What Are Assets And Liabilities

The phrase “my assets” is familiar to everyone. The first association that arises in this case: a businessman, perhaps a securities trader, talks about his business. In fact, each of us has assets and liabilities. It is very important to learn to distinguish between assets and liabilities. This, you can say, is the basis of financial literacy.

So, without going into boring economic details, we will give definitions to these two terms:

• Assets this is all that brings us profit.
• Liabilities is everything that entails costs draws money out of you.
• The concept of assets and liabilities can be applied not only to money, but also to other human resources, for example, to time or physical health.

Let’s look at each resource in more detail.

Money

In this category, any item or property can be either an asset or a liability. It all depends on how you use it.

For example, an apartment. If you live in it, you pay for utilities, make repairs, without getting any income this is your liability.

If you rent such an apartment, then the apartment automatically becomes an asset the one that brings you income.

A computer or laptop can be considered an asset if you work with it and receive additional income. Moreover, can become a liability, say, if you use it only for games and recreation. You pay for the Internet, buy new toys. Such a computer your money only sucks.

A pledge of financial well being in the following formula: We reduce liabilities and increase assets.

In every way try to get rid of unnecessary liabilities and increase the number of assets.

Time

The most typical temporary liabilities are TV and telephone. These two things eat up free time with terrible force. However, temporary car and diary can become temporary assets.

The computer is especially for us, freelancers are often an asset. It allows you to perform many operations much faster.

Physical forces

All that adds to your vitality makes you cheerful and energetic this is your power asset. Such assets are considered fledged sleep, exercise, any regular physical activity.

Liability in this case is all that reduces your efficiency. For some physical liabilities, work can become a job, for others simply unpleasant people, who have had to quarrel in public transport. Poor food, by the way, is also a liability for physical strength.

Why am I even talking about this?

If you clearly understand that in your life assets, and those liabilities, you can make your life better. Just analyze the picture of your life and begin work on reducing liabilities and building up assets. When you feel the first results from this activity, you will enter into excitement!

For example, I looking for liabilities, decided to disconnect from cable television. We decided that by cutting off cable TV, we would kill two birds with one stone we save time eaten by TV and save money that went to pay for cable television every month.