Navigating Liability and Asset.

In the aspect of finance, these two words can never be looked down upon because they hold a vital role in the life of any financial system. Liabilities and assets are two key factors that help every human build their financial life and create a strong account.

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What does the word "liability" imply, and what does "asset" imply?
Liability, in a simple word, refers to something or anything that is capable of making one owe a debt. They are things that bring debt into our finances.
On the other hand, assets are things that make us gain more money or things that make us gain profit after we might have invested in them.

Liability and assets are really two different things that one must be careful about. Most especially for liability, we must be very careful because this thing can ruin one if not really taken care of on time. Asset disposal must be done in a more careful way if one doesn't want to fall back into debt, which will then return to be a liability to us.

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Liability makes it so hard for us as humans to own something for ourselves that we end up making one spend from his or her purse without any hope of a possible return. Examples of these are clothing, going to the party, transportation, paying bills and expenses, a vehicle, children, and many more. These are things we must do, but on the other hand, they drain us if we are not financially stable.

Assets are crucial to have, if not compulsory, because what brings value to everyone differs. Having or investing in an asset will enrich one, make one richer, and also allow one to earn more from what they have invested.

Assets are given with the expectation that they will provide future benefits and that one will be able to enjoy their return in the long term. Examples of assets can include items like investing in real estate, vehicles, the stock exchange, machine equipment, land, and properties, as well as tangible items like intellectual property, bonds, and so on.

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Assets, on the other hand, generate revenue for everyone who has invested in them. Like a liability that takes money, especially, away from you. These can also include owning properties, having large investments, even if not too much inventory, and so on. It yields profit in the long term and sometimes in the short term.

In financial management and decision-making, having an asset is very good because it makes one able to caution himself or herself in terms of spending and puts one on the right track. Both liability and assets are two things one must be very cautious about because they are very important in life.

Most of the time, many forget the fact that when they spend too much money on things that are not valuable, they will later run at a loss because there is no way the things they are spending on will yield any profit for them. Many young people these days prefer to invest in liabilities rather than assets, and they forget that assets are what you will fall back on when you have been broke and have wasted whatever you have.

That is why, when some guys have money with them, they prefer going clubbing and spending money to have fun. I am not saying that is a bad idea, though, but before doing that, have you got something you know you can fall back on when there is nothing anymore?

Posted Using LeoFinance Alpha