an asset is something that a company person or even entity such as a country owns that is expected to generate future economic benefits for a company machinery represents a good example for a person a home that was bought without alone can be considered a decent asset whereas even countries themselves possess assets like let's say heal and liabilities on the other hand represent a future obligation of paying money providing a service and so on to put it differently assets are expected to generate resources whereas liabilities will drain resources but what if Joe takes out a mortgage to buy a home is he adding an asset or a liability to his life well both under one hand his home can generate future economic benefits by going up in value producing rent income etc on the other hand though Joe has to keep making his monthly payments so until the mortgage has been paid off the liability dimension is here to stay at the end of the day whether we're talking about companies individuals or countries trying to add assets and get rid of liabilities should be one of the top wealth management principles to live by