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Common mistake some people make, is not knowing the difference between an assets and a liability and that’s really common among the youths that really want to acquire wealth without actually knowing what to use it for. They just want to get the money and buy whatever they want and I try as much as possible to educate some of my neighborhood pals.
First of all, asset is considered as something that adds value to you and just value, it’s something that won’t give you trouble but peace of mind and can also serve you in future. That’s what I consider an asset. Some examples of asset as some of us might know is investing in crypto, acquiring houses, lands, properties (real estate) and having a lot of cash not just in hand but in savings as well. This is what people who have the mindset of getting rich focus on.
And as for liability, they are what I call money draining. And the funny thing about a liability is that at first some of them are assets but as time goes on they become a liability. For example, imagine purchasing a brand new car, now that’s an asset because its serving its purpose but along the line as time progresses new model of cars comes out and that one becomes and old model and if you want to sell, you won’t get the same amount as you bought it with.
Aside the car losing its value, the spending we make on it costs us and that’s a liability if you don’t have enough money for it. Another liability that we have but we can’t make do without it is subscriptions because some of us subscribed more than two times a month. We also have taxes, mortgage debt etc.
And one thing to note is that having a house is not an asset if it takes money from your pocket like taxes, insurance etc. but it will only be an asset if at the end it is sold at a higher price and profit is made. So if you want to be rich and have something for your future, start investing in assets than acquiring liability.