Though not the usual dictionary definition, you should think of an asset as something that puts money in your pocket whether you work or not. Does your home do that? Most likely the answer is no, unless you are renting it out.
A common mistake that most people make is thinking of their home or their car as an asset. While I give them credit for taking the first step and creating a list of their assets and liabilities, the problem starts when they don’t truly understand the difference between an asset and a liability.
From a personal finance perspective, you should NOT be listing things such as your home or your car under the asset column. Remember that an asset is something that puts money in your pocket whether you work or not. Things you should have listed as assets will be things like- dividend paying stocks, certficates of deposit (CDs), a business that cash flows, a rental property, royalties from books, blogging income, etc. Wait, blogging income?? Yes, these are all things that put money in your pocket and blogging income is by far the easiest thing on this list to start accumulating.
One of the best things you can do for your personal finances is to start your own online home-based business based on something that you are passionate about. It costs almost nothing to get started, you get great tax benefits, enjoy what you are doing by sharing your passion with others, AND you create an asset that puts money in your pocket each month. It’s a win-win-win! Eventually, with just a little effort each month, your income will grow and get you on the road to financial freedom. You will have the freedom to work when you want, wherever you want – all you’ll need is an internet connection!
REMEMBER – Items that will show up in your liability column will be things such as- your cellphone bill, your electric bill, your home, your car, taxes and other monthly expenses that you have. These things take money from your pocket month to month whether you work or not which is why they are listed here.
So let’s get to work building your asset list!