Assets and Liabilities: The Key to Wealth

Assets and Liabilities are two terms that I am sure you have heard before. They are usually associated with the balance sheet. On the balance sheet assets are what you own, and liabilities are what you owe to others. In determining your net worth or the net worth of your company, you would subtract the value of your liabilities from the value of your assets. The number that you come up with is what is called your net worth. My definitions for the terms assets and liabilities are a little easier to understand, and I will give them to you now.

Asset: Anything or anyone that puts money into your pocket is an Asset.

Liability: Anything or anyone that takes money out of your pocket is a Liability.

It is straightforward. There are no gray areas when it comes to determining what an asset is and what is a liability. You have to put everything and everyone in your life into one of these categories and once you do you are going to have a choice to make. The main purpose of building a business is to make a profit. The more, the better. The reason why I expanded the definition of assets and liabilities by including anything and anyone is that all of the assets and liabilities in your everyday life are not going to show up on the balance sheet. In determining what your assets and liabilities are you need to analyze every aspect of your life.

The accumulation of assets is what it is all about. The critical thing to remember here is that the People in your life can be the strongest asset that you have. For those who are trying to make something out of nothing, People are going to be the only asset that you have in the beginning. Until you are in a position to make your money work for you, you have to be able to make People work for you. This is important because People can often get you into places that money can’t. Any successful business owner would tell you that what drives success is the people that are a part of the organization. You have to run your life like it is a Fortune 500 company. If there is anybody in your life that is taking more than they are giving, then the first step you have to take on your path to financial freedom is to get these people out of your life.

From this point on, you only have time for the people, places, and things that are contributing to your success. That is what accumulating assets is all about. You have to decide what is going to bring value to you, your company, and your brand and devote all of your time to the pursuit of those things.