Assets earn you money. Liabilities cost you money. Done, next tip. Oh how does this work? Well you have your 8 assets; 1) Stocks, 2) Bonds, 3) Mutual Funds, 4) Intellectual Properties, 5) Income-producing real estate, 6) Businesses that do not require my presence. I own them, but they are managed or run by other people, 7) IOU’s, 8) Commodities… Four of which we’ve gone over thus far. Each of these assets cost no money to maintain though after your initial investment into them earns you money. If you do your proper research there is little to no chance of loss. That goes with anything, but even sometimes a loss leads to a gain.
Liabilities cost you money. Some people mistake a home as an Asset, or a car. You have to pay insurance on both a house and a car. There is gas upkeep, maintenance, taxes, rent/mortgage, etc. If you find yourself placing cash into something that you own, than you are dealing with a liability. Think of an Asset as a career, and a Liability as a hobby. You earn money through a successful career. While a hobby cost you money to do.
If you were a comedian as a career you’d get paid for your time on stage. Plus that is your only job. If you have a job during the day… or night… and you pay to get to shows, on stage, for classes, or whatever it takes so you can just get on stage…
A good rule of thumb (you’ve heard this before) is Don’t Live Above Your Needs… D-LAYN. A great issue is when people start making a lot of money they all of sudden start living above their needs. Spending money faster than they bring in is a habit that must be broken. It is nice to have things, but things should not HAVE YOU!!! Budget your financial situation so you can live your life in the best way you can. Once everything is in order you’ll be given freedoms that allow you to live it how you want.