Couldn’t get it while reading Rich dad Poor dad book
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An asset is something with value that you own.
A liability is something you own that represents negative value.
You own a house that is worth money. It is an asset.
You borrowed money to buy the house. That loan is a liability.
Read the whole book and couldn’t figure it out?
An asset is something with value that’s either worth money or generates money for you.
A liability is something that **costs** you money.
Having a paid-off car is an asset because you can sell it and put X dollars in your pocket. Having a financed car is a liability because you need to pay money every month to keep it.
An asset is an apple. You can sell the apple to someone in return for cash or other goods and services.
If you sold them two apples and you only had one and you took money for two apples and still owe them one, then the apple you owe them is a liability. They are liable to beat you if you don’t give them their other apple or their money back.
If it makes you money, it’s an asset. If you have a car that you paid off. It’s not an asset if it cost you money to keep. If you sell it for anything less what you paid plus any cost to insure and maintain then it’s a liability
If it doesn’t make you money, then it’s a liability. If you own a house, you still pay insurance and property tax, it’s a liability.
Positive cash flow = asset
Negative cash flow = liability
[Cash flow](https://www.youtube.com/watch?v=A8vD_XO0vUU)
In the book, Robert Kiyosaki redefines asset and liability differently than the definitions used by banks. He says “An asset puts money in my pocket. A liability takes money out of my pocket.” The classic definitions are more like: assets are what a business owns, liabilities are what a business owes.
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