Close up of a person's hand holding a pen going over financial statements.

Assets and Liabilities Explained

At the end of 2023, Americans owed $986 billion on credit cards, surpassing prior years. With debt on the rise, assets and liabilities are playing major roles in your financial success. Let’s explore the importance of assets and liabilities, the role they play in your life and ways to level up your asset management pursuits.

Assets and Liabilities

Let’s start by revisiting the basics. What are assets and liabilities?

Asset: An asset is a financial product that adds value to your portfolio. Some examples include cash, investments and property.

Liability: A liability is a financial obligation or debt where you or your business must repay funds to someone else. Some examples of liabilities include credit card debt, student loans or a home mortgage.

Assets and liabilities work together to create your financial picture. Finding the right balance of both can be advantageous and help reach you and your family’s goals.

What is the Impact?

There are a few factors to consider when reviewing your assets and liabilities and determining which financial vehicles to pursue in the future.

Net Worth

Net worth, by definition, is your total value of assets minus liabilities or what you own compared to what you owe. Keeping tabs on this number will give you direction in your financial pursuits. Working toward a higher net worth continues to perpetuate you forward and to own more than you owe over time. This reduces your risk and responsibilities as you move toward retirement and beyond.


The concept of leaving a legacy takes your financial picture a step further by asking the question “What for?” It is important to consider why you have pursued certain ventures in life and what you want to leave behind as part of your memory. From financial legacies to personal or spiritual legacies, it is vital to have a plan in place.

Transfer Considerations

Another piece to consider in your asset and liability evaluation is transfer considerations. As you pass along your financial picture to your family, it is vital to understand how that will impact generations to come. Some liabilities or debts can be taken out of your estate, leaving your family with less while other liabilities don’t quite function the same way. Considering this as well as communicating with your family is essential for a smooth transition of your hard-earned net worth.

Ways to Level Up

Now that we have explored the basic building blocks of net worth and the impact on generations to come, let’s consider ways to level up your asset management pursuits.

  • Revisit Net Worth or Portfolio: If you already have a grasp on your net worth – great! If it has been a while, take some time to evaluate your current asset landscape this month and determine if you are happy with the number.
  • Educate Yourself: Dedicate a few minutes to learning something new about finance. From ChatGPT to online resources, give yourself a high-level overview of concepts like asset diversification or compound interest.
  • Chat with a Professional: Asking questions is always beneficial. Make the effort this month you reach out to a financial professional and get a second look at your current financial position.

Bankers Life is Here

From supporting assets to guidance through liabilities, Bankers Life Securities is here to help you reach your financial goals. Start here to learn more.