The world is based on capitalism right now and in this world of capitalists, there is need to have financial education.
Financial education is not limited to learn to differentiate between saving money and investing money. It is more than this. It consists of principles that govern that what are the principles which should be followed while investing and saving money. It tells you that which things are actually profitable and which things are not profitable.
Profitable things are those things which can make money for you with making you to work harder for it while non-profitable things are those things which do not earn money for you.
Profitable things are called assets and non-profitable things are called liabilities.
Assets can be shares and properties that you have bought and then rent someone. Liabilities, on the other hand, are materialistic things like bags and shoes or different consumers. In fact, your home is also a liability because it is not making money for you and not giving you any financial benefit.
Assets basically are those things whose value will never be decreased. They are items which you use to get money until you are died but liabilities do fade with time. You cannot use your bag for life time. It will be torn after few years. Similarly, the car you have bought from valet parking Abu Dhabi or electric car charging parking Dubai can fade too.
As the time passes the value of liabilities or consumer items decreases but the value of assets remains constant. They keep on generating money. And with time, they generate more. That’s the reason why people try to save money and buy shares or property with their friends to rent it and get money every month which can be used to pay utility bills and buy grocery.
However, at many times you can make assets from liability. Like you can book a place in your home which can be used as library and charge every person who come there to read a book. In this way, you are doing hard work. Your books and place are working for you to earn money. So, these are few differences between assets and liabilities. Assets are usually bought by people who have knowledge of finance and know how about assets and liabilities. That’s the reason why they are usually bought by businessmen or rich people. Liabilities are usually bought by people who value their wishes over smart work.
