Yes. I've learned from it and moved on.

By reading rich dad poor dad by Robert Kiyosaki this night, I agree with him and seriously believe the poor and middle class people truly have a misconception in identifying the differences between what an asset and a liability is.

While growing up, just like many families out there, my parent actually worked really hard from one job to the other, from one business to the other just to make ends meet. I noticed they were vexed and not finding the way our landlord then do come and harass them for house rent. Again, like every other family in this level, they came up with an idea that owning a home. “That'll be a great asset.” I heard them say. Did they finally get a house of their own? Of course they did. But did this action put an end to their money problems? Not at all! Instead it compounded it.

Now i am actually not against having a landed property like a house of your own. At least, "it’s a formidable investment you'll ever make in life as you no longer get to pay house rent" as my father will always retort. Back then when i was still a kid i do find that statement really interesting. And again, you know that feeling you get when you finally get to live in a house you can finally call yours and brag to your relatives and colleagues. It’s exhilarating. Don’t you think?

Lately i had a thorough thinking after reading rich dad poor dad. The way we see assets and liabilities is way different from the way the rich do see it. Now for example in my ss1 accounting class, we were taught things like buildings, motor vans, office machines etc. to be assets while things like bank loans, account payable and other kind of debts we are owing, are said to be liabilities.

The common man on the street will often have it in mind that things like a house, car, a TV set, generator set, refrigerator etc. are all assets so far he no longer feels the discomfort of not having them. But to a financial literate, what the common man terms as assets are liabilities.

In real terms. Anything in your possession, or persons, that generates more money for you with or without your supervision, is considered an asset. Anything outside from the definition given above, is a liability. And whatever property (or persons) that consumes more than what they produce, is a liability as well.

In my subsequent posts, we shall be discussing various types of assets you can own which will continue to generate you more money rather than having more liabilities and remain dead broke!

Now over to you. What are the things you considered as assets and liabilities in the past?



photos: google image.