Asset and liability, one key factor for poverty among most Africans

[odunybiz]

What is asset? What is liability? Assets are the items you owns that can provide future economic benefit while liabilities are things we own with future obligations. In a simple definition, assets are things we buy that will bring money back to us while liabilities are things we buy that we will keep spending money on. Assets put money in your pocket while liabilities take money out of your pocket.

Most Africans especially Nigerians prefer liability to asset. In the journey of becoming a successful being, it is advisable to acquire more assets than liabilities. The questions here is where does 70%- 80% of your income goes? Asset or liability?

Imagine someone that can hardly feed himself twice daily buying an expensive phones and cars without a specific purpose (just for fashion). This is the different between the rich and the poor. The rich invest in what can fetch them more money (asset) e.g buying land, investing in reputable businesses but the poor out of fashion keep buying liabilities (goods that they keep on spending their little earnings on for maintenance). If 70%- 80% of your income goes to liability then one is preparing for a poor life.

I'm not saying buying expensive phones and cars isn't good but shouldn't be priority over ones investment. Phones and cars maintenance in some countries are expensive. So this may prevent one from saving if one acquire it without a good job.

Conclusion
👉👉Let 70%- 80% of your income goes to asset. It is better to invest ones money on asset than getting liabilities that will bring no income.

👉👉Only acquire liability if the liability will add value to you, your business or improve the income made in your business.

👉👉Only acquire liability after gotten a good investment that is capable of providing enough returns for your home and the liability purchased maintenances.

[Coyster]

Most Africans especially Nigerians prefer liability to asset. In the journey of becoming a successful being, it is advisable to acquire more assets than liabilities. The questions here is where does 70%- 80% of your income goes? Asset or liability?

I completely disagree with this brazen claim of yours, what statistics or proof do you have to back it up that Africans (Nigerians more specifically like you said) are more concerned about acquiring things that are liabilities to them, than stacking up assets; i can categorically state that it is wholly untrue. You can prolly call it a human trait, but to pinpoint a particular people as doing it more without stats is uncalled-for.

Having said that, you quite forget that in most parts of Africa people live below the poverty level, some even earn less than $2 a day, quite a lot of them are basically concerned about what to eat, wear, good water, etc, that they can't even condition their minds to dream of acquiring luxurious items, only the wealthy/rich can afford it there. It is in parts of the world where life is much better, first world countries were people earn a reasonable minimum wage that you could talk about even the middle class citizens leading a somewhat comfortable life.

[samcrypto]

There’s a good debt and bad debt, you should be more aware the difference between this two and take advantage of what works for you. Asset can be your liability as well, don’t get be fooled by any investment that promise easy profit because it’s too risky.

What’s your basis about Africans getting into more liability than to focus on creating more asset that generates income? Most probably they are into debt because it left them with no choice, the problem there is poverty and corruption.

[jackg]

I doubt a lot of people are spending that much on debt without being incentivised to do it (eg high inflation and low interest).

Quality of life depends on where and how you live but it's much more than the assets and liabilities you might acquire.

You can't call a mortgage a liability somewhere (if house prices don't rise much) and then call it an asset builder somewhere else because house prices are soaring there (you still need a house near social or work connections).

[Rruchi man]

Most Africans especially Nigerians prefer liability to asset.

This is just an assumption, you can't speak for all Africans especially Nigerians, especially since you cannot tell all our preferences exactly. If you make this claim, you should have at least attached a source for your data.

Asset or liability?

The debate between what exactly we can call an Asset and Liability will continue for a while as I believe that some things that some people may consider as liabilities may be assets to other persons, it all depends on usage IMO. A car for instance which may be considered a liability to some, can be a asset to a business person who uses it to facilitate their business in form of logistics or transport services to bring profit, which is also in line of what an asset is.

I'm not saying buying expensive phones and cars isn't good but shouldn't be priority over ones investment. Phones and cars maintenance in some countries are expensive.

You spend majorly on maintenance and repairs when you buy a fairly used or not too good item, in this case a phone or a car. If you can get a good one in very good working condition, it will be a while before you talk maintenance and repair, it would have served you already a lot and possibly made you some good returns already.

[Apocollapse]

I think it's not only problem on Africans, but the whole poor countries in this world have such kind behavior.

Usually they're want to become like a rich person where they force themselves to buy branded and pricey stuffs even though every year those stuffs the price will decrease, not increase. But who cares? it's their life and they will regret in the future when they realized there's no use to have branded and pricey stuffs.

Don't confuse between asset and liability, make it simpler: don't buy anything if you don't really need it.

[Husires]

When I read these words, I remember Rich Dad and Poor Dad, but philosophy has changed since the years in which these words were written, and the rules have changed. The hyperinflation that hits most countries in the world has made keeping money and saving a wrong idea, as even the evil of obligations such as phones is better than keeping cash.

