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| ASSETS AND LIABILITIES |
To master your finances, you must know the difference
between an asset and a liability. Most people spend time investing in
liabilities which to them, they think are assets. Your ability to distinguish
between these two generates a long lasting control over your finances. Get the
difference now and invest in assets. What are assets and liabilities? In simple
accounting terms, an asset represents things of value and benefits in the long
run whilst liabilities include things which represents lost and depreciation in
the long run. Even knowing the trend of events can help you distinguish between
these two. Most people are immersed in
abject poverty because they lack the knowledge between an asset and a
liability. Rich people recognize assets and acquire them whilst the middle
class and the poor keep acquiring liabilities. They usually think they are
acquiring assets. If you can comprehend this simplicity of an asset and a
liability, your life will have a plan and be financially easy. In a quest to
figure out the difference between an asset and a liability, let me inform you
about what I call, the Time Factor Principle (TFP).
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| TURN YOUR ASSETS TO LIABILITIES |
The time factor plays a
role to realizing the difference. What you need to understand is, time has
always been an asset but most people turn it into a liability. This singular
act affects their finances in the longer term. A deep thought about this, will
enable you know the difference between a liability and an asset. Although most
people may argue they know the difference between these two, which is an asset
and a liabilities; I can confidently state that, the difference is not in what
you were taught in the classroom. Forget about the classroom lessons. Think
deep down within yourself and as an individual. The simplicity of the
difference escapes most adults because, they have been educated differently and
mostly by other educated professionals such as accountants, real estate agents,
financial planners and so many bookworm professors. This is where the problem
geminates from. Think about this, your accounting teacher or lecturer told you
an asset is bla bla blah and a liability is bla bla blah. To your accounting
lecturer, the things he or she mentioned to you as an asset or a liability are
the things generally accepted as definitions. Also, they are things they
themselves considered to be either an asset or a liability, which is highly
dependent on how they have gained or lost from those they considered as such.
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| DEVELOP YOUR LIABILITIES TO USEFUL ASSETS |
With this, I can strongly argue your accounting lecturer to be basing these
lessons on his or her personal experiences. To them, it is an asset or a
liability. This is your accounting lecturer’s opinion and point of view as to
what really an asset or a liability is. Yet you put it at the back of your
mind. You grew up and started buying liabilities thinking you are actually
investing in assets. In the long run, it backfires and brings you back to
square one. What about your own view on assets and liabilities in accounting?
Remember the time factor I stated earlier. The general acceptability of an
asset or a liability was a theory stipulated so many years ago. For theories to
have an impact on our lives in the real world, they need to be updated on daily
basis. I can state for a fact that, the accounting theories we learnt in school
was equally taught our grandparents as well. These principles helped them in a
way. In their time, what they considered to be an asset really generated a
return but what about our modern day generation? We are still being taught these old
principles in school. We finish school with so many chaffs in our minds as
theories which cannot even be applied to the real world to get results. The
Time Factor helps in knowing the difference between an asset and a liability.
With this principle, you can relate well with assets rather than liabilities.
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| USEFUL ASSETS |
To know what defines an asset, it is not words but numbers.
It also has to do with not just the numbers but what the numbers are telling
you. For instance, it is just like words. It is actually not the words you are
speaking but rather the story you are telling with the words which brings
understanding. You need an in-depth comprehension. Many people know the numbers
but they do not understand the numbers. Comprehension leads to application and
eventually results. You can get an A for
reading but F for comprehension. This is because reading the words or seeing
the numbers is just 20% of the work done. The rest 80% accrues from
understanding and an effective application of what you understood to the real
world in order to get results. If you cannot differentiate between the numbers,
I bet you cannot tell an asset in your entire life.
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| EARN A LOT FROM YOUR ASSETS |
In conclusion, I would like you to Figure out what an asset
or a liability is to you as an individual. I cannot give you what an asset or a
liability is. What I might consider to be an asset may not be an asset to you.
It varies from person to person and changes with time. I believe with the
little knowledge you have accumulated in distinguishing an asset from a
liability using the time factor, you will start investing in assets and not
liabilities.
Try to acquire assets
and grow them to mature into huge finances.
All the best.
