Everything that relates to the asset. Let's understand the assets and liabilities of the enterprise

Assets and liabilities are concepts that appear very often in people's economic lives. As you know, they are the most important categories of accounting. Meanwhile, understanding the practical essence of these terms can be useful in everyday life. It is important for any business entity to have a clear understanding of what assets and liabilities are, how to correctly classify them, and why a balance is always maintained between them. This knowledge will help you manage your own finances wisely and use personal funds with the greatest efficiency.

Important nuance! In the modern information space, one can find two interpretations that define the essence of assets and liabilities. The first – accounting – characterizes these concepts from the point of view of the balance sheet. The second - investment - appeared in business slang at the suggestion of Robert Kiyosaki, whom many know as a successful investor and popular business consultant.

Of course, both approaches to determining assets and liabilities deserve special attention. It is necessary to consider them as simply and clearly as possible - with examples that are close to most people engaged in business activities or related to investing, financial management, and accounting.

The concept of assets and liabilities: the investment approach of Robert Kiyosaki

According to Robert Kiyosaki, a world-famous business coach, the assets of a business entity should be considered financial investments that consistently generate passive income. An investment consultant includes liabilities and other encumbrances of a business entity that force it to regularly incur certain expenses. Of course, although such definitions explain the essence of these categories in an accessible, popular form, they require specific examples from practice.

Assets - investment approach

So, assets should be understood as any investments that meet at least one of two criteria:

1. Allow the investor to receive systematic passive income.
2. Gradually increase their own value over time.

Practice shows that the most preferred assets for most citizens are the following investments:

1. Deposits opened in reliable banks on favorable terms. Such deposits bring the investor a stable interest income.
2. Reliable bonds- debt securities . The source of earnings is coupon income, regularly accrued to the investor over a certain period of time. Such payments are often made every six months, or alternatively quarterly or annually.
3. Dividend shares– equity securities. Profit from such investments is generated in two main directions. The first is an increase in market value, the stock price, which certifies that the investor has a certain share (part) in the capital of the issuing company. The second is annual dividends paid to the investor in accordance with his share (part) in the share capital.
4. Immovable objects. Such investments are rightly considered the most reliable options for generating income in the long term. First, the value of these assets tends to increase over time. Secondly, rental income from premises can provide the investor with a good platform for financial well-being.
5. Investments in various trust management instruments(mutual funds and other assets). Everything is simple here: funds are transferred under an agreement to professional managers who use them to generate income (usually investing in equity and debt securities). The profit received is subsequently distributed between investors and trustees.
6. Payable receivables, that is, funds loaned to third parties for a certain fee, which is the income of the lender.
7. Investments directly related to the acquisition of valuable assets in anticipation of a future increase in their market value. These can include precious metals in various forms, art and collectibles.

Liabilities - investment approach

Accordingly, the following positions can be classified as liabilities:

1. Targeted housing loans – mortgage loans.
2. Consumer loans issued by a citizen for the purchase of any material goods, entertainment, tourist trips.
3. Any property that does not generate income for the owner.
4. Any accounts payable (money borrowed).

Asset or liability - a clear example

For example, a citizen has an amount equal to 3 (three) million rubles. The thing is that he can use these funds in different ways.

• Alternatively, there is a possibility purchase living space - apartment, in good condition and located in a good, convenient area. Liquid real estate that is in stable demand can always be sold at a favorable price. In addition, such housing can be easily rented out for temporary use for a good fee, which will provide the owner (landlord) with passive income.

Having made this acquisition, the investor rents out the real estate. Monthly rent – ​​20,000 rubles. In a year you get 240,000 rubles - passive income. If this amount is reduced by the amount of utility costs and other current costs, you will get approximately 180,000 rubles - net income from the provision of your own housing for rent. It should also be taken into account that the cost of purchased living space is likely to gradually increase due to inflation and other factors. An increase in the rental amount in the future cannot be ruled out. Thus, the purchased apartment became an income-generating asset.

• Another scenario is to spend 3 (three) million rubles for the purchase of a new executive car in a prestigious showroom. After leaving the car dealership, the vehicle immediately loses 15-20% of its original value. In addition, it is necessary to estimate the annual costs of the car owner for fuel, service, parking, insurance, consumables and other cost items, the total amount of which for the year can reach at least 350,000 rubles.

