The Difference Between an Asset And Liability
Retirement does not mean not working. It means, barring unforeseen cataclysmic changes, work or not work, wealth grows automatically, staying ahead of inflation. Assets are large enough to grow by themselves. It's like planting a tree. You water it for years, and then one day it doesn't need you anymore. Its roots are implanted deep enough. Then the tree provides shade for you enjoyment.
So.. "Where do I get started?" or "How to get rich quick?" (red)
A rich dad said "if you want to be rich, you need to be financially literate"
So many people who become instant millionaires. Some people have become richer and richer, but most people fail to realize that in life, it's not how much money you MAKE, but how much money you KEEP and how many GENERATIONS you keep it.
All stories including:
1. Lottery winner who are poor, then suddenly rich and then poor again. They win millions, yet are soon back where they started.
2. Professional athletes, who at the age of 24 are earning millions, but are sleeping under a bridge 1 year later.
3. Young basketball player who a year ago had millions. Today at just 29, friends, attorney, and accountant took his money and was forced to work at a car wash for minimum wage.
Too many people are too focused on money and not on their greatest wealth, their education. Be prepared to be flexible, keep an open mind and learn, you will grow richer and richer despite tough changes. If you think money will solve problems, you will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.
If you are going to build the Empire State Building, the first thing you need to do is dig a deep hole and pour a strong foundation.
Financial foundation aka. accounting is possibly the most confusing, boring subject in the world, but if you want to be rich long-term, it could be the most important subject. How to make it simple?
Rule #1: you must know the difference between an asset and a liability, but assets.
Most people struggle financially because they do not know the difference between an asset and a liability.
"Reach people acquire assets. The poor and middle class acquire liabilities THAT THEY THINK ARE ASSETS.
Forget for awhile about how you were taught by other educated professionals, such as bankers, accountants, financial planners, and so forth.
I did learn accounting at uni, but in fact I hate it.
The first time I read the book, I was like "This book is talking non-sense". But then I tried to open mind and forget everything I know for awhile to learn this new thing.
Apparently it's true, I got something new and that's why I'm here to share. So be prepared to be flexible, keep an open mind and learn. Those are keys. Because most of time life does not talk to us. But it says "Hey wake up, there something new I want you to learn."
Remember?
Have you see the diagrams I've shared? have you know your position?
The diagrams from the poor, middle class or rich cash-flow pattern it's all about how someone handle their finances.
It can be people from rich family but they have poor cash-flow pattern.
How come?
I've siad this, we are all go to school to get scholastic and professional skills both of which are important.
example: auditor, doctor, chemist, architect, etc. And we usually have assumption that for them who succeeded on their academic, they will get good results or pledge bright future. It sound familiar right? YES. IT'S TRUE.
But... School ONLY teach you professional skills, how to be a good auditor? How an architect draw a building? How to manage and develop a company?
But school doesn't teach you to handle money. Correct?
Because students leave school without financial skills (not only count the ratio to solve a question, guys). Millions of educated people pursue their profession successfully but later find themselves struggling financially.
Familiar?
They work hard, have high salary, but the missing things is school teach HOW TO MAKE MONEY, but NOT HOW TO MANAGE MONEY FOR A BETTER YOU. What you do with the money once you make it, how to keep people from taking it, how to keep it longer, and how to make that money work hard FOR YOU.
Let's take classic case guys:
1 happy and highly educated couple, recently married, and decided to move to an apartment. They think it can save their money because it can reduce cost.
They now have two incomes, and start to focus on their own career. As their incomes go up, expenses go up as well. The expenses from debt card, taxes (the higher salary you get, the higher tax you must pay), then with your double incomes, you have much money, then you decide to buy new house, then new car, then property. See? All of a suddent, this couple's liabilities is full of mortgage and credit card debt and go up. Not yet for hang out with friends, open table in the club, torry burch sales, attend your friend's wedding, etc.
And this couple ask: "How to make more money?"
More money seldom solves someone's money problem. But the problem is caused by financial illiteracy and misunderstanding about the difference between assets and liability.
what I learn in theory and practical from bankers, accountants, financial planners etc, that house is an asset.
But, did you know that house can be an asset and also liability. How come?
Become liability if:
1. The bigger your house, the higher expenses: property tax, insurance, maintenance, utilities
2. If all your money is tied up in your house and no more assets to generate cash flow. You are maybe will work harder to pay your expenses (related to no. 1).
It's not means I say don't buy a house guys. What I'm saying is that we should understand the difference between an asset and a liability.
When we want to buy a big house, first thing first, buy an assets that can generate cash flow to pay the bills. All often we see, people buy house first, without any incomes from another assets.
Lesson 2 finished
Well, we have come to the conclusion, back to basic. Know the difference between an asset and a liability.
The key is:
Asset puts money in your pocket
Liability takes money out of your pocket.
