Act like an Asset!

To begin with- You need ASSETS. The opposite of Assets is LIABILITIES- you want less of those, but you probably will need some of those. Liabilities drain away your resources (think- money that you owe to a restaurant after a good meal, or amount of hours you need to wash their dishes if you don’t have any cash to pay them). But for now, let’s stick with Assets. You want them, and you want to constantly be buying more of them. We’ll talk about why later.

Some people (like the author of Rich Dad, Poor Dad- a book I recommend reading) say assets are something that continually give you money- they are money production machines, like an apartment building you own where the renters pay you far more than it costs to maintain it. That is an Asset, certainly, but I like to think of assets as things that give you freedom to do what you want to do, or need to do. So, you may own a house (and I hope you will), that does cost you something to maintain, but it is an asset because it gives you freedom to do other things (e.g., you can keep your stuff safe and yourself comfortable while you explore and imagine new worlds).

So one of the main things you want to do when thinking of whether something is an asset (freedom maker) or liability (freedom taker) is what you want to accomplish with your resources- what do you want to do, where do you want to go?

Here are examples of some Assets that will build your financial freedom. Note that I own some of all of these things mentioned, in different amounts:

Primary residence (e.g., my house)

Secondary residence (e.g., my Poconos house)

REIT (Real Estate Investment Trust)- a collective real estate ownership share

Rental property- Property owned solely to produce income (or produce deductions that reduce taxable income or both)

Cash (uninvested- try to limit this)

Cash (invested in high yield savings acct)

Stocks (shares of for-profit companies)- can be publicly or privately held

Bonds (money borrowed from you with the promise it will be paid back with interest over a certain period of time)