The Great Misunderstanding

The Great Misunderstanding in our money world is thinking something is an asset when it is actually a liability. Liabilities cause recurring expenses like monthly instalments, interests, repair, maintenance, insurance, taxes and depreciation.

Most people suffer financially when they buy liabilities and think that they are assets. This minor oversight causes a lifetime of financial struggle. Just because something is listed under the asset column does not make it an asset. Don't feel bad. Many adults including very qualified professionals always get asset and liability wrong! This is because the accepted method of accounting allows liabilities to be listed under the asset column.

Before we can be rich we have to be financially skillful. Understanding accounting is part of financial skill. With this skill you can create your own luck.

One who cannot read a financial statement will have the least money and the biggest financial problems. An average investor cannot distinguish between a security and an asset. Don't be average.

Your money life will spin out of control if you have nothing under the asset column, huge liabilities and many items under the expenses columns.

Mistaking a liability for an asset may cause a lifetime of financial struggle.