If the owner, for example, after 3 (three) years wants to sell this car, he will be able to get a maximum of 1.5 million rubles for it. It turns out that the possession of such property led to the loss of 50% of its value over a three-year period of normal operation. In addition, during the same period, the owner of the car spent approximately 1 (one) million rubles on its use, based on the data given above (350,000 rubles per year). Three years of operation of the vehicle will cost its owner about 2.5 million rubles. A car has become a typical liability for its owner, which does not bring income to the investor, but leads to regular expenses and gradually loses its value.

How to manage your own assets and liabilities

Although liabilities do not generate income for their owner, it is not possible to completely eliminate them from everyday life. As a rule, liabilities are necessary factors for the existence of any person. We are talking about food, clothing, medicine, a roof over one’s head, technical devices, accessories and other areas of expenses that a person cannot do without. The only way to competently optimize the costs associated with maintaining and securing liabilities is to adequately link them with assets. It is desirable that the income from assets be greater than the costs of liabilities.

1. Make an accurate calculation of the actual amount of liabilities, assessing current needs and real monthly costs.
2. After analyzing the items of personal expenses, determine which areas should be excluded and which should be limited or reduced. Alternatively, you can avoid excessive expenses associated with paying for entertainment or purchasing expensive items.
3. Determine the structure of existing assets. Make sure they all generate adequate income. Calculate the monthly amount of cash receipts.
4. Compare the total income from existing assets with the total costs of existing liabilities. Identify the difference, estimate its size, and draw appropriate conclusions.
5. Always strive to exceed the income generated by assets, the costs associated with securing and maintaining liabilities.

An accounting approach to the interpretation of the concepts of assets and liabilities

From an accounting point of view, the assets of a business entity and its liabilities are components of a balance sheet containing the following information:

• Property owned by a business entity.
• Who owns this company.
• Sources of financing for property owned by the organization.
• Financial results of the enterprise (profit, loss).

Assets are displayed on the left side of the balance sheet and contain information about the property at the disposal of a business entity.

The organization's assets are divided into the following main groups:

1. Current assets, which, as the name suggests, are directly used in economic activities. These include the organization's financial resources, its inventories, as well as accounts receivable and other similar assets.
2. Fixed assets, which do not take part in the turnover of an economic entity, but play an important role in ensuring it. Non-current assets are considered to be real estate for industrial or other purposes, equipment, tools, vehicles, technical devices, long-term investments, and intangible assets of various types.

Even a person who is not involved in business and does not know the basics of economics has heard the term “asset” more than once. This word is most often used when it is necessary to estimate the value of a business and is often considered a factor influencing the final price. In addition, people who own shares in joint stock companies also have assets. Everyone knows this too. In this article we will try to understand in more detail what a net asset is, what other types it comes in, and so on.

Definition of the concept

An asset is property that belongs to an organization engaged in economic activity or to an individual. The totality of assets can include those materials and resources that are needed to organize production (or any other business activity). The difference between assets and other resources is that they are acquired for the purpose of further profit. Thus, each asset potentially contains income that can be received in the future, after carrying out certain operations. It turns out that an asset is a tool that can bring profit.

To make it clearer, let's give an example. A business entity makes envelopes from paper and ribbons. In this situation, paper and tapes as materials will be assets that will transfer their value to the price of finished products (envelopes) and thus bring profit.

Types of assets

In economic theory, there are several types of assets. The classification is carried out taking into account various criteria: nature, degree of participation in turnover, period of existence and return.

For example, depending on the nature of the asset, it is a bank deposit, real estate (for commercial use), securities, shares in a company, property that is involved in business activities, etc.

If we distinguish assets by their return period, we can distinguish between short-term and long-term assets.

Speaking about participation in turnover, we can distinguish between current and non-current assets. The last classification, by the way, is one of the most popular, so we will focus on it.

Current and non-current assets

So, any asset can be classified according to this criterion. It's quite simple if you know what the essence of entrepreneurial activity is. In the example described above, where the business produces envelopes, the paper and tape are current assets because they are cut and included in the turnover of goods in the form of envelopes. Non-negotiable funds can be called those funds that do not become a commodity, that is, do not go into circulation. For example, this is a machine that wraps paper.

The characteristics of asset turnover make it possible to determine how they will be used in the future: they will be immediately converted into finished products or used in such a way that these resources will not be changed, so their resale will be possible in the future. This primarily determines the risk that business owners will be exposed to.

Who can hold assets?

Who can own a business asset? This question is quite simple - the enterprise itself. After all, its balance sheet includes such property as furniture, equipment, buildings and other objects.

