Do you know what assets and liabilities are in one sentence?

If I ask you what is a liability and what is an asset, many people may say that the money I owe is a liability, and what I own is an asset. Needless to say, this is such a simple thing. If you think so, you are wrong.

Distinguishing assets and liabilities is actually very easy. It can be solved in one sentence. Determine whether this thing will make money flow into your pocket. If it does, it is an asset. If not, it is a liability.

House prices have skyrocketed in recent years, prohibiting most of us. So is a house an asset?

Some people may say that a house must be an asset. You see, if you buy it and the value increases, doesn’t it mean that your money has actually increased? It is indeed good. In this way, the house is Assets, but this one is a little different. To judge whether a house is an asset, you have to look at it from many aspects.

Let’s talk about cars. Cars are basically consumables. The depreciation value of a new car is very high, and the various annual expenses are not small, so it is a liability.

Some people may say that I can use it to run Didi to make money. Then according to your logic, if I use it to earn back the cost of a car, does it become an asset? Then you are wrong. The cost of a car increases every year. It is not a fixed total value. We can use it to make money and then offset part of the cost.

The purpose of distinguishing assets and liabilities is to allow us to reduce our investment in liabilities during the investment process and spend as much money as possible where it can bring profits.

For example, investing in yourself to learn financial management knowledge and professional skills can lead to better changes in the long run. However, if you only use the money for food, drink and fun, then you will not only lose Money may also harm your health.

Regarding assets and liabilities, sometimes they cannot be viewed separately. If you don't know whether this thing is an asset or a liability, think about the sentence at the beginning of the article, whether it brings you benefits or costs you money, and you will know what it counts.