Converting Liabilities to Assets: First, Consider the Growth Potential
Have we adopted a fragmented view of what separates a liability from an asset? I believe many sectors of industry have, which has led to inadvertent confusion within our culture. The definitions of both are commonly restricted to strictly financial terms; this is somewhat of a misnomer.
In the financial world, an asset is typically defined as something that retains or develops monetary value. Common examples include homes and land. Liabilities are labeled as anything that depreciates in value; vehicles and electronics fall within this category.
Isolating these terms to concrete definitions may lead to skewed decision-making. In this post, I’m specifically referencing decisions involving the purchase of “liabilities.”
When purchasing a “liability,” you need to ultimately consider the professional or personal value your purchase is making towards your development or your organization. Of course, cost is important, but I believe it should be secondary to considering the “growth potential” of your purchase.
- The iPhone 4 has allowed me to video chat with my parents wherever I am. It’s enhanced relationships, which is priceless.
- The iPad allows me to walk around my classroom and input student grades on-the-spot, providing increased efficiency that allows me to spend valuable time in other areas.
- I read so many more books on my Kindle than I did when I went to the bookstore. I no longer travel to the bookstore and I can leverage community rankings of books to help me find quality content.
When we can utilize our “liabilities” to streamline or remove any process from traveling from “point a” to “point b,” we can increase our time spent in areas we’re passionate about. That’s when liabilities are converted to assets.
When viewed from this “growth potential” paradigm, liabilities carry more abstract characteristics. The monetary value of the device will assuredly depreciate. However, an iPad may be an asset to the individual who fully utilizes it’s capabilities for personal and professional development while providing little gain for the individual who utilizes it exclusively for entertainment. Undoubtedly, we all like entertainment and appreciate our “down time.” I’m just suggesting that the entertainment aspect be a secondary consideration to the primary concern of how your purchase will develop you as a person.
The next time you catch yourself considering the purchase of the latest iPad, iPhone, and other new gear, fully define your intents for using the new features of the device before determining whether it will be a liability. Doing so will help you gauge the “growth potential” of your purchase and make price a mitigating factor. Effective use – whether it be in the classroom, office, or home – may serve as a catalyst for obtaining future opportunities.
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