Mika
VIP Contributor
The most important lesson you need in order to manage your money is to understand the difference between assets and liabilities. The moment you understand the difference, you will understand how to build your assets and how to cut your liabilities.
Assets put money in your pocket, whereas liabilities take away money from your pocket.
Generally speaking, people count anything that they buy and have value as an asset. For example, they count your car as an asset and your house as an asset. However, in a truer sense, these are not assets, these are liabilities disguised as assets. Your house and car take money from you. You are either paying your house loan or a car loan, or you are spending money to maintain your car (fuel and maintenance) and house (insurance, repairs, etc.)
According to Robert Kiyosaki, even your retirement plan is a liability because it takes money away from your pocket every month.
You gain financial freedom only when you build assets and reduce liabilities.
Assets put money in your pocket, whereas liabilities take away money from your pocket.
Generally speaking, people count anything that they buy and have value as an asset. For example, they count your car as an asset and your house as an asset. However, in a truer sense, these are not assets, these are liabilities disguised as assets. Your house and car take money from you. You are either paying your house loan or a car loan, or you are spending money to maintain your car (fuel and maintenance) and house (insurance, repairs, etc.)
According to Robert Kiyosaki, even your retirement plan is a liability because it takes money away from your pocket every month.
You gain financial freedom only when you build assets and reduce liabilities.