What You Own vs What You Owe

Imagine two people who both say, “I have money.”

One has cash in the bank, a laptop they use for work, and some savings set aside.The other has an expensive phone, designer clothes and a large credit card bill waiting to be paid.

On the surface, both look fine. But financially, they are in very different positions.

That difference comes down to what you own and what you owe.

What you own (Assets)

Assets are things that have value and belong to you.

This can be obvious things like money in your bank account, but it can also include items or investments that can help you in the future. Savings, investments, or even something that helps you earn money all count.

Some assets are easy to use or access within a year, like cash, bank balances, or short-term savings. These are useful for everyday needs or emergencies.

Other assets are meant to stay with you longer, like investments or property. You don’t usually touch these quickly, but over time, they can grow in value and support bigger goals.

What you owe (Liabilities)

Liabilities are the opposite. They are money you need to pay back.

This could be a credit card bill, a loan, or money you borrowed and haven’t returned yet. Even if you bought something valuable with borrowed money, the amount you still owe counts as a liability.

Some liabilities are short-term, like a bill due this month. Others last for years, like home loans. Either way, they represent money that will leave your pocket later.

Why this difference matters

Personal finance isn’t just about how much you earn. It’s about what stays with you after everything is paid.

If what you own is more than what you owe, you’re building financial strength.But if what you owe keeps growing faster than what you own, money starts to feel stressful, even if your lifestyle looks impressive from the outside.

Understanding this helps you make better choices, like thinking twice before buying something or prioritising saving over spending.

A simple example: the sandwich shop

Imagine a small sandwich shop.

The shop owns:

• Cash in the register

• Ingredients and supplies

• Equipment like ovens and counters

These assets are things that help it run and earn.

But the shop also owes:

• Money to suppliers

• Rent for the space

• A loan taken to start the business

These are its liabilities.

If the shop’s assets grow faster than its liabilities, the business becomes healthier. 

The same logic can be applied to anyone.The goal isn’t to never owe anything, it’s to make sure that over time, what one owns grows more than what you owe.