ASSETS AND LIABILITIES: THEY ARE NOT WHAT THEY TAUGHT YOU

Assets and liabilities are not what the educational system taught you.

“Rule one. You must know the difference between an asset and a liability and buy assets” — Robert Kiyosaki

Understand what assets and liabilities are

Maybe it’s a trite topic: “understand what assets and liabilities are”, have you ever thought that all the material that exists trying to explain them is because they are two very important concepts that truly define our financial lives? Give it a try!

What do you think that is an asset and a liability? Have you ever wondered where you learned that concept? Most likely, you have learned it in college and from your family.

Regardless of where you learned it or what does it mean for you, here you have the definitions in the context of Personal Finance:

· Your assets are everything that puts money into your pockets. In other words, are everything that generates you income.

· Your liabilities are everything that takes money out of your pockets. In other words, are everything that generates you expenses.

Young generations have come to realize that security is not about having “house, car and study”, as a famous phrase that portrays the eighties in my country of origin says. Don’t get me wrong, having a house and a car is great! but it is smart financially depending on the use you give it. If you have a car and a house to rent or that produce you money in some way (such as in Airbnb or Uber), they are assets. But if you have a car and a house for your personal use they are liabilities, because they only generate you expenses.

Certainly you must be wondering: then how do I move around the city and where do I sleep? My advice is: rent the place in which you live and move in alternative methods of transportation! in this way you will live a calmer life because you will not be thinking about repairs, taxes and other expenses.

Advice: take action!

It’s useless to know the “financially intelligent” definitions of assets and liabilities if you do not apply them in your life, that is why I want to invite you to really make the effort of understanding your financial situation and working towards changing it, if you see it necessary.

If you live a minimalist lifestyle and concentrate you efforts on building assets, you will save money that you can allocate on things like investing in yourself and in assets that produce you cash flow.

With love and desiring to help you change your mentality about money,

Daniel.