In last month’s issue, we talked about the difference between the spending habits of the Rich and the Poor. This month, we will be looking at Rich Money Habit #2: The Rich buy Assets, the Poor buy Liabilities.
What are Assets? Assets are things that put money into your pocket, hence making you Richer. An example of an asset is a House. If you bought a house for S$ 200,000 and 2 years later, you manage to sell the house for S$ 230,000, you would have made a profit of S$ 30,000. Selling the house put S$ 30,000 into your pocket; hence a house is an Asset because it makes you Richer!
Liabilities are things that take money out of your pocket, hence making you Poorer. An example of a liability is your hand phone. If you bought the latest, coolest hand phone for S$ 1,000, and 3 months later, you decide to sell it off. Do you think you can sell it off for a higher or lower price? Right! Lower price! You would probably be able to sell it off at S$ 800 and you would have lost S$ 200. Selling your hand phone took S$ 200 out of your pocket; hence a hand phone is a liability because it makes you Poorer!
The Rich buy Assets, the Poor buy Liabilities. So kids, if you want to be rich, buy Assets, not Liabilities!
In next month’s issue, Rich Money Habit #3: The Rich have Money work hard for them, the Poor work hard for Money.
Other Related Articles:
- How financially savvy are youth today?
- Rich Money Habits - #1
- 12 tips for managing your parents’ finances
- Never Too Early to Get Started on Financial Education
- The incredible shrinking dollar
Other Updates in Library
- Rich Money Habit #12: Orrie the Ostrich
- Rich Money Habit #11: Philly the Peacock
- Rich Money Habit #10: Your Belief Systems Will Determine Whether You Become Rich, or Remain Poor
- Rich Money Habit #9: If You Want Different Results, You Would Have To Do Things Differently
- Rich Money Habit #8: The Rich work at building Wealth, the Poor merely try to survive
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