Sometime ago, we talked about assets and liabilities when we discussed Net Worth. But can we discuss it in a little more detail now?
Sure we can! Assets are things that you own, and can be sold to get money. And liabilities are things that you owe someone.
Can you give me some examples of assets and liabilities?
Okay. The house, car, jewelry and stocks you own are all assets. These are tangible assets. They are physical things that you can touch and hold. There could also be intangible assets – like copyrights, trademarks or patents, which are intellectual property.
On the other hand, money borrowed by you – like a car loan, student loan, credit card debt and mortgage are all liabilities. Remember, if you have bought a house on a mortgage, the house is still your asset, but the remaining mortgage on the house is your liability.
Well, do all assets appreciate in value?
Not necessarily. Many assets, like a house or stocks, can go up or down in value, whereas others like a car usually depreciate in value over time.
Can something be a liability for one person, but an asset for another person? I mean, can one person’s liability be another person’s asset?
That’s an excellent question Sooper Cooper! Yes, it is certainly possible.
For example, if I lend you $10, that loan is a liability for you because that’s the money you owe me. But it is an asset for me, because it is my money and would come back to me when you repay – hopefully!!
Podcast: What are Assets and Liabilities
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything about assets and liabilities, and their inclusion in calculation of your Net Worth: what are assets and liabilities, examples of assets and liabilities, do all assets appreciate in value, can something be a liability for one person but an asset for another – can one person’s liability be another person’s asset, and more. Show notes and transcript at: https://easypeasyfinance.com/what-are-assets-and-liabilities/
