Dear readers,

Are your friends constantly complaining about living from paycheck to paycheck every month?

If you ask me, I would rather look at what I’m spending on every month. What I find spending on are income generating assets. Some define income generating assets plainly as assets that generates income for the owner. For me, I would further categorise income generating assets as direct income generating assets and indirect income generating assets.

The aim of identifying income generating assets in this post is to focus on purchasing the right things and avoid spending on unnecessary expenses. I’ll discuss about identifying income generating assets to create multiple streams of income in another post in future.

Let’s look at direct income generating assets.

I would consider a property with decent rental yields to be a direct income generating asset for an owner who rents it out. This makes the property an instrument that contributes to the owner’s net worth. In fact, a rented property also acts as a passive income.

So what makes an indirect income generating asset?

Take a mobile phone for example. I have friends who change their mobile phones every other month even though the gadgets are working perfectly fine. So is a mobile phone an income generating asset? For some, probably yes. Others, maybe not. Let’s look at it from a salesperson’s perspective. For a salesperson who is constantly on the move, a mobile phone is the essential item that keeps a salesperson in contact with the company and his colleagues. With a mobile phone that breaks down every now and then, it would indirectly affect the salesperson’s income generating abiliies. Hence I determine the mobile to be an indirect income generating asset for a salesperson, and it is worth spending money on a quality mobile phone.

That being said, it doesn’t mean a salesperson should change a new mobile phone every other month because buying a new mobile phone to replace a working model may not increase the salesperson’s income generating abilities.

So what’s your income generating asset?

Are you spending your money on the right thing?

[tags]income generating asset, passive income[/tags]