There are two opposing forces in finance called assets and liabilities. The difference between assets and liabilities is simply put in this way…an asset is something which generates an income. Or said differently, puts money in your pocket. And a liability is something which is an expense or takes money out of your pocket. That’s about as simple of an explanation as it gets.

In order for you to build wealth, you need to focus and concentrate on taking advantage of spending your money on things that will put money back in your pocket after you buy them. When you think of spending money, you need to think of things that will produce an income in return. As examples, the most common are stocks/bonds, real estate and business.

“Never depend on single income. Make investments to create a second source.” – Warren Buffett

If all you do is spend money to buy things which increase your expenses and ultimately take money from your pocket, then that’s when you just end up broke! By spending your money on buying assets you will continuously increase your income. This will then provide you with more cash to invest in more assets, which in turn will boost your income even further.

If you change the way you spend your money by buying assets first, the money generated by your assets can take care of your liabilities. It’s not necessarily as easy as it sounds, but the benefits are worth the effort. Buy assets before you spend on liabilities…..it’s worth it!

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