If we talk about other types of assets, such as deposits or securities, then anyone can own them. For example, you, as an individual, have the opportunity at any time to purchase shares of a particular enterprise in order to later participate in its management and receive dividends. The same applies to other types: deposits, property, and so on.

Why are assets needed?

The main purpose of the assets is to participate in the organization of the production process. Since each asset of an enterprise is some kind of equipment, office space, or even licenses and certificates, their function is to work on the process in general, embodied in goods and services produced by the enterprise. The secondary function of an asset, which determines its importance, is generating income. With proper management and business planning, assets will begin to turn into products that should cost more than their original cost.

Intangible assets

In addition to the types of assets discussed above, there is one more category that should be mentioned. We are talking about such a concept as an intangible asset. This is a slightly different resource with an individual character. Thus, it is noteworthy that it does not have the structure of material things, exists together with some formalized documentation and, therefore, cannot be transferred (or simply is not re-issued due to inexpediency) to other entities.

In the current conditions, we can safely say that every organization or private entrepreneur, like any company, has such a resource as an intangible asset. This is explained by the fact that this category includes a whole list of abstract values: reputation, licenses, documentation with permits to conduct activities, databases, intellectual property.

Such assets cannot be felt with your hands, seen with your own eyes, and sometimes even fully appreciated. This is a kind of abstraction, which can be quite valuable. The clearest example is the reputation of a business entity in the business market. It is impossible to determine its value, but every entrepreneur will agree that a lot depends on its quality, including future profits.

Any enterprise or organization has assets, by condition, structure, the volume of which can be concluded not only about the sustainability of the business, but also the market value of the enterprise or firm. The assets of a business entity (enterprise, organization, etc.) are, in simple words, the property of the enterprise. Property in this case is interpreted broadly as financial, tangible and intangible assets. The totality of assets is the property of an enterprise, the use of which generates income. Net assets or equity are the difference between a business's assets and its financial liabilities. The size of assets significantly affects the tax base.

If an enterprise is on a simplified taxation system or pays tax on imputed income, then the value of assets does not affect the tax base. However, it is advisable to keep records of assets in accounting in these cases, since when going beyond these taxation systems (annual income, number of employees, etc.) one has to switch to a general taxation system. Assets are broadly divided into current and non-current assets.

Current assets- these are those that participate in the production cycle for less than one year. These assets transfer their value to finished goods entirely within a year. Typically these are raw materials, materials, cash on hand and in the current account, as well as short-term financial investments. Fixed assets- these are assets that are used in the activities of the enterprise for more than a year. They transfer their cost into finished products in parts. The answer to the question of what non-current assets are is important when determining the tax base. Non-current assets of an enterprise are most fully reflected in accounting documents. According to accounting, non-current assets are four categories of assets.

1. Tangible non-current assets (fixed assets).
2. Financial.
3. Intangible.
4. Other noncurrent assets.

Let's look at everything in order. Material non-current assets are:

• land;
• buildings (main and non-permanent) and structures;
• machines, machines, equipment, complex office equipment, instrumentation and vehicles;
• furniture, office equipment, tools with a service life of more than a year;
• unfinished capital construction;
• animals and perennial plants;
• trade equipment (counters, cash registers, display refrigerators, etc.;
• equipment purchased but not installed, as well as spare parts for it;
• property leased or rented;
• library collections;
• other tangible assets.

Tangible non-current assets are recognized as such if their value can be determined.

In addition, such assets have a cost limitation. Their cost should be above 10,000 rubles. Otherwise, low-value tangible fixed assets are classified as “low-value”. Such assets, despite the fact that they last more than a year, for example, a telephone, are accounted for as working capital in the form of inventories. Land plots are accounted for at their acquisition price or cadastral value. Buildings and structures - at the price of their acquisition or construction.

Unfinished capital construction, as well as equipment that is not installed, is taken into account at the purchase price of materials/equipment and the costs of their delivery, construction and design. Furniture, tools and trade equipment are accounted for at the purchase price. Accounting for the cost of animals and perennial plantings has its own characteristics and is discussed in detail in specialized sources. For example, you can recommend cxychet.ru or consultant.ru. Since fixed assets gradually transfer their value to products, their value is reduced annually by the amount of depreciation. The depreciation period, and, consequently, the amount that is included in the cost price and by which the value of the objects is reduced, is a standard value regulated by law.

