Money Matters: Assets and Liabilities

From Scrubs to Financial Success, Our Nurses Know How to Invest…

As we continue on this financial journey, I hope everyone had time to review the post from last month on budgeting and other money matters. The table in that blog is a great starting point for understanding your monthly expenses in relation to your income. 

Kiyosaki, author of Rich Dad Poor Dad, noted that the world is constantly changing, especially as there are advances in technology and AI. He advises that people need to be flexible, remain open-minded, and educate themselves on financial matters. By following this advice, one can continue to reap financial prosperity despite the changes occurring in the world (p. 62). No one will notice the changes more than older folks. I didn’t need a computer to attend college, and everything we did in the hospital was done on paper and pencil - from paper charts to paper documentation. I recall searching for a patient’s medical records among numerous files in a large room. The world will continue to grow and evolve, and so must our money skills. 

Some quotes from Kiyosaki that resonate with that sentiment 

“Money Skills”

• “If you want to be rich, you need to be financially literate (p. 63).”

• “Money without financial intelligence is money soon gone (p. 62)."

(Kiyosaki, 2022)

Kiyosaki tells a story his father told him growing up about the Japanese people. Japanese methodology discusses the three sacred treasures or powers that were passed on to the first emperor of Japan from the gods.

1. Sword - valor or the power of weapons.

2. Jewel - benevolence or the power of money.

3. Mirror - wisdom or the power of self-knowledge. This is the most valued of all. 

Kiyosaki goes on to say that those who have money make the rules, but having self-knowledge is key. One must listen to and trust their inner voice, encompassing thoughts, emotions, behaviors, and more. By trusting in this approach and not just following the status quo or letting fear dictate their actions, they learn how to harness the knowledge of money and use it to their advantage (p. 79).

Questions to ask yourself related to the 3 Scared Treasures

1. Do I listen to my inner voice? Do I respect my self-knowledge?

2. Do I take the time to improve my self-knowledge?

3. What does my financial story say?

Being able to assess your financial status and how much money you have is key. What does your cash flow look like? This is where your budget will tell the story. As we continue to build our understanding of our financial status, the next step is to distinguish between assets and liabilities. 

Assets = something you own that puts money in your pocket

Liability = something that takes money out of your pocket

Example of Assets vs Liabilities

Assets	Liabilities
Savings	Mortgage
Retirement Funds	Car Loans
Stocks	Student loans
Rental Properties	Credit Card Debt
Paid off, well-maintained car
Home - even if not paid off, can it be sold for a profit? Is it well-maintained, so you're not making extensive, costly repairs?

The above chart should accompany income and expenses 

Income	Expenses
Salary	Mortgage/rent
Rental income	Taxes
Additional jobs or side hobbies that earn money	Credit card debt
Dividends	Student loans
Interest	Car payment

When you subtract your liabilities from your assets, it will reveal your Net Worth. 

Assets	Liabilities
Savings  = $5,000	Mortgage = $175,000
Retirement funds = $ 10,000	Car loans = $5,000
Stocks = $2000	Student loans = $20,000
Rental Properties	Credit Card debt = $5,000
Car (could be sold for) = $12,000
Home - even if not paid off, can it be sold for a profit, and is it well maintained, so you are not making large costly repairs = $300,000

Total Assets - Total Liabilities = Net Worth
Asset	Liabilities	Net Worth
$329,000	$205,000	124,000

Remember - Anything that takes money out of your pocket is considered a liability, not an asset. 

(Cagan & Lariviere, 2017; Kiyosaki, 2022)

So, before the next post in April, this is your to-do list:

1. Review your financial goals

2. Review your budget grid, looking at your income in relation to your expenses

3. Assess your assets and liabilities to calculate your net worth

4. Let the above work set for a week and then review it again for any needed adjustments

It is not how quickly you can get rich, but rather the financial knowledge you possess to grow your wealth over time and achieve success. Assessing your budget, including income versus expenses, will reveal how you manage your money. It may be advantageous to meet and talk with financially successful individuals and learn from them, or to sign up for a financial seminar at your local community college. This is a lifelong journey and one that must be tended to regularly. As nurses, we work tirelessly for our earnings, and we must make the most of every dollar. Financial success isn’t about getting rich quickly, but about making informed decisions that allow our hard-earned money to grow over time.

References

Cagan, M., & Lariviere, E. (2017). The infographic guide to personal finance. Simon & Schuster.

Kiyosaki, R. (2022). Rich dad poor dad (25th ed.). Plata Publishing.