heart and my soul.
It was with these thoughts in my mind that I read an article called the “8 Forms of Capital” on a website called AppleSeed Permaculture. The article is written mostly from the perspective of permaculture, economic theory, and social sustainability (which were all pretty interesting to read about), but I found myself thinking more about how the concept applied to my life, my family, and the goals that we had set for ourselves. In the end, I found that these 8 Forms of Capital neatly described many of the things that I aspire to and actually provided a pretty solid structure for describing how our personal time and energy can be used to generate different kinds of value in our lives.
Included below are the 8 forms of capital, including a loose definition for each paraphrased from the article, as well as my thoughts on how each of them fit into my life.
- Financial – “Money, currencies, securities and other instruments of the global financial system…It is our primary tool for exchanging goods and services with other humans”. The author describes this as the most familiar form of capital. Interestingly, it is also the most exchangeable, being readily converted to most the other forms of capital (save for spiritual or cultural). It is little wonder that it has become so powerful in our society.
- Material – “Non-living physical objects” – These are basically the “things” in our lives. Houses, cars, TVs, phones, jewelry, etc… Many of these are important to maintain our livelihoods – providing shelter, a means of income, etc… Some provide some level of entertainment/comfort, while others are symbols of social status (linking to the next form of capital). The trick for me is to know the difference between them, being careful about spending money on comfort items, and completely avoiding those that are just for status.
- Social – “Influence and [personal] connections” – This is basically a measure of the strength of your personal relationships. How strong your family ties are, how easy it is for you to call in a favor, or to get help from someone when you are in need. It is clear that this is important in life – building strong, trusting relationships. The trick for me on this one is how you build it (hard work, integrity, generosity vs. deceipt, gossip, and backstabbing) and how you use it (build others up vs. tearing others down).
- Living – “Living capital is made up of the animals, plants, water and soil of our land— the true basis for life on our planet.” As a father and a fledgling homesteader, living capital holds a special place for me. The importance of maintaining healthy systems of life is as deeply important to growing a happy family as it is to growing a productive garden and prolific flock of chickens. All of these add unspeakable value to my life.
- Intellectual – “Knowledge asset” – I think of this as the things that I have learned, the things that I have discovered, the things that I know how to do, my intellectual property. This can be gained in school, on the job, in the field…regardless of the source, this is an inherent value that each person carries with them in different ways.
- Experiential – “Personal experiences” – Closely related to intellectual capital, experiential capital is more related to the things that you have done and the things that you have seen in your life. This can result in skills that are critically important to any person who strives to be self-reliant.
- Cultural – “the shared internal and external processes of a community – the works of art and theater, the songs that every child learns, the ability to come together in celebration of the harvest or for a religious holiday” – In addition to the traditional forms of art that the author describes, I think of this as the traditions that we build, the tone and “feel” of the community that we foster, the principles by which people choose to associate with one another. At one time, I believed that something like culture was fixed, simply a function of where you grew up or where you live. I now know that it is something that can be influenced, shaped for the better or for the worse through our cumulative interactions with the people around us. Build enough positive social capital, and a strong, supportive, and communal culture can emerge around you.
- Spiritual – “religion, spirituality, or other means of connection to self and universe” – While this can be very difficult to quantify, the author speaks to a great example in the Buddhist principle of karma as a representation of spiritual currency. To me, this represents both the spiritual and religious aspects of life, embracing the miracles that surround us in nature and in life, and the recognition that sometimes “doing the right thing” delivers no value outside of knowing that you did the right thing.
I realized in reading through these that it is only when all of these forms of capital are in balance that I will ever really consider myself to be successful. It also explains how some people that we would consider to be so successful (lots of money, position, and things) are actually so unhappy, having sacrificed the remaining aspects of these forms of capital to get there. With this framework in hand, I have a new way to look at how I define “true wealth”, the goals that I have in my life that will help us get there, and the actions that we can take to achieve those goals.
Which of these “forms of capital” do you find yourself craving the most in your life? With a little focus, you might be surprised how easy it might be to start to build this new wealth.