The Assets and Liabilities Tool is a resource that, along with the Budget Tracker, helps paint your financial picture.  Use the budget tracker to track your monthly spending and the Assets and Liabilities Tool to maintain an inventory of the things you own and what you owe for those things. Assets are what you own and Liabilities are what you owe.  As an example, let’s say you just bought a car for $15k with $2k down payment, and you made a loan for $13k. The value of your car is your asset: $15k. The loan you took out to pay the car is your liability: $13k.  The value of your car decreases over time because of depreciation, but so does the value of your loan as you make monthly payments. The difference between Assets and Liabilities is called Net Worth.  Let’s take a closer look. 


In the example below, eight assets are listed which happen to fall within three categories: Home, Car, Bank Accounts. In this example, the information was last updated as of January 2017.  Some assets have an associated liability with them. If you don’t owe anything for that asset, then there won’t be a liability listed for it in the Liabilities section.  In this example, as you will see in the Liabilities section, ‘Home’, ‘Second Home’ and my ‘Car’ were purchased by taking loans against them. However, in the Asset section, I’m only interested in listing the approximate value of the asset as of the time the information was last updated.


Your liabilities include what you owe for the assets you own and what you owe for products or services you’ve purchased on credit.  There are fixed liabilities and variable liabilities.  Fixed liabilities like mortgage loans, car loans and student loans come with fixed monthly payments in most cases.  While ‘Home’ on the Asset side above has an approximate value of $400k, it has an associated mortgage loan of $192k was taken out in 2012. The balance of that loan today is $161k.  You will notice the ‘Car 2’ is listed on the Asset side but not on the ‘Liabilities’ side so we’ll assume that it’s paid in full.  Additionally, there’s no hard asset associated with student loans so they will only be listed on the ‘Asset’ side.

Your credit card payments are an example of variable liabilities.  This means that as your balance grows or shrinks so will your minimum monthly payment.  You should list all credit cards even if they have a zero balance because that will give you an idea of the credit that you can borrow against, if needed.

The Budget Tracker and its companion, The Asset & Liabilities Tool, will ensure your financial picture is complete.  Review these regularly and give every dollar a job so YOU can keep more of YOUR money!