Understanding What Puts Money In Your Pocket (Assets) Vs What Takes It Out (Liabilities)

If you've ever found yourself working hard month after month but wondering why your bank account still feels empty, chances are you're caught in the trap of prioritizing liabilities over assets. Understanding the difference between what puts money in your pocket (assets) and what takes it out (liabilities) could be the financial awakening you need. This simple but powerful distinction is the core of building lasting wealth, and it's one of the fundamental lessons most people never learn in school.

Let’s break this down in a way that makes sense — no financial jargon, no confusing charts, just real talk about money.

What Are Assets?

An asset is anything that puts money in your pocket — consistently or eventually. It can be a physical item, a digital product, a business, or even an idea — as long as it generates income or appreciates in value over time. The most important thing is this: assets work for you, even when you’re sleeping.

Let’s look at some examples of assets:

Rental Properties: These bring in monthly income if tenants are paying rent.

Stocks and Dividends: You invest in a company, and they pay you a portion of their profits (dividends).

Intellectual Property: Wrote a book? Composed a song? Every time someone buys or streams it, you earn money.

Online Businesses: If you own a dropshipping website or YouTube channel that earns ad revenue, that's an asset.

Education and Skills: Yes, investing in yourself can be an asset if it increases your earning power.

The golden rule? If it’s generating income or appreciating in value, it’s likely an asset.

What Are Liabilities?

Now here’s where many people get it twisted. A liability is anything that takes money out of your pocket. It’s the expense that looks good on the outside — maybe even feels good — but drains your account slowly and steadily.

Examples of liabilities:

Your Personal Car: Unless you’re using it for Uber or Bolt and it’s making you money, your car is a liability. Fuel, maintenance, insurance — they all cost money.

Loans and Debt: Student loans, credit card debts, payday loans — all of them come with interest and repayments that suck your income dry.

A Fancy House: That beautiful house with marble tiles, chandeliers, and solar panels might impress your guests, but if it’s not generating income (like rent from tenants), it’s taking money from you.

Subscriptions You Don’t Use: That gym membership you’ve only used twice this year? Liability.

Lifestyle Inflation: Upgrading your phone, clothes, or gadgets every few months just to “keep up” — this is where people silently go broke.

In simple terms: if it keeps taking money out of your pocket with no return, it’s a liability.

Why the Confusion Between Assets and Liabilities?

Our society is built around consumerism. We're constantly being told that success looks like driving a flashy car, wearing designer clothes, and living in a luxury apartment. But if all those things are draining your wallet without bringing in income, what you really have is a pile of liabilities dressed up as assets.

Many people also confuse a house with an asset. Even Robert Kiyosaki, the author of Rich Dad Poor Dad, stirred controversy when he said “Your house is not an asset.” What he meant was — unless the house is putting money in your pocket (as in, generating rental income), it’s actually costing you. Maintenance, repairs, utility bills, property tax — these are all money outflows.

The Rich Buy Assets, The Poor Buy Liabilities

This is not to insult anyone, but it's a mindset shift. The wealthy understand that the path to financial freedom lies in buying income-generating assets. Meanwhile, many middle-class and low-income earners unknowingly tie themselves to liabilities thinking they’re making smart financial decisions.

The key difference? The rich invest in things that pay them over time. The poor and middle class spend their money on things that look rich but keep them broke.

Asset vs Liability: Simple Comparison

Let’s say you have ₦2 million in Nigeria. You could either:

Buy a Car (Liability): You feel good cruising the streets. But you start spending on fuel, repairs, servicing, and before long, you’re broke again.

Start a POS Business (Asset): With that same ₦2 million, you set up a small point-of-sale business in a busy area. Every transaction brings in ₦100-₦200. Before you know it, you’ve made back your capital and now enjoy steady income.

Which sounds better in the long run?

How to Start Accumulating Assets

The journey to financial stability doesn’t start with millions in your account — it starts with a shift in mindset. Here’s how to start building assets even if you’re not “rich” yet:

1. Track Your Spending

You can’t fix what you don’t know. List out all your monthly expenses. Ask yourself: Is this an asset or a liability? If it’s not earning you money, it’s draining you.

2. Cut Down on Liabilities

You don’t need to cut out everything — but do you really need that ₦10,000 monthly subscription? Can you switch to a cheaper data plan or skip that weekly takeout?

3. Build Emergency Savings First

Before investing, make sure you have a savings buffer (at least 3 months of expenses). This protects you from having to sell your assets in an emergency.

4. Invest in What You Understand

Start small. Mutual funds, agriculture investment platforms, or a side hustle that earns income online — go for what you understand, not what’s trendy.

5. Develop Marketable Skills

Your brain is your greatest asset. Learn digital skills (like coding, design, writing), offer services online, and earn in dollars. That’s money in your pocket.

6. Monetize Your Passion

Can you sing? Cook? Make funny skits? Start uploading your content online. TikTok, YouTube, Instagram — these platforms can become digital assets when done consistently.

Common Myths About Assets and Liabilities

"If I can afford the monthly payment, it's not a liability."

Reality: If you’re borrowing money to buy something that doesn’t generate income, it’s a liability — no matter how affordable it looks.

"My house is my biggest asset."

Truth: Unless your house is rented out or appreciating faster than inflation, it's just a place to live, not an income generator.

"I can’t invest unless I have millions."

You can start investing with ₦5,000 in Nigeria today — via mutual funds, agricultural crowdfunding platforms, or digital products. The key is starting small and growing.

Real-Life Story: From Liability Lover to Asset Builder

Let’s take Kunle as an example. He was a regular salary earner in Lagos, earning about ₦250,000 monthly. Every time he got paid, he would upgrade his phone, buy new clothes, take friends out — living “soft life” on a hard budget.

After reading Rich Dad Poor Dad, Kunle realized he was deep in the liability trap. He cut out unnecessary expenses, sold his expensive iPhone, and used the money to buy a used laptop and take a course in digital marketing. In 6 months, he started freelancing. In 1 year, he was earning in dollars.

Kunle turned his knowledge (asset) into income and became financially independent. All it took was changing how he viewed money.

Final Thoughts: Choose Assets Over Appearances

We live in a world that rewards appearance over substance. But if you want to build wealth — not just look rich — then focus on assets.

The truth is this: every financial decision you make either puts money in your pocket or takes it out.

So next time you’re about to buy that shiny gadget, sign up for that monthly bill, or take a new loan, ask yourself:

"Is this an asset or a liability?"

If it’s not making you money or helping you grow, you might want to reconsider.

Conclusion: Build, Don’t Just Spend

Wealth doesn’t come from how much you earn — it comes from what you do with what you earn. Assets are the quiet soldiers that fight for your financial freedom. Liabilities, on the other hand, are like sugar — sweet in the moment, but dangerous over time.

Make a conscious effort today to identify the assets in your life and build more of them. Learn, invest, grow. Even if you start small, over time, you’ll begin to see the difference in your pocket — and your peace of mind.