Building Wealth through Increasing “Assets”

What is a Liability?

What is an Asset?

How do these affect your wealth?

LIABILITY

In finance, a liability is anything that would decrease your net worth and enlarge the expense side of your income/expense statement.  Liabilities can be in many forms, but are most often in the form of a loan or a debt.  Liabilities could also be alimony or child support from a divorce, insurance premiums on a house or a vehicle, tax burdens, etc.  The commonly thought of liability is your credit card balance, where you pay some each month but not enough to pay off the balance.  Any loan that you have that sets you up to enjoy your purchase now and pay off the principal with interest over time is a liability.  This could be your car loan, your home mortgage, or a small business loan.

Having uncontrolled liabilities can lead to financial disaster:  Expenses exceeding Income.

This is Anti-Wealth!

Financial liabilities must be controlled.  The expenses created by these liabilities need to be kept to a controllable minimum.

ASSET

In finance, an asset is generally anything that has the potential to increase your net worth and the income side of your income/expense statement.

Why did it say “potential”?

Well assets are what?

  1. Successful companies
  2. Real estate that has a steady positive cash flow
  3. Stocks and bonds that appreciate and have good dividends
  4. Investments that have positive income and low taxes
  5. Network marketing businesses that have great income producing associates
  6. Books or music that sells a lot of copies and has a good royalty payment structure
  7.  You can probably think of others

As you can see, each asset has a qualifier.  This means that you have to select the asset wisely and you have to cultivate it so that it will grow and be profitable.  In shorter terms:  you must control your asset or your asset will turn into a Liability.

Controlled properly, the Asset increases your net worth and your income and continues to do so as long as it is healthy, thus allowing you the freedom to increase assets whenever another good one presents itself.

Having healthy assets builds your wealth.

Having healthy assets can make you wealthy forever.

Gary

About Gary

I am retired, but not tired. I still want to be valuable to others. I know that others are valuable to me. After looking back on six decades, I have asked myself this question: “What do I believe?” My mind filled up. My heart started beating faster. My spirit soared. I post blogs to share what my mind is working on, what my heart believes would help others and, what my spirit is communicating to me. What do I believe, you ask? Decisions dictate your path In love, not hate In tolerance, not prejudice In health, not sickness In wealth, not poverty In kindness, rudeness In happiness, not sadness In encouragement, not discouragement In faith, not doubt In courage, not fear I have been and will be challenged in each one of these beliefs, but the biggest belief is to stay positive and not turn negative. This belief helps me maintain all of the others.

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