What is an asset? What is a liability? A liability is something that depletes your bank account, and an asset is something that adds to your bank account. That's about as basic and it gets.
by BrianGosur
What is an asset? What is a liability? A liability is something that depletes your bank account, and an asset is something that adds to your bank account. That's about as basic and it gets.
There are many items that fall into these two categories that may surprise you. So let's cover first, the liability column. What kind of items do you think you might consider a liability in your financial statement? Some would say their spouse is a liability. Not my wife. She is definitely in the asset column for me.
What about your home? Liability or asset? You're right. It is a liability. Every month your home is costing you money to keep it running. There are taxes, utilities, and interest on your mortgage payments. A rental property would be an asset because you would be making money off of it each month, not putting money out.
What about your automobile? Liability or asset? Yes it is a liability. The vehicle that you drive will cost you money, unless you have a 1969 427 L88 Corvette. If you can find one, they are probably worth around a quarter of a million dollars. You could put that on your financial statement for sure. But since we don't have one of these magnificent automobiles, your vehicle is a drain on your budget.
We are in a struggling economy right now. People are counting their pennies. They aren't going to the Starbucks and spending the 4.50 for the latte every morning, like they used too. They are running through McDonald's and buying from the dollar menu. They aren't having their business suits tailor made, they're buying them from a discount store. They are looking to cut costs and increase their income.
What do the wealthy do? They are buying up income producing assets, while all the rest of us are buying up expensive money draining liabilities.
Learn a lesson from the wealthy. Instead of working so hard for your money, learn how to get your money to work hard for you. None of us had a course in school on how this concept could work.
I was always told to go to college. Get a good paying job at a good secure company. Work the next forty years and save a lot of money, invest in mutual stock funds, and you will be able to retire, collect a pension and live a long life. How is that working out for most Americans today? I here to tell you, it doesn't work that way anymore.
After thirty five years of service with Ford Motor Company, I retired and I receive a monthly pension. My savings and 401k is gone. I am one of the lucky ones, because I am still getting a pension check. At least for now I am. The auto companies are struggling too.
With the falling dollar, precious metals, such as gold and silver, are always good investments. These metals go way back into the Roman and Egyptian days, when they were used as currency. They have always held their value and can be put in your financial statement as an asset.
We need to be doing what the wealthy do. Use that green paper to buy wealth building assets, not liabilities that just put a hole in your pocket.
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