An asset is any item that you own that increases your net worth, as opposed to a liability that decreases your net worth. Examples of assets include the money in your bank account, property like your house or your car, and personal items like your TV, fine art or appliances. Knowing what assets you have and how much they are worth helps you make better financial decisions.
Calculating Your Net Worth
Your assets are only half the equation when it comes to figuring your net worth. To figure your net worth, you must subtract the amount of your liabilities from the fair market value (not what you paid) of your assets. Using finance software, like Quicken, can help you track your assets, liabilities and net worth all in one place.
Assets Change in Value
The value of your assets isn’t fixed forever. Some assets, like your home, generally appreciate over time, which means they go up in value. Other assets, like your car or your TV, generally depreciate over time, which means they lose value. So, even though you might have paid $20,000 for your new car, it might only be worth $9,000. Investments, like stocks or mutual funds, while intended to increase in value, don’t always go up as expected.
Assets as Collateral
When you borrow larger sums of money, the lender will often want you to use your assets as collateral. This means that if you don’t pay back the money, the bank can take the assets instead. This is common on a mortgage, home equity loan or car loan. For example, when you borrow to buy a house, the bank will use the house itself as collateral and if you aren’t able to make your mortgage payments, the bank can foreclose on the home.
Insuring Your Assets
Insurance protects your assets in case of an unexpected casualty, such as a fire, car accident or home robbery. Reviewing your insurance to make sure you are adequately covered helps you avoid an unpleasant surprise if something does happen to an asset and your insurance isn’t enough to cover it. For example, if you’ve been skimping on your homeowner’s or renter’s insurance by only carrying $10,000 of coverage when your items are worth $25,000, you may have a hard time replacing everything should damage or loss occur.
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FAQs
An asset is something containing economic value and/or future benefit. An asset can often generate cash flows in the future, such as a piece of machinery, a financial security, or a patent. Personal assets may include a house, car, investments, artwork, or home goods.
What does it mean when they ask for assets? ›
Quick Answer. Financial assets are anything you own that has value attached to it. Some are material assets you can touch, like a car, while others are intangible, like a 401(k), but hold value all the same.
What is the best way to describe assets? ›
When looking at an asset definition, you'll typically find that it is something that provides a current, future, or potential economic benefit for an individual or company. An asset is, therefore, something that is owned by you or something that is owed to you.
Are assets everything you own? ›
An asset is anything you own that adds financial value, as opposed to a liability, which is money you owe. Examples of personal assets include: Your home. Other property, such as a rental house or commercial property.
How do you answer total assets? ›
Total assets are the sum of the value of all current and noncurrent assets. The total assets can be found in a financial statement called the balance sheet. In basic accounting, total assets are also equal to total liabilities and total stockholder's equity.
How do you answer what makes you an asset? ›
Learn About the Company and the Role
Try to identify the company's specific needs, and then respond by giving examples as to why your education, skills, accomplishments, and experience will make you an asset to the employer by fulfilling those needs.
How to answer asset question on FAFSA? ›
How to answer these questions. Don't include your parents' assets. Enter the current total of any cash you have, and the combined total of all your checking and savings accounts.
Do you have to answer asset questions on FAFSA? ›
The FAFSA® requires parents and students to report the value of their assets, and we're often asked here at MEFA the exact definition of assets, at least according to the FAFSA. There are three main asset questions on the FAFSA, and we've included the fine print instructions of each below.
What are my total assets? ›
A person's total assets include items or property they own that they can exchange later for money. If you work in accounting, you might also find the total assets of clients to understand their investments and sales results.
What are assets in simple words? ›
An asset is generally any useful thing or something that holds value. Most people have personal assets, like cash, savings accounts, bonds, life insurance policies, jewelry and collectibles. A person's skills and abilities can also be an asset.
An asset is anything a person or company owns that has an economic value and may provide benefits to its owner in the future, such as reduced expenses, improved sales and increased cash flow. People also can use assets as collateral to secure a loan because of their value.
What is the greatest asset of a person? ›
Your attitude is your greatest asset and can make up for gaps in your expertise, skills, and knowledge while growing in those areas. Make sure that you're intentional in keeping your attitude strong and contagious in a good way.
Is a bank account considered an asset? ›
Assets are things you own that have value. Your money in a savings or checking account is an asset. A car, home, business inventory, and land are also assets. Each program has different rules about what counts as an asset and the total value of your assets allowed to qualify for assistance.
Is a car considered an asset? ›
A car is a depreciating asset that loses value over time but retains some worth. Because you can convert a vehicle to cash, it can be defined as an asset.
What is not considered an asset? ›
Business assets include money in the bank, equipment, inventory, accounts receivable and other sums that are owed to the company. Hence, a building that has been taken on rent by the business for its use would not be regarded as an assets because company have no ownership of that building.
What is your asset interview answer? ›
Well, I can be an asset to your company by using my valuable qualities from my past job. Such as, I am a hard worker and proactive person, my communication with people is good especially with my main customers and with my co-workers. I can use also my initiative while working in a team especially on my own task.
What is an asset in simple terms? ›
Assets are things you own that you can sell for money. In accounting, an asset is any resource that a business owns or controls. It's anything that could be sold for money. The study of a balance sheet and assets and liabilities helps us to ascertain the equity value.
What is your best asset sample answer? ›
I am dedicated towards my work and able to prove myself best for the success of the organization. So, It will be an asset to your organization. I believe, I am a team player who actively contributes, values others' ideas, and communicates effectively while also being a good listener.
What is an asset quizlet? ›
An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. Balance sheet.
