Robert Kiyosaki of ‘Rich Dad fame states the term “asset” refers to anything that helps you put money in your pocket. This is an excellent definition that gets down to the essence of what an asset actually is.
The majority of us believe that our house can be considered an investment. It’s not the reality! Do you bring money into my account every month?
When you realize that you’ve paid the mortgage payment last month and paid for electricity as well as gas to warm it, and have spent thousands of dollars repairing the roof that was damaged and you’ll be thinking, no! If you’ve let the spare room to a lodger and the lodger has paid you enough money to pay for your mortgage, your heating and insurance costs, as well as some funds for the maintenance and repairs, your home could be a good investment.
The only thing that should not be taken in this calculation would be the appreciation in the value of your home. While we live in a time when the value of properties rises, there are times when it doesn’t. So it’s not a good idea to count that as a regular source of income, but your lodger’s rental is. (Let’s simply assume there’s a reliable lodger).
When you next invest money in something, do you expect to receive any cash back at what price and at what amount will you receive back? These are the kinds of questions that investors who are wealthy inquire about.
If you purchase “Doodads,” or costly toys, it is your decision, however the money goes to waste and can only be recuperated if you sell those toys in the future.
A liability , then, is the exact opposite of what was mentioned above. It is a thing that takes money from your pocket. Things you may have to rent out over time like a car, television, or even your home is considered a liability.
To have more leisure time, the concept is to cut down on your debts and build up your assets. In plain English it is simply to pay attention to what you spend to spend your cash on.
It can be a challenge choosing a healthy lifestyle balance. You’re looking for some fun So toys can be great, but be careful not to overdo it. Be aware of your spending before you make a purchase.
Ask yourself questions like “Is it better to purchase the automobile outright rather than renting it. Keep in mind that rent is considered dead money and you’ll never receive it back. You must stay on the receiving end of this rent equation instead of on the spending side.
When you are able to recognize the distinctions between liabilities and assets, and then put your plan to implement it and your wealth will grow!