Personal Finance in WoW: Rich Dad Poor Dad Edition

While doing some research on personal finance in real life, I have come across many articles and books that deal with the matter. It is like when a player goes out and reads the blogs, forums, and gold making guides to improve their income of gold. We had come across a well known book called Rich Dad Poor Dad, which talks about financial independence and various aspects of personal finance. Although we are not here to discuss the validity of it, review the book, or even promote it, there is an aspect of it that can relate to being rich in the World of Warcraft. A commenter on the personal finance blog I read regularly, The Simple Dollar, writes:

I’ve read the book twice and my favorite part is how he explains that wealthy people buy assets while the poor and middle class buy liabilities. Its a tad oversimplified but it explains so much about the outcomes of each group and makes for a strong motivation to change one’s habits.

Before we explain, lets talk about the difference between assets and liabilities. Assets are things like the amount of gold you have, various materials, professions that you use to bring in gold. Liabilities are things that do not contribute to that income like vanity items, extra mounts outside of that first one, and gear. Now ask yourself if you are broke/poor because you have been spending your gold on liabilities outside of the basics for survival. That is, you are buying mini-pets, mounts, vanity items, achievements, ect. Now to put things into perspective, that gold-capped player you see riding their 16,000g mammoth around have obviously spent gold on something that is considered a liability. However what we don’t always see is that through their research, patience, work, and investing their gold on assets, they have the wealth to pay for such things.

A while back we wrote a very simple article on Income vs. Spending. Where if you want to have gold in the bank, you should spend less than you earn. This difference or the gap between the two is called “Savings and Capital”. So if you are on your quest towards the gold-cap or just wanting to make some extra gold, figure out how large this gap is and if you are using it to invest in materials and items that will generate income or more assets. Taking a look back at our own spending, even though we didn’t keep track of every single piece of gold, we realized we spent about a quarter of a million gold(250,000g) on various vanity items or what is considered liabilities. These numbers were also in the Wrath of the Lich King expansion only and doesn’t include certain mandatory expenses like training skills. However our income also exceeded these expenses as well, but this also explains why we ourselves have not hit the famous gold cap number. While the gold cap has never been much of a goal of ours since we were ok with just having enough to pay for whatever we wanted, even though the next expansion. The concept of re-investing your profits in order to make more profit is really nothing new to gold-capped players, though some have never though of it that way like those who have their Jewelcrafting/Disenchanting or Inscription business on auto-pilot.

So now we are asking what our readers think about this topic and how it has related to their gold making strategies. What are your Assets and Liabilities in WoW?