How you choose to spend or invest your money can have an impact on your net worth. Many of you are familiar with the net worth equation which is Assets – Liabilities = Net Worth. In other words, what you own, minus what you owe, equals what’s yours.
However, what is conventional wisdom isn’t always what’s best. What I mean is, just because something is generally known as an “asset” doesn’t mean it’s going to help your wealth. Here are a few examples.
- Your house. While generally considered an asset, and to some, an investment, your home can also drain