Asset vs Liability

Most people struggle financially and the simple reason being is that they don't know the difference between an asset and a liability. Let us try and understand them through some examples. 

Asset

If you really want to gain wealth in your life then you have to focus only on one thing which is expanding your Asset. What do you mean by an asset?   An asset is something that puts money in your pocket. Example:

You own a house in which you no longer reside so you get the idea to rent that house and make extra income from it. This house now is your Asset because it is generating income for you and not taking money out of your pocket.

This image shows us how an asset works.

                                                                 ASSET=WEALTH 

Liability 

Liability is the opposite of an asset, liability is the things that take money out of your pocket. A person who falls in the middle-class section will have more items in his/her liability column instead of being in the asset column. Examples of liabilities are monthly bills, house loans, car loans, EMI, or purchasing of label clothes and shoes, etc. 

 This image shows us how liability works.

                                                                     LIABILITY = WEALTH

Now in order to generate passive income, you really need to focus on expanding your asset column and minimizing things that can unnecessarily fall under the Liability column. The rich people always prioritize their Asset column rather than the Liability column.So I hope you understand the sheer difference between the two and carefully make your financial decisions keeping these points in your mind. 

 Image :Credits