Most of us spend a lot on unwanted things, but the crises that occurred in recent years have dramatically changed this view.

[avikz]

That's what consumerism means! The entire consumer boom is based on acquiring liabilities which doesn't give any return. I have seen young people's habits and I have noticed that they are so very much attracted towards latest electronics rather than building a habit of savings. People even buy iphone using loans. I am not sure about Nigeria but I believe this issue is everywhere.

Young people should start saving money early in their life to get the advantage of time. But alas! Schools won't teach that to you!

[Markinzo]

Imagine someone that can hardly feed himself twice daily buying an expensive phones and cars without a specific purpose (just for fashion). This is the different between the rich and the poor. The rich invest in what can fetch them more money (asset) e.g buying land, investing in reputable businesses but the poor out of fashion keep buying liabilities (goods that they keep on spending their little earnings on for maintenance). If 70%- 80% of your income goes to liability then one is preparing for a poor life.

Am still trying  to come to terms as to understand  how "someone that can hardly feed  himself twice daily" is capable of buying expensive phones and luxury cars like the OP emphasized above.
Isn't that statement contradictory? Cause for example, if a person can afford an expensive phone like an iPhone 13pro for example or any expensive car like a Lamborghini then definitely such a person can not just only be capable of feeding himself but his family and friends!

So am not sure I understand the point your trying to make except that you deviated from what I could suggestion as the intent of the thread which is " it's better to acquire more assets than liabilities", and not the other way round as you just unsuccessfully tried to confuse me.

[Hydrogen]

This is the different between the rich and the poor. The rich invest in what can fetch them more money (asset) e.g buying land, investing in reputable businesses but the poor out of fashion keep buying liabilities (goods that they keep on spending their little earnings on for maintenance). If 70%- 80% of your income goes to liability then one is preparing for a poor life.

I would say the #1 difference between the rich and poor is.

The rich read books and learn as a lifestyle.

While the poor believe no good can come from either reading and learning.

Its the mentality, lifestyle and attitude that is responsible for producing results.

Although it definitely is becoming harder to reach wealth from a starting point of poverty.

The goal isn't necessarily wealth. But rather learning things that are worth knowing. Which produce an abundance of wealth, inevitably.

[Strongkored]

Most Africans especially Nigerians prefer liability to asset. In the journey of becoming a successful being, it is advisable to acquire more assets than liabilities. The questions here is where does 70%- 80% of your income goes? Asset or liability?

Is this the result of research? Or is it just your personal opinion because you see people around you doing that?
It is undeniable that many people do not consider it important to add more assets rather than liabilities because they do not get enough information that having assets is much more profitable than liabilities, but it is possible that liabilities exist because they are productive for business and profit from business can have assets.
In my opinion, in poor or developing countries 70-80% will actually be used more for needs, it is even possible that 100% of the income can only cover the cost of living so there is no opportunity to buy assets.

[Don Pedro Dinero]

Most Africans especially Nigerians prefer liability to asset. In the journey of becoming a successful being, it is advisable to acquire more assets than liabilities. The questions here is where does 70%- 80% of your income goes? Asset or liability?

Is this the result of research? Or is it just your personal opinion because you see people around you doing that?

It seems the latter to me. Otherwise the OP was wrong not to give the source that backs up what he says.

Having said that, you quite forget that in most parts of Africa people live below the poverty level, some even earn less than $2 a day, quite a lot of them are basically concerned about what to eat, wear, good water, etc, that they can't even condition their minds to dream of acquiring luxurious items, only the wealthy/rich can afford it there. It is in parts of the world where life is much better, first world countries were people earn a reasonable minimum wage that you could talk about even the middle class citizens leading a somewhat comfortable life.

When I read the OP I was thinking about that. Acquiring assets can only be done by those who have their basic needs covered, and have money to spare. So, instead of squandering it or spending it on superficial things, he decides to save and invest it. But then I imagine it would be easier for people to acquire assets in Germany than in Somalia. Regardless of financial education. In richer countries there are more people who could acquire assets by holding back a little from consuming, and they don't do so because of poor financial education or other reasons.

[Fortify]

What is asset? What is liability? Assets are the items you owns that can provide future economic benefit while liabilities are things we own with future obligations. In a simple definition, assets are things we buy that will bring money back to us while liabilities are things we buy that we will keep spending money on. Assets put money in your pocket while liabilities take money out of your pocket.

Most Africans especially Nigerians prefer liability to asset. In the journey of becoming a successful being, it is advisable to acquire more assets than liabilities. The questions here is where does 70%- 80% of your income goes? Asset or liability?

