For years, I have done much research on wealth creation and assets.  I have come across a many descriptions of assets and liabilities in my study of wealth.  What I have read from quite a few sources that really jumps out at me, is what people do with their money and what they view as "assets".  I have read several books that discuss these asset/liability perspectives, but it was good to get a refresher.  Here is some of what I was looking at:

• Poor people buy "stuff" things that make them feel they are living a desirable lifestyle
• Middle class people buy "liabilities" that they view as "assets" (that have mortgages and loans attached-- cash outflows), as well as branded, designer goods that make them feel they are living "upscale"
• Rich people buy or create assets that generate income (cash inflows), then usually buy more assets and if they do use financing (debt) it is to leverage their returns

Think about that for a moment . . . Where are you?  Where should/could you be?  That last one is the one that should be of the most interest to us. 

Defensive entrepreneurs have the ability to create assets that generate income and wealth.  Entrepreneurship is one of the best ways to achieve wealth because the result of entrepreneurship is supposed to be an income producing asset.  The ideal in wealth creation is creating a passive income business (more on that in future posts).

This post originally appeared on DivorcedDadFrugalDad.com (but has been modified and expanded upon here), here is the link to the original post: Wealth Creation and "Assets".

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