Assets vs. Liabilities

The idea

Kiyosaki’s cashflow lens asks whether something adds to or drains available cash. It is a simplified teaching model, different from formal accounting: a house can be an accounting asset even when its mortgage and upkeep create cash outflows.

How to use it

1. List the cash each item produces.
2. Subtract all related payments and upkeep.
3. Review the net cashflow, alongside value, debt, liquidity, and risk.

In practice

A rental brings in $2,000 a month and costs $1,700 to operate and finance: $300 before any omitted costs or taxes. A personal car usually creates payments without producing income.