Financially freedom is important to live life happily. Being rich and being financially free is slightly different. If someone is earning more money but has more expenses, is not necessary that he is financially free. To become rich and enjoying financial freedom you must know the difference between assets and liabilities. In this article I will explain about assets and liabilities in easy words that you will not get to know somewhere else.
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| Assets vs Liabilities |
Everyone in this world want to earn money, earn more money to fulfill his dreams and support dependents living splendid esteemed lives. Previous days I read the book "Rich Dad, Poor Dad" and got to know many things about finance and accounting. I think everyone should know the formula of becoming rich and enjoy his life as he wants. Under the finance category in this website, I will continue posting new and interesting posts related to finance and money earning.
Coming to the main point I start here discussing about asset and liability and its usage. Actually assets and liabilities are two financial terms important for managing balance sheet and confining budgets. Every progressive human kind wants to become rich or financially free. It indeed depends upon someones earnings/incomes. But this is not true that if a person earns less, he cannot be rich in his life. If anyone wants to become rich, he should follow some rules of investment and learn basics of finance.
Making this post concise and to the point, I would like to directly talk about assets and liabilities in brief. This is a kind of series of articles that will complete overall financial topics. So let's start the topic -
DIFFERENCE BETWEEN ASSETS AND LIABILITIES
Assets - When you own any property whether that is intellectual, virtual, online or any kind of physical property like land and building, if you get income from it or your property works for you, that is called assets. Assets help you increasing income/revenue. Asset is some kind of your employee who works for you gaining profit.
For example if you have building given in rent, you will get rental income. This is a kind of passive income. Very soon you can see the grow in your revenue. Like this is blogging website of mine and have also mentioned my YouTube Channel, these are my assets from where I get income. Investing your money in government schemes and secured share market, you create assets.
In previous times, only land was considered as an asset but now time has been changed. Intellectual property gives you more returns than any land or physical property. You get royalty for you books, art, music etc for lifetime. So, asset is not only that you see with eyes, but it is present in virtual world too. I will cover more about these facts in upcoming articles.
Creating assets and reinvesting in creating assets again will make you rich and financially free soon. Therefore it does not matter how much you earn, but all that matters is how much you save or invest. Keeping your amount in bank savings is a kind of liability because your amount in bank will be decreased with time. The inflation rate is usually higher than what interest you get on saving accounts.
Liability - When you buy any property like bike, car, truck, bus, building, mobile phones that needs repairing/other kind of charges and pull money from your pocket is generally known as liability.
People sometimes buy more liabilities for pretending themselves being rich. They buy expensive cloths, bikes, gadgets, devices and pertain expensive & luxurious lifestyle. They are unable to understand the difference between asset and liabilities.
You should avoid buying liability if you do not have sufficient amount for doing so. You can buy liabilities if your purpose is gaining side income, or maintaining balance sheet. Your liabilities can work for you as assets, like if you buy automobiles and affiliate that to any company or business like zomato, swiggy delivery partners do, that becomes asset side of your liability.
Conclusion is that both asset and liability is good for becoming rich in your life. Only need is that you should be aware of categorizing assets and liabilities. Indeed assets give you money and liability draws money from your pocket. Credit cards, loans, etc are a kind of liability, you should stay away as far as you can.
But also think, liabilities are sometimes good for maintaining your mental health. Buying such devices and products that are necessary, you should not wait for calculation for creating wealth. Always buy necessary liabilities. Like nowadays mobile phones, especially smartphones are necessary but it is a liability, if you buy mobile phones and use in proper way, you can create a way of passive income or learn numerous things with the help of this device.
Hope these article is useful for you, if you have any other query, you can ask in comment section. You can watch video Assets और Liabilities में अन्तर | Difference Between Assets & Liabilities in Hindi | Finance Help |
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