by Winston (Kip) Scoville
The rich and successful stand
out from the rest because of their Financial Intelligence education, not
their scholastic education. This is something that we are not taught in
school but rather something that is acquired.
To give you an
example:
Is your home an Asset or a Liability?
The general
consensus is that it is an Asset. But is it?
To answer that question we
must first understand the difference between Asset and a Liability
(financial intelligence).
Simply put:
"An Asset puts money into
our pockets."
"A Liability takes money out of our
pockets."
Knowing these two basic rules of financial intelligence lets
re-visit the question.
Is your home an Asset or a Liability?
1.
Every month we make a mortgage payment - (Cash flows out). 2. We pay
yearly taxes on our property - (Cash flows out). 3. We have to pay for
repairs - (Cash flows out) 4. When the mortgage is paid we still have to pay
the other two - (Cash flows out)
As you can see, if you buy a home,
cash will always flow out of your pocket. Thus your home is a
Liability.
Does this mean that we shouldn't buy a home? No, not
at all.
The point that is being made is that if we wish to be
rich (or wealthy if you are uncomfortable with the word rich) and
successful we need to understand how to accurately distinguish Assets from
Liabilities.
Most people spend a lifetime acquiring Liabilities
rather than Acquiring income generating Assets. The rich or wealthy spend
a lifetime acquiring income-generating assets and purchase liabilities that
work for them instead of against them.
An interesting fact and one
that seems to be a stumbling block for most people is that you don't need to
be rich to acquire income-generating assets. 80% of today's wealthy had
nothing when they started. The other 20% inherited their fortunes.
So,
if you desire to be wealthy there are two basic things you have to learn how
to do:
1. Continually acquire income-generating assets (cash
flows in). It does not matter how small they are when you start. Over time
assets will build up.
2. Learn to acquire Liabilities that work in your favor and not against you.
"It's not how much money you make, its
how much money you can keep that counts. There is always hope for
those that help themselves"
