Having assets suggests that you are rich. Exempted from a class of people who have no income or assets to call their own. The ones we sometimes describe as poor.
Gen Y Finances: 2017 could be most successful year in your life!
But times are changing. There are people who earn high, yet have no assets. They live from pay check to pay check.
Still, some have assets but no income.
What does it mean to be income poor and asset rich? How can we navigate today’s financial environment and better manage our financial resources?
A short answer is – financial knowledge.
Investopedia describes it “as a resources with economic value, that an individual, country or corporation owns”. These may be stocks, shares, mutual funds, real-estate property, bonds, and so forth.
The expectation in buying or investing in an asset is that it will be of benefit at a later period.
But while some assets appreciate in value, others depreciate. The bad ones may not generate income. Rather, it becomes a liability that can bleed you financially.
Income poor asset rich
Being income poor and asset rich infers that an individual has assets with high value but insufficient cash at hand.
An example of someone that is income poor but asset rich may be a person who owns a large mansion but has to make monthly mortgage payments that leave him flat broke every month.
How can one avoid falling into the category of the income poor asset rich? As earlier stated, financial knowledge and seeking advice where necessary can help nudge you towards managing your money better.
Not everyone understands how money works or how best to manage, invest or give it out.
How do you manage your income? What kind of banking account do you operate? A current, savings or both types?Financial literacy will give you good grounding on how money works? Do you know how to make use of modern banking apps to keep tabs on your finances?
You can learn about finance from different sources but your success with managing money will ultimately come down to your interpretation and execution.
Making the right decisions
Many people do not have adequate information before making important financial decisions. Some seek little clarification before choosing a credit card, which may be able to lead them into debt. You should not fall into that category.
Understanding the difference between good assets and bad assets may be key to your financial stability. It will help you in making the right money decisions. And avoid sliding into the category of income poor and asset rich.