When someone starts talking about their assets, do you blush? 🍑🤭 Cool it, Sir Mix-A-Lot. Although we bet certain Kardashians claim the junk in their trunk is worth money, that's not what we're talking about! 😆
So what exactly is an asset, anyway? 💸
Here’s Five Fast Facts you need to know about assets:
- 💰 Back that Asset Up - In the world of finance, an asset is anything with some sort of economic value. Anyone can own assets, including you, a company, or an entire country. People hold onto assets because of their expected future benefits. Some assets appreciate --or increase in value -- over time, so you can cash them in at a later date for more than what they were originally worth. On the flip side, other assets depreciate -- or lose value -- over time.
- 🗃️ It's Personal - Assets are classified in a bunch of different ways, and one way is whether they're business or personal. Personal assets are things like the cash in your bank accounts, any land or property you own, and investments, like your retirement account. Personal assets can also include jewelry and artwork.
- 🏭 Business Booty - Business assets also include cash and property, but also things like machinery, inventory, and raw materials. Depending on the industry, these types of assets can be worth a pretty penny and are added to a company's balance sheet. Patents and intellectual property are also considered business assets.
- ⏳ Now 'n Later - Another way to classify assets is according to how quickly you can convert them back into cash. Current assets, or liquid assets, include savings accounts, stocks, and bonds, which turn into cash pretty easily through withdrawal. Fixed assets take more time and effort to convert and include things like real estate and vehicles.
- 🤑 What's Your Net Worth? - The opposite of an asset is a liability, or something you owe. Examples of liabilities are personal loans and mortgages. In business, liabilities include accounts payable and expenses. If you're feeling fancy and want to calculate your net worth, add up all your assets and subtract your liabilities. The resulting number is how much of a baller you are (or aren't)!
🔥Bottom line: Assets sound fancier than they are. All it really comes down to is how much stuff you have and how much it's worth! The more junk you've got in the trunk (and the less you owe), the bigger your financial booty, stud. Wanna boost your bottom (line)? Check out this guide to making more money.
Got any sweet assets?
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