Hey everyone, I recently consumed a lot of content regarding assets and liabilities. I was aghast by knowing the impact it has on our life. So I decided to share this with you as it is really important for your personal economy. Here are 5 liabilities which you don’t know but it is creating massive holes in your pocket. It’s going to help you a lot in balancing your money matters.
Before we begin, let us understand two things which will make this blog a cakewalk for you to understand. We will define two terms; Assets and Liabilities, according to the Author of Bestseller Rich Dad Poor Dad, Robert Kiyosaki.
Assets: Kiyosaki defines an asset as anything that puts money in your pocket.
Liabilities: Liability is anything that puts money out of your pocket.
Simple? Great. This will be the simplest definition of assets and liabilities you would ever come across. Moving ahead.
Here are 5 basic liabilities;
The house is the first thing a majority of youth think of buying, once they start earning well. However, a house is the biggest liability, as it doesn’t put money in your pocket unless it is given on rent or you are planning to earn by selling it on profit.
In fact, the regular maintenance of the house and the elements inside the house makes it a huge liability. So the house which you are buying to settle down is a 100% liability, forever. That is why a rich will not stop after buying one house, instead, he will buy another house (or any other real estate) and rent it to balance the liability he created.
Again a classic example of foolishness from a middle class is to own an expensive automobile just to satisfy the ego. Any automobile which you use is a liability unless you give them to use it as a taxi or any other system which puts money in your pocket rather than driving it out.
The game is not to purchase any such liability but to balance it out with creating enough assets. However, for that, you need to identify the liabilities. That is the first step and the goal of this blog post.
Yes! You read it right. Your salary is nothing but a liability unless you know what to do with it! The reality is that you won’t become rich on salary. Why? Because it is taxable. When a normal person earns 1 million dollars, 40,000 dollars is taxed out but when an Entrepreneur who knows the true game earns 1 million dollars, he will at least take away 95% of that income, legally!
If you don’t believe, read this How Amazon gets away with not paying taxes. Not just Amazon but most of the big shots do this.
By now, you know what are the liabilities and assets. Your body if not worked on well will become a huge liability. According to me, it is one of the most badass liability ever. The reason is that you cannot give it up.
You have to keep it fit by working out and watching what you eat. That is the smartest and easiest way to keep this liability as quiet as possible.
5. Population in your house:
Don’t count me as insensitive but we are talking money and by that perspective, every person in your house, who are not adding to the family pocket is a liability!
A child is a liability at least for 16 years, when he starts to add something to the pocket he/she turns into an asset. The message you should take away from this 5th liability is to not populate more! You will be doing a huge favor to your country (if populated) and yourself too.
- Understand the liability and Asset concept.
- Identify the liabilities.
- Try to dilute the cash flowing away from your pocket.
- If it cannot be diluted, build other things that could put money into your pocket and cancel out the liabilities.
If you want to know more on this from the maestro Robert Kiyosaki, go for this book:
I hope this blog was worthy of your time spent on our site. Drop your views regarding asset and liability in the comment section. We would love to interact with our content consumers.
If you liked this blog, you will love this How You can make a side income by reselling legally on Amazon
By: Shivam Joshi.