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The residual value of an object is the difference between its original cost and accrued depreciation over the period of operation. No depreciation is charged on unfinished construction and uninstalled equipment. Other non-current assets include costs for land reclamation, major repairs that change the value of objects. Non-current assets and what relates to them can be acquired by the enterprise independently, donated, exchanged or created using its own/borrowed funds or authorized capital. Sometimes fixed assets are a contribution to the authorized capital of a newly created joint stock company. In this case, such assets are reflected in the constituent documents.

Financial assets- These are, first of all, long-term financial investments, which can be of several types.

1. Bonds with a maturity of more than one year, bills of exchange and certificates of deposit. The purpose of such long-term investments is to use free funds in order to receive profit in the form of interest on such securities.
2. Purchase of shares in closed/open joint stock companies and shares in limited liability companies. The purpose of such acquisitions is to establish control over the relevant business entities and receive profit in the form of dividends. In some cases, such acquisitions are aimed at establishing control over the supply of raw materials or creating their own distribution system.
3. Providing loans to organizations/enterprises. Such loans, in addition to the purposes of generating income, may pursue, for example, the expansion of production of raw materials at the supplier’s enterprise.
4. Investments to improve the financial condition of subsidiaries.
5. Other financial investments lasting more than one year.

Accounts receivable, the maturity of which is several years, can also be classified as non-current assets.

Intangible assets represent a large group of objects, the valuation of which is sometimes difficult. This part of the company's balance sheet requires detailed consideration. Intangible assets include:

• software products and databases (if these objects are not proprietary, they are accounted for at the purchase price);
• rights to use subsoil and land plots;
• licenses for the right to conduct a particular type of activity;
• patents, know-how, industrial designs and trademarks.

The results of scientific research and surveys are not intangible assets, expenses for improving personnel training, advertising and the creation of industrial designs and trademarks. These expenses are expensed in the period during which they are incurred. The difficulty in registering intangible assets lies in determining their value. Tax authorities often have questions about the value of acquired patents and know-how.

It should be borne in mind that the term of patents (and therefore the period of their protection) is usually twenty years. The older the patent, the lower its value. But, on the other hand, if an object protected by a patent is sufficiently “promoted” at the time of acquisition, the higher its value. The latter option is often found in the case of pharmaceuticals. Unlike patents, know-how (from the English know how - know how, production secret) does not have a validity period and is often acquired together with a patent (license).

Know-how belongs to the most protected objects of intellectual property.

This is the most common target of industrial espionage. Often it is know-how that protects patents more reliably than intellectual property laws containing difficult-to-control technologies or product formulations. Indeed, if you have invented a new technology for the production of polyethylene and received a patent for it, then the polyethylene produced using the new technology is no different from that produced by the old method. Your competitors may simply use the description of the invention, and you will not be able to control this. But if the patent contains know-how (which is not published and is not freely available), then the competitor will not be able to reproduce the patent. Therefore, the presence of know-how significantly increases the cost of a patent.

To fully conduct the company's activities, the owner must be able to operate the balance sheet. When making calculations, he will definitely encounter such concepts as passive and active. An inexperienced person immediately asks the question: what are assets and liabilities and what are their differences? We suggest that you familiarize yourself with the answer to this and many other questions.

Liability/asset and accounting system

Both an asset and a liability represent a certain amount of finance, which is reflected in different parts of the balance sheet. In this case, calculations are carried out in accordance with specific principles. Accordingly, the resulting total value of all assets and liabilities is always identical.

The total amount of assets is the balance sheet currency. This term is not associated with the currency of any country. Its task is to determine the volume of economic activity of a particular company.

Asset Features

If you want to know what is an asset and what is a liability, you must first become familiar with the first concept. In itself, this is a resource managed by the organization under the influence of past events, the use of which will make it possible to make a profit in the future. This resource consists of intangible, material and monetary values. In addition, this includes rights to property in terms of location, composition, and/or investment.

The resource in question is also divided into several categories depending on the form in which it functions. He can be:

• material;
• intangible;
• financial.

The first category usually includes equipment, consumables, real estate, and so on. An intangible type cannot have a physical form; it is represented by a patent, trademark, and so on. However, it also has an impact on the functioning of the company. The last category includes financial debts, funds, investments.

Depending on how they participate in production processes, resources can be divided into non-current and negotiable.

Non-current can be used in several cycles of production activities at once. They can be used in practice until their price is transferred completely to the product being manufactured. Recyclable, in turn, is intended for full use within one production cycle. In other words, it cannot be used repeatedly. Practice shows that the revolving type can be used for a period not exceeding one year.

