Assets vs Liabilities

Assets are valuable resources owned by an individual or business, such as cash, real estate, and equipment, that can generate income or appreciate over time. Liabilities, on the other hand, are financial obligations or debts owed to others, like loans, mortgages, or credit card balances. In simple terms, assets are what you own, while liabilities are what you owe. The net difference between your assets and liabilities is called net worth; a positive net worth indicates more assets than liabilities, while a negative net worth suggests the opposite. Understanding this balance is crucial for financial health.