Imagine someone that can hardly feed himself twice daily buying an expensive phones and cars without a specific purpose (just for fashion). This is the different between the rich and the poor. The rich invest in what can fetch them more money (asset) e.g buying land, investing in reputable businesses but the poor out of fashion keep buying liabilities (goods that they keep on spending their little earnings on for maintenance). If 70%- 80% of your income goes to liability then one is preparing for a poor life.

I'm not saying buying expensive phones and cars isn't good but shouldn't be priority over ones investment. Phones and cars maintenance in some countries are expensive. So this may prevent one from saving if one acquire it without a good job.

Conclusion
👉👉Let 70%- 80% of your income goes to asset. It is better to invest ones money on asset than getting liabilities that will bring no income.

👉👉Only acquire liability if the liability will add value to you, your business or improve the income made in your business.

👉👉Only acquire liability after gotten a good investment that is capable of providing enough returns for your home and the liability purchased maintenances.

It seems you are a little confused or trying to make these financial matters far more complicated than they need to be. In simple terms, for most people around the world, the only good form of debt is possibly buying a house - which tends to have a low interest rate and in most areas goes up in value over the term of the loan above the rate that is paid. There are certain scenarios that might spur people to borrow money and it may be a necessity, like buying a car because you have to travel longer distances which might be the most economical way to do so. Generally though there are a lot of frivolous purchases made which should be scrutinized and avoided if possible, along with wasting too much money on vices like drugs or alcohol.

[odunybiz]

I completely disagree with this brazen claim of yours, what statistics or proof do you have to back it up that Africans (Nigerians more specifically like you said) are more concerned about acquiring things that are liabilities to them, than stacking up assets; i can categorically state that it is wholly untrue. You can prolly call it a human trait, but to pinpoint a particular people as doing it more without stats is uncalled-for.

I'm from Nigeria and I know what happens around me. Although this happen almost everywhere but I have chosen Africans especially Nigerians because I can easily check their way of life. I have friends in some other African countries like Ghana, Togo and Morocco. I have taken my time to compare our ways of life together. Nigerians love fashion. Most time they hustle hand to get this things. I even have an example here around me. A lady who have saved almost 70% of her 8 months salary to buy a phone of #140,000+. That means she had worked for 8 months to get a liability.

Having said that, you quite forget that in most parts of Africa people live below the poverty level, some even earn less than $2 a day, quite a lot of them are basically concerned about what to eat, wear, good water, etc, that they can't even condition their minds to dream of acquiring luxurious items, only the wealthy/rich can afford it there.

Yes you are right about earning less than $2 per day. But most times they make savings from this little amount to buy irrelevant things. Here now in Nigeria, even though there is a claim that things are hard but almost all households uses an android phone. Imagine a household of 5 chaiming they are poor but all including the last child have an android phone which they use.

[Die_empty]

Most Africans especially Nigerians prefer liability to asset. In the journey of becoming a successful being, it is advisable to acquire more assets than liabilities. The questions here is where does 70%- 80% of your income goes? Asset or liability?

You did not add a source so that we can view which organisation carried out the statistics. Or maybe you were just estimating based on your experience or environment which would be very inaccurate. There are still Africans that are tireless investors and you can find them everywhere both in the slums and the Government Residential Areas.

Haven said that I want to state that Africans also love liabilities. This is a cultural and historical defect that has kept many people in abject poverty. Africans like spending money on unnecessary thing or events. Even if a poor man dies, the community would force the family to sell lands or borrow money to give that man an expensive burial. It is only in Africa that someone must eat in a burial even if it was hunger that killed the deceased.

African traditional marriage is very expensive that people sometimes become broke after getting married. We like celebrating everything in Africa, chieftaincy title, child naming, child dedication, birthday, are all avenues that African waste resources.

When I see some of my relative come back to Nigeria from the West or the US, I am humbled by their simplicity. Their phones, clothings, cars, lifestyle are modest. Africans culturally like to be flamboyant, you can attest to that by the royal apparel of our traditional rulers. But it is time we cut all these unimportant expenses and focus on investing other profitable ventures.           

[Findingnemo]

Conclusion
👉👉Let 70%- 80% of your income goes to asset. It is better to invest ones money on asset than getting liabilities that will bring no income.

👉👉Only acquire liability if the liability will add value to you, your business or improve the income made in your business.

👉👉Only acquire liability after gotten a good investment that is capable of providing enough returns for your home and the liability purchased maintenances.

First of all its is not really possible to expect someone to invest their 70% of their income, even if they invested 20 to 30% then they will attain financial freedom sooner and probably can live the life sfter retirement peacefully. So I just wanted to keep the amount to somewhat realistic which is 25%.

Better realize the difference between needs and wants so they can spend money economically.

