Lesson 3 - Statements and Budgets - Part 4

Assets

Assets are items that we own and have market value. There are physical assets such as cash, jewelry, cars etc. and there are non-physical such as stocks and bonds. There are always two steps in determining our assets, firstly we must list every asset. Secondly we must assign a market value to each one. In some cases this might be hard to do. How much is your diamond necklace worth now? or what is the market value of your car? Determining these market values can be a little difficult to figure out. There are many online resources that should let you get a better idea of their current worth.

As mentioned earlier there are three different kinds of Asset categories:

1.      Liquid Assets

2.      Lifestyle Assets

3.      Investment Assets

Liquid Assets

Liquid Assets refer to cold hard cash or assets that can be converted into cash quickly with no loss in value. The most popular Liquid Assets are: Cash, Checking Account, Savings Account, Money Markets, Certificates of Deposit and so forth. All of these Assets can be quickly converted to cash without losing market value. A car or collection of something is not a Liquid Asset, because sometimes they cannot be converted into cash quickly without a loss in value. Obviously some things can be in certain situations, but it isn’t always consistent.

Managing our Liquid Assets will play a very important part of our day to day living that will be covered in a later Lesson.