Assets and liabilities P2

Hello Everyone

In my previous blog 'assets and liabilities'  I talked about what are assets and what are liabilities and where should we spend more. Moving forward with that blog let's discuss cash flow of money.

Most of the people say that rich people are growing day by day and poor are getting poorer. But nobody thinks about their plannings and strategies Behind that how are managing there cash. To understand it let's discuss cash flow of money that how people spend. On behalf of financial situations people are divided into 3 categories Poor, Middle Class and rich.

When poor people get money or their salary they spend it in there expenditures. In case of middle class they spend it in their expenditures and in liabilities. They think that their home is their asset but it is not so unless they are not earning anything from their home. If they rent their house then it becomes asset for them, and at last rich people they first spend on assets. They make ways of earning first then they expend. So that's why they getting rich day by day. So it doesn't matter that how much you are earning. But how and where to spend it matters.

So you have to adopt investor's thinking instead consumer's thinking. People always complain that their salary is responsible for their poor conditions. But it is not a hurdle.  Actually after increase of income people increase their expenditures. Which forces them to buy cars, expensive cell phones, new home which are again a liability. So this will not let them to become rich.

 So always think before spending.



Thanks