Features of a long-term asset

This resource includes building structures and/or the land on which they are located, equipment, machinery for the production of goods, vehicles, and so on. The scheme for reflecting them is implemented at the purchase price without taking into account accrued depreciation. There are also exceptions that are relevant for land and buildings, where resolving issues related to their price falls on the shoulders of a professional appraiser.

Features of a current asset

This type is determined from finished goods, available raw materials, volumes of unfinished production batches, as well as inventories of a material nature. This may also include accounts receivable (this is the amount that buyers and customers must pay). Current assets include short-term investments and deposits. Naturally, money is a current asset. The characteristics of all available assets include the following:

• the company receives financial benefits from their continued use;
• both the events and the transaction that lead to the benefit have already occurred;
• The definition of “net asset value” should be understood as a value equal to the difference between the total amount of assets and liabilities.

To understand how an asset differs from a liability, it is necessary to consider the second term and delve into its features.

Passive: characteristics and varieties

If an asset results in profit, a liability is the exact opposite. Its task is to reflect the obligations that the organization has assumed in the process of conducting its own activities.

Without a liability, it is impossible to form an asset, since it is used as a source of its creation. When preparing a balance sheet, liabilities are always reflected in the right column. They are divided into 3 basic sections:

• short-term liabilities;
• long-term liabilities;
• reserves and capital level. In each element or line of liability, you can see the company’s funds, the presence of which makes it possible to fully form the active part of the balance sheet. Reflecting the balance sheet, the assets and liabilities of the enterprise are precisely those parts that are always indicated and without exception.

When asking the question “what is a liability?”, you can answer in just one short sentence. This is the company's capital. It is formed not only from own funds, but also borrowed funds, which are subject to long-term or short-term obligations. On the right side of the balance sheet, the accountant indicates each source, using which the organization generated assets. Summing them up, we get a liability, which, when converted to cash, indicates the exact value of the balance sheet currency. A liability can be called any type of capital of a company, which depends on the type of financial obligations (bill, loan, credit), and the form of organization (statutory or joint stock).

Liability structure

Each company liability can be classified into several categories.

1. Imaginary liability. It is reflected in tax or accounting records as of a specific date, with the help of which the exact value of the net asset is calculated. Moreover, it is already extinguished. If the accountant promptly determines the presence of an imaginary liability, he will be able to prevent double payment (current companies will be preserved and the value will not go down).
2. Hidden liability. In essence, this is a missing obligation, which is still reflected in the structure of the tax, credit or off-budget payment. It appears under the condition of untimely indication of previously listed debts.
3. Actual liability. It really exists and is always indicated on the balance sheet. The degree of urgency is determined depending on the repayment period specified in the drawn up agreement. Having fulfilled its obligations under this liability, the company will always lose a certain share of its assets (working/fixed assets, finance, finished products, and so on).

conclusions

Having understood what an asset and a liability are in a balance sheet, you can fully prepare your accounting records. The result of the calculations is to obtain an accurate picture of the efficiency of the enterprise.

In essence, assets and liabilities are an effective means for making adjustments to the company’s current strategy, thereby increasing income and minimizing possible financial losses due to the wrong approach to solving certain problems.

Assets and liabilities - what are they? Despite their apparent simplicity, these two concepts cause difficulties for many, while for others it is something from the field of accounting. It's actually not that scary. Your material well-being directly depends on how you distribute ownership of assets and liabilities.

So what are liabilities? And what are assets?

Let's not go into the jungle of scientific financial definitions and terms. Let us formulate everything very simply and clearly.

Assets are what make you money.

Liabilities are what take your money.

Types of assets and liabilities

Assets

Assets include all your financial investments that:

1. generate constant financial (passive) income
2. and/or increase in value over time.

