Many a times, we get things that we don't really need and spend more money on things that are not needful for the success of our day to day life. Buying things is not bad but do you really need them now? Can you do without them? Until you answer these critical question, you will always find yourself buying things and still be unsatisfied with them. Differentiating between Asset and Liability will help you to minimise you spending and increase your profit. It will also take you out of the pitfall of life.
A simple way to defined Asset is something that add money to your pocket while Liability is something that remove money from your pocket. Let take for an example, if the phone that you have is only for calls, whatsapp chatting and facebook chatting alone, its a Liability because it only take money from your pocket. Buying data, and if there is power outage, you buy petrol and put on your generator to charge your phone, all these take money from your pocket without getting anything tangible from it.
(image courtesy of pixabay).
With this short conversation between father and son, I hope we will learn from this.
On one fateful day, the son of a rich man felt that he could not get as much as what his friends in school has gotten from their parent and his Dad is a wealthy man that many people revered in the city and he went to the father and the following conversation took place.
Son: Dad, may I speak with you?
Dad: Go ahead, am listening
Son: In my department, all my course mates always come to lecture with a car and I am a son to a wealthy father without a car and its embarrassing, am always ashame of myself
Dad: Do you have a particular car in mind?
Son: Yes Dad (smiling)
Dad: How much?
Son: $2000
Dad: I will give you the money on one condition
Son: What is the condition ?
Dad: You will not use the money to buy the car but invest it. if you make enough profit from the investment, you can get your car.
Son: Done deal Dad
After the conversation, his father gave him a cheque of $500. Then he cashed the cheque and invested the cash in accordance to the verbal agreement that he had with his father.
Some months latter, his dad asked him how the business was going and he responded that the business was improving. The dad left him alone.
After some months, the dad came back and asked him about the business and he told the father that he is making a lot of profit from the investment.
When one year into the business elapsed after being given the cheque by his father, the dad asked him to show him how far the business has gone, he readily agreed and the following dialogue took place.
Dad: From this I can see that you have made a lot of money from the investment.
Son: Yes dad but.....
Dad: What is it?
Son: We agreed that I should invest the money first then I get a car from the profit
Dad: Why have you not bought the car?
Son: I don't need the car again. I want to invest and make more money
Dad: Good, you have learnt the lessons that I wanted to teach you. You didn't need the car, you just wanted to belong. That would have placed extra financial obligations on you. It wasn't an asset, but a liability . It is very important for you to invest in your future before living like a king.
Son: Thanks dad
Then the father handed over keys to the latest model of that car to his son.
(image gotten from pixabay)
THINGS LEARNT FROM THIS
- Always invest first before you start living your dream.
- What you see as a need now is not really a need giving time.
- Try to identify asset from liability so you will always leverage on asset to get to your dream.
So the different between the rich and the poor is that the rich look for asset while the poor look for liability.
KNOW YOURSELF
BUILD YOURSELF
BE YOURSELF