[serjent05]

Conclusion
👉👉Let 70%- 80% of your income goes to asset. It is better to invest ones money on asset than getting liabilities that will bring no income.

👉👉Only acquire liability if the liability will add value to you, your business or improve the income made in your business.

👉👉Only acquire liability after gotten a good investment that is capable of providing enough returns for your home and the liability purchased maintenances.

First of all its is not really possible to expect someone to invest their 70% of their income, even if they invested 20 to 30% then they will attain financial freedom sooner and probably can live the life sfter retirement peacefully. So I just wanted to keep the amount to somewhat realistic which is 25%.

Better realize the difference between needs and wants so they can spend money economically.

And most of all better to know reality than illusion.  I wonder how can an average earner person survive if 70% to 80% of his income goes to assets.  People have to pay rentals, monthly bills, and personal maintenance, food, transportation etc..  For a normal employee or a minimum wage earner, it is lucky to have an excess of 20% of their monthly salary. In my place in order for me to safely invest my 70% income, I need to earn at least $5k per month which is impossible because the minimum wage in my country is only $10.15 per day taxes and miscellaneous charges haven't been deducted from that.   It is ideal to save and invest but the percentage OP is suggesting is way overkill!  

[tippytoes]

Conclusion
👉👉Let 70%- 80% of your income goes to asset. It is better to invest ones money on asset than getting liabilities that will bring no income.

👉👉Only acquire liability if the liability will add value to you, your business or improve the income made in your business.

👉👉Only acquire liability after gotten a good investment that is capable of providing enough returns for your home and the liability purchased maintenances.

First of all its is not really possible to expect someone to invest their 70% of their income, even if they invested 20 to 30% then they will attain financial freedom sooner and probably can live the life sfter retirement peacefully. So I just wanted to keep the amount to somewhat realistic which is 25%.

Better realize the difference between needs and wants so they can spend money economically.

And most of all better to know reality than illusion.  I wonder how can an average earner person survive if 70% to 80% of his income goes to assets.  People have to pay rentals, monthly bills, and personal maintenance, food, transportation etc..  For a normal employee or a minimum wage earner, it is lucky to have an excess of 20% of their monthly salary. In my place in order for me to safely invest my 70% income, I need to earn at least $5k per month which is impossible because the minimum wage in my country is only $10.15 per day taxes and miscellaneous charges haven't been deducted from that.   It is ideal to save and invest but the percentage OP is suggesting is way overkill!  

This is very true. Not all people can afford to allot even 20% of their earnings to assets especially if you are just a minimum wage earner. Even if you say you are frugal with your life, still there are basic needs that you need to pay. You would be more than happy to even spare 5% of your earnings to your savings if your wage is just an average one. Most are just living from paycheck to paycheck, so you are lucky one, if you can spare some for your savings.

[Republikcoin.com]

This is very true. Not all people can afford to allot even 20% of their earnings to assets especially if you are just a minimum wage earner. Even if you say you are frugal with your life, still there are basic needs that you need to pay. You would be more than happy to even spare 5% of your earnings to your savings if your wage is just an average one. Most are just living from paycheck to paycheck, so you are lucky one, if you can spare some for your savings.

A person will be very successful if he can be able to set aside 5% of his money from the salary he gets in an average month. Because it is something that is highly recommended and also very good to do for a comfortable life and also for having money when you need it suddenly.

I've even been doing this kind of thing for a long time and I feel the benefits when I'm sick, because the need for money when I'm sick is a little different than usual. That's why maintaining health is important in order to be able to manage finances normally and not be chaotic

[Smack That Ace]

This is the different between the rich and the poor. The rich invest in what can fetch them more money (asset) e.g buying land, investing in reputable businesses but the poor out of fashion keep buying liabilities (goods that they keep on spending their little earnings on for maintenance). If 70%- 80% of your income goes to liability then one is preparing for a poor life.

I would say the #1 difference between the rich and poor is.

The rich read books and learn as a lifestyle.

While the poor believe no good can come from either reading and learning.

Its the mentality, lifestyle and attitude that is responsible for producing results.

Although it definitely is becoming harder to reach wealth from a starting point of poverty.

The goal isn't necessarily wealth. But rather learning things that are worth knowing. Which produce an abundance of wealth, inevitably.

Not all poor people have thought that they should not be reading and learning.
But sometimes due to forced circumstances, if you are born into a rich family, and do not have to worry about eating, living and daily expenses, then you will have more time to study and read, books on how to be people, books on how to get rich...
On the contrary, if you are born into a poor family, you cannot afford to eat 3 meals a day, you have to work all day to cover daily expenses and you will not have time to read or go to school.
In my hometown, there are many poor families, and parents have to work hard all day, but they always encourage and try to send their children to school fully. Because they understand that only education can give them a chance out of poverty.