For our needs an asset is something that can make you profit

Assets vs Liabilities - Why the Rich Make Much More Money than Everybody Else?

We'll save the last 2 for some other time, for the time being let's talk about Assets vs Liabilities. For our needs, an asset is something that can make you profit. A moneymaking home business, a stock that pays dividends, rental homes, a hammer & screw driver can all be assets. A liability is something that costs you money. A small business that manages to lose money and a rental building that does not generate more than enough rent to pay the mortgage are liabilities.

Top-Secret Method of the Poor - Acquire Liabilities.
Top-Secret Method of the Rich - Acquire Assets.

One good reason the rich make much more money compared to the poor and the middle class is these people recognize that getting through your life with more debts than assets is just like trying to swim with cement blocks tied to your feet! The majority of people seem to make a hobby of accumulating liabilities; they'll buy products on credit cards, they mortgage their home, they buy their car or truck with monthly payments. You just can not succeed financially with excessive debt and liabilities holding you down.
So, is a house an asset or a liability?
We'll it might be either. It would be an asset if it is a rental and creates a positive net income, or if you run a profitable home business from your residence. But it truly is a liability if it doesn't produce more revenue than it costs. So for most people, what they think is their biggest asset actually is their greatest liability!

Asset vs Liability - Your car?
Your vehicle will be an asset if it makes you more money than it costs. Do you use it for work? Do you use it for advertising and marketing? Do you charge people for rides? For most people, their car is their second biggest liability.

Asset vs Liability - Your telephone?
Well, are you socializing with friends or creating a business?

There's no doubt that you are seeing the pattern here. Now look at the things in your life; look around your home and office. Are you able to recognize the assets vs liabilities? I am not saying all liabilities are bad or that all assets are good. I'm just explaining that step one in building wealth is understanding the difference between assets and liabilities.