Financial Management (Part 2) - Assets vs Liabilities

In order to have a Financial Stable Life, you need to Increase your Assets and Decrease your Liabilities.


If I ask you, what are Assets and Liabilities ? Can you identify your Assets and Liabilities ? Most of you are not aware about what are your Assets and Liabilities and how to distinguish between them ? Do you prioritize things based on Assets and Liabilities ? Prioritizing things based in Assets and Liabilities is very important if you want to have a Financial Stable Life.

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Let's see what are Assets and Liabilities.

In simple terms :
Assets : Something that puts Money in your Pocket.
Liabilities : Something that takes out Money from your Pocket.


So now, can you identify your Assets and Liabilities ?
In general, Assets include your Business or Job, Bank Accounts, Mutual Funds, Bonds, Stocks, Property and anything else which puts Money in your Pocket. These are the things that generate Income and grow your Money.

Liabilities include your vehicles, television, Mobile and anything else that takes out Money from your Pocket or have the potential to take Money out from your Pocket. Liabilities have the recurring maintenance costs that you pay every month and it doesn't stop after you buy it. For example, your Vehicles. They have the recurring costs that includes fuel, insurance, Taxes, Maintenance, etc. In the end all these costs sums to a huge number. Similarly your television and mobile have monthly bills that you have to pay.


On the other hand, Assets help you generate and grow your Income. They have the capacity to grow your Money and work for you. That's exactly what we all want, that our Money should work for us instead of we working for Money.

You need to understand that you should have more Assets and less Liabilities in order to have a Financial Stable Life.

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