ASSETS are purchases that make you money. When you buy an asset, that purchase earns (or saves) money for you. Assets do not continue costing you after the initial purchase. If you buy a cotton candy machine to rent out for parties, that is an asset. If you buy a chicken that lays eggs for your family, that is an asset.
LIABILITIES are purchases that cost you money. A car is not an asset- it requires money for gas, insurance, and upkeep. It quickly loses value as it ages. It is a liability. Houses, unless they are rental properties, are liabilities. A house requires money for upkeep and taxes. Unless you sell it, your house will not make you money. Boats, rugs, food, and designer purses are liabilities.
Most people spend their money on liabilities. Their only real asset is their job; this job pays for the house, car, boat, magazine subscription, china cabinet and other liabilities that are not making them money. Likewise, most housewives use their husband’s money to buy liabilities: potato chips, shoes, furniture, home décor, books, movies, magazines, gas station coffee, phones, iGadgets, craft supplies, makeup, hair care, and an extra car to drive around. Look at what you spend in a month and classify each purchase as an ASSET or a LIABILITY. Chances are, most of what you buy are liabilities. Try to limit your spending on these items, so you can put more money toward asset-type purchases.
What Should I Buy Then?
Now obviously there is not enough money in your grocery budget to purchase stocks. But what about seeds for a garden? Take some of your “eating out” money and plant a garden with it. Will you miss one meal at a restaurant? Probably not. You can grow a LOT of food for the cost of one restaurant meal.
Some “asset” purchases that housewives can make:
- Plants. I’ve already mentioned seeds, but you can also purchase fruit and nut trees, berry brambles and grape vines, herbs, and perennial flower bulbs that bloom year after year and often reproduce themselves.
- Animals. I’m not talking about pets here! If you live in the country, you can buy chicks that grow into meat birds or laying hens. You can buy piglets, lambs, calves, or goat kids. These baby animals will grow up. You can either butcher them for meat, or let them have even more baby animals to sell or raise.
- Tools. It can be smart to buy tools that will save you time and money. A pressure canner, for example, allows you to can meat instead of freezing it. This can save a lot of money long-term. A good camera allows you to take high quality pictures to display items to sell online.
- Business purchases. Say you have a small sewing business where you make and sell aprons. A bunch of fabric, then, would be an asset because it will make you money.
This, my friends, is investing on a small level. When you have saved and earned enough, you can invest in bigger things like stocks and rental properties. My challenge to myself and to all of you is that we 1) ELIMINATE most of our liabilities, and 2) begin buying assets instead. Finally we can stop being slaves to our “stuff” and start making “stuff” our slaves.