The rich but assets
The poor only have expenses
The middle class buy liabilities they think are assets
The summary from 36 sheets. So pack and interesting, wasn't it?
I know it sounds unbelievable, but I'm still learning. tho we all are.
So.. "Where do I get started?" or "How to get rich quick?" (red)
A rich dad said "if you want to be rich, you need to be financially literate"
So many people who become instant millionaires. Some people have become richer and richer, but most people fail to realize that in life, it's not how much money you MAKE, but how much money you KEEP and how many GENERATIONS you keep it.
All stories including:
1. Lottery winner who are poor, then suddenly rich and then poor again. They win millions, yet are soon back where they started.
2. Professional athletes, who at the age of 24 are earning millions, but are sleeping under a bridge 1 year later.
3. Young basketball player who a year ago had millions. Today at just 29, friends, attorney, and accountant took his money and was forced to work at a car wash for minimum wage.
Too many people are too focused on money and not on their greatest wealth, their education. Be prepared to be flexible, keep an open mind and learn, you will grow richer and richer despite tough changes. If you think money will solve problems, you will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.
If you are going to build the Empire State Building, the first thing you need to do is dig a deep hole and pour a strong foundation.
Financial foundation aka. accounting is possibly the most confusing, boring subject in the world, but if you want to be rich long-term, it could be the most important subject. How to make it simple?
Rule #1: you must know the difference between an asset and a liability, but assets.
Most people struggle financially because they do not know the difference between an asset and a liability.
"Reach people acquire assets. The poor and middle class acquire liabilities THAT THEY THINK ARE ASSETS.
Forget for awhile about how you were taught by other educated professionals, such as bankers, accountants, financial planners, and so forth.
I did learn accounting at uni, but in fact I hate it.
The first time I read the book, I was like "This book is talking non-sense". But then I tried to open mind and forget everything I know for awhile to learn this new thing.
Apparently it's true, I got something new and that's why I'm here to share. So be prepared to be flexible, keep an open mind and learn. Those are keys. Because most of time life does not talk to us. But it says "Hey wake up, there something new I want you to learn."
Remember?
Have you see the diagrams I've shared? have you know your position?
The diagrams from the poor, middle class or rich cash-flow pattern it's all about how someone handle their finances.
It can be people from rich family but they have poor cash-flow pattern.
How come?
I've siad this, we are all go to school to get scholastic and professional skills both of which are important.
example: auditor, doctor, chemist, architect, etc. And we usually have assumption that for them who succeeded on their academic, they will get good results or pledge bright future. It sound familiar right? YES. IT'S TRUE.
But... School ONLY teach you professional skills, how to be a good auditor? How an architect draw a building? How to manage and develop a company?
But school doesn't teach you to handle money. Correct?
Because students leave school without financial skills (not only count the ratio to solve a question, guys). Millions of educated people pursue their profession successfully but later find themselves struggling financially.
Familiar?
They work hard, have high salary, but the missing things is school teach HOW TO MAKE MONEY, but NOT HOW TO MANAGE MONEY FOR A BETTER YOU. What you do with the money once you make it, how to keep people from taking it, how to keep it longer, and how to make that money work hard FOR YOU.
Let's take classic case guys:
1 happy and highly educated couple, recently married, and decided to move to an apartment. They think it can save their money because it can reduce cost.
They now have two incomes, and start to focus on their own career. As their incomes go up, expenses go up as well. The expenses from debt card, taxes (the higher salary you get, the higher tax you must pay), then with your double incomes, you have much money, then you decide to buy new house, then new car, then property. See? All of a suddent, this couple's liabilities is full of mortgage and credit card debt and go up. Not yet for hang out with friends, open table in the club, torry burch sales, attend your friend's wedding, etc.
And this couple ask: "How to make more money?"
More money seldom solves someone's money problem. But the problem is caused by financial illiteracy and misunderstanding about the difference between assets and liability.
what I learn in theory and practical from bankers, accountants, financial planners etc, that house is an asset.
But, did you know that house can be an asset and also liability. How come?
Become liability if:
1. The bigger your house, the higher expenses: property tax, insurance, maintenance, utilities
2. If all your money is tied up in your house and no more assets to generate cash flow. You are maybe will work harder to pay your expenses (related to no. 1).
It's not means I say don't buy a house guys. What I'm saying is that we should understand the difference between an asset and a liability.
When we want to buy a big house, first thing first, buy an assets that can generate cash flow to pay the bills. All often we see, people buy house first, without any incomes from another assets.
Lesson 2 finished
Well, we have come to the conclusion, back to basic. Know the difference between an asset and a liability.
The key is:
Asset puts money in your pocket
Liability takes money out of your pocket.
The rich but assets
The poor only have expenses
The middle class buy liabilities they think are assets
The summary from 36 sheets. So pack and interesting, wasn't it?
I know it sounds unbelievable, but I'm still learning. tho we all are.
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