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How you have been socialized to throw your money away.
The full chapter on Real Assets will show you how to ensure you change from just getting by to having and keeping real wealth.
Real Assets mean your wealth compounds and grows – without you working for it!
I was trained as a Chartered Accountant (CPA) and I still hold that qualification. I also have a first class honors degree in Accountancy. So you could say I was well qualified to give advice on accounting.
However, what you are taught in:
- School accounting classes;
- Small business classes;
- University accounting classes;
- On the job accounting and book keeping;
is almost exactly the opposite of what you and I need to know about our own personal finances.
For you and I accounting for our own personal finances is simple:
A real asset is anything that:
- Puts money into your bank account; or
- Increases in value; or
- Is cash; or
- A cash equivalent.
A liability is anything that takes money out of your bank account.
Sounds simple doesn’t it? So you shouldn’t be surprised when I tell you:
- Your car is a liability.
- Your home is a liability.
- Your boat is a liability.
- Your holiday house is a liability.
- Your TV is a liability.
- Your pool is a liability.
- Your mobile phone is a liability.
- Your pet is a liability.
- Your household furniture and furnishings are a liability.
- Your hobbies are a liability.
- Your vacations are a liability.
All of these cost you money. They all take money out of your bank account. Even if some of them don’t do it every week (e.g. your furniture), they all need to be replaced, so over time they cost you money.
It is vitally important we realize these are real liabilities that are causing huge amounts of money to disappear from our lives. You might rightly argue that some of these are necessary for living and I agree with you. But almost everyone in the industrialized world falls into the trap of buying bigger and more expensive than they need. And then of course acquiring all of the other paraphernalia we don’t actually need. You only get to spend money once!
Tip #1 Your Assets
Write out on a piece of paper or a spreadsheet all of the Real Assets you own. You might be surprised to realize you have none or very few. But that is a great realization and a good place to start.
Tip #2 Your Liabilities
Calculate how much your Real Liabilities are costing you every week, every month, every year. You are likely to be shocked how much money is pouring out of your bank account to pay for all of your liabilities.
Tip #3 Make a Change
Make a radical change now so that you store up wealth for your future. Change your expenditure from funding liabilities to buying real assets that will continue to gain in value over the years. This change could literally lift your level of future wealth by hundreds of thousands of dollars.