Manage Your Expense: Choose Asset than Liability
Today, I want to share about money, again. Yap. I think the topic of money is needed to be understood by us. We can call it financial literacy. The purpose of this writing is just for sharing. Who knows if it can help you manage your money.
I want to tell you a story of my past habit with money.
I had been a wasteful person. I easily spent money to buy something. It’s not a problem. But when I didn’t manage my money, it worsens my finance.
I used to ask, “Where is my money? It’s easy to come, easy to go.”
Sometimes, the money I spent didn’t be something meaningful. It didn’t become something beneficial.
Then, I read about assets and liability. Based on the explanation, our money will flow to assets or liability. I then realized that I spent more money on liability.
Let me differentiate between assets and liability.
Based on the dictionary, an asset is a thing that can be exchange rate, capital, or wealth. It can be the thing that has value and helps us to generate income.
So, when we spend money on assets, the money is not disappearing. It is still valuable, but it is in a different medium. We can call it an investment.
Examples of Asset:
A renting house, gold, stock investment, etc.
How about liability?
Based on the dictionary, liability means obstacle or kind of responsibility. We can’t generate money if we spend it on liability.
So, when we buy something (liability), we probably enjoy it, but sometimes, it makes us spend money on it again and again.
Examples of liability:
Home mortgage, car loan, another credit and bills, expensive stuff, etc.
Sorry to say that liability is not a good choice.
The good news is you can change the liability things to be an asset. It should help you to earn money again. For example, you buy a car. Then you sell your car again to people. Or, you can open a car rent.
“It’s not about how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” — Robert T. Kiyosaki.
The lesson of the quote is that how much money you have is meaningless if you cannot manage the expense. To control this expense, you have to spend money on assets rather than liabilities.
After I know about assets and liability, I can be careful in spending money.
Before I buy something, I ask myself first, “Can this thing helps me to earn income?”
My wasteful habit decreases little by little. I already know where to spend money wisely.
I prioritize assets, then liability. Not vice versa.
I hope it helps. Thank you.
