And perhaps it has taken at least a decade and a financial meltdown to let that lesson partially sink in, but by now the “asset-light” or “lightweight” lifestyle is one of the trademarks of the infamous Millennial generation.
This generational shift has been made possible by the rise of smartphones and cheap cloud computing.
As opposed to an asset-heavy lifestyle, in which you pay to own physical goods, the asset-light lifestyle is based on paying for access to (digital) goods.
The examples are many and well known. Instead of shelves full of books, CD’s and DVD’s, many nowadays have an e-reader like Amazon’s Kindle, or a Spotify, YouTube and Netflix / iFlix account.
Our wallets, once filled with cash, coins, credit cards, loyalty cards and receipts are slowly giving way to a smartphone and a digital payment solution like Apple, Samsung, or Ali Pay.
And then there are the really big ticket items: renting a house instead of owning it; using Grab instead of buying a car and using Airbnb instead of buying a holiday home or booking an expensive hotel room.
The advantages of the “sharing” economy are plenty: most of these expensive items are idle most of the time and sharing increases their utilisation.
Your car is not driving (not talking about standing still in traffic) for 95% of the time and the same goes for your golf clubs, skis, skydive outfit, smoking or gala dress and diving equipment.
Of course, if you really want to take it to the extreme, pets and kids are also incompatible with an asset-light lifestyle!
So what are the benefits of the asset-light lifestyle?
First of all, its flexibility. If you plan to move around a lot across Malaysia or even go abroad for work or love, it makes sense to be asset light.
Assets like your house tie you down to a certain location, while a rental agreement is much easier to cancel.
You will also have more money left if you don’t need to buy a car or expensive equipment upfront, which means you have more left to save and invest.
An asset-light lifestyle also means less risk: if you buy a house or a car, a huge portion of your wealth (and debt!) is tied to one very specific, not-so-liquid asset that could suddenly drop in value.
The asset-light lifestyle is a huge space saver and works very well for anyone living in a cramped studio apartment. No more packed shelves, storage boxes and closets to have to deal with.
Finally, it can also be more convenient and time-saving. Deciding which house or car to buy requires a lot of research, window shopping and careful planning which takes up a lot of your time.
As your family situation changes, your requirements for a home and car will also change, which is easier to accommodate if you rent and grab, than if you buy. Finally, the “pay-as-you-live” economy also has a positive environmental impact!
So, are there no disadvantages? There are some minor ones. All that digital information can cause information overload and watch out all your digital stuff doesn’t become as cluttered and disorganised as your non-digital stuff!
Make sure you do not overspend on digital subscriptions and then forget about them as they are quite ‘invisible’ and sometimes a single click is all it takes.
Finally, companies are also looking into “asset light” business models, which means you might become their supplier as a freelancer, rather than their employee!
Mark Reijman is co-founder and managing director of https://www.comparehero.my/ dedicated to increasing financial literacy and to help you save time and money by comparing all credit cards, personal loans and broadband plans in Malaysia.