There are actually a great variety of assets. Here are just the most famous and popular:

1. Bank deposits. Money invested at interest in a bank and generating profit.
2. Bonds. Profit is generated from coupon income accrued over a certain period of time. Usually once every quarter or six months, year. By purchasing long-term bonds, you can create a constant source of income for many years.
3. Stock. Here we can make profit in two directions at once. First, buying shares is buying a piece of a business, which will increase in value over time, which means the value of your shares will also increase. Secondly, when buying dividend shares, you have the right to expect an annual distribution of profits in proportion to the shares you purchased.
4. Real estate. Almost the most reliable way to make a profit. By investing in the purchase of this asset, you guarantee yourself a constant flow of cash from rental income. And the cost of real estate itself is only growing from year to year. Here we observe a similar picture of income generation as from the purchase of shares.
5. Mutual funds and other investments. Assets for the lazy. Suitable for those who do not want to rack their brains over the question: where to invest their money? You place your finances under the management of professionals who have much greater knowledge about financial instruments and, accordingly, can use your money more effectively. Of course, not for nothing. They will have to pay a certain percentage.
6. Borrowed money. This is also an asset. Of course, if you are borrowing for a reason. And you have your own financial interest. Otherwise, you have not an asset, but a liability.
7. Purchasing assets whose value will increase over time. What are these assets? Gold, silver and other precious metals. Collectibles: paintings, stamps, rare coins. In general, everything that constantly grows from year to year.

Liabilities

1. Mortgage loans.
2. Consumer loans taken out for the purchase of things, travel, entertainment.
3. All your movable and immovable property (apartment, car, household appliances, gadgets, things, etc.). Yes Yes. Everything you own and use in your daily life is a liability.
4. Borrowed money. Even if you were given a loan out of friendship, given the fact that you only need to return the principal amount, without any interest, this is also a liability.

For better understanding, let's illustrate with an example.

Let's say you suddenly became the owner of 3 million rubles. It doesn't matter where. They fell from the sky, won the lottery, were found on the street, received an inheritance.

How can they be disposed of?

You can buy an apartment with this money. In a good area, in good condition. In general, liquid real estate for which there is constant demand and which, if necessary, can be easily rented out or sold over time without problems.

After purchasing, you rented it out for 15 thousand per month. This is 180 thousand rubles per year. If we remove utility bills and other current payments from this amount, we get about 140 thousand a year.

By purchasing this asset (real estate), we generated a monthly constant income in the form of rent. Those. the asset will bring us money.

But this is not the most important thing. There is an invisible tax in the world called inflation. Those. Every year, thanks to her, everything in the world becomes more expensive. And real estate is no exception. Typically, its growth is 15-20% per year. Even if we take a modest 15% increase in value per year, then after 3 years, your apartment will no longer cost 3 million, but 4.5 million. Those. in 3 years you will become 1.5 million richer.

And rent will only increase every year.

If we sum up the total income from the increase in value and from renting, we get that in 3 years you will become richer by about 2 million.

But it could have been done differently. Many people adhere to the principle in life about money “easy come, easy go.” You think the same. And with the money that suddenly fell on you, you decided to buy an excellent (expensive) car for 3 million. As soon as you leave the car dealership, the car will immediately lose 10-20 percent in value. Add here the annual costs of insurance, parking, washing, gasoline, maintenance, tuning and so on. This car will extract at least 300 thousand a year from us.

And if after 3 years you decide to sell it, you can get about half of its original cost for it. Those. in 3 years you lost 1.5 million. Plus, each year of its operation costs you about 300 thousand, over 3 years that’s about a million.

In total, 3 years of car operation will cost you 2.5 million.

In the first case, when we invested money in an asset, we received 2 million, and in the second case, when we bought a liability, we became poorer by 2.5 million.

Of course, these are the 2 most extreme cases. But I think it is precisely with such contrasts that it will be easier for you to understand the difference between liabilities and assets.

What to do with assets and liabilities?

Of course, in life you cannot do without liabilities. Our entire life practically consists of liabilities and it is impossible to eliminate them completely. Clothing, food, equipment - these are what we use every day. The main thing here is to find a balance. It is necessary to strive to ensure that the profit received from assets exceeds the costs of liabilities.

Of course, you won’t be able to change the situation every second. This process is not quick. It takes many years.

To start:

1. Determine the size of your liabilities, i.e. your current needs or monthly expenses
2. See what you can give up or cut back on. Let’s say you spend too much money on entertainment (restaurants, clubs, etc.), or on buying unnecessary or expensive things.
3. Now identify your assets. Those. something that brings you money. What monthly cash flow do they bring you?
4. Now compare the difference between your assets and liabilities. Those. how much money you spend, and how much money your assets bring you.
5. you need to strive to ensure that your income from assets exceeds your expenses from liabilities.

To begin with, set yourself a goal of achieving income from assets equal to 10% of your liabilities. Further by 20%, etc. Break your global goal into many small ones. This way you will benefit from your small achievements and constantly move forward.