Updated: Apr 16
Kia Ora Whanau! Welcome back to another post. Let's get straight in to it. I had some feedback to do shorter posts for beginner's to learn financial concepts so please do let me know if this is the type of post you were wanting.
Assets and Liabilities are just terms to explain the financial implication of owning something. Some are good, some are bad, and some are necessary liabilities ( things you can not live without) The intention is to have more assets than liabilities.
An asset is something which makes you money. An asset is supposed to provide a future benefit.
A rental property which generates more income than expenses, is providing a profit. This therefore means that it is an asset.
Stocks which increase in value and earn you dividends, are assets.
A liability is something which costs you money.
A car costs you gas, it depreciates in value, and you have to maintain it with oil.
A phone costs you the initial cost of the phone and then you have to top it up every month with credit in order to use it.