Each year I have to spend a number of hours on on-going training (mandated by my firm). This year I chose an on-line course about retirement (a little for learning some of this, is it not? Fortunately I seem to have done mostly the right things the last twenty years).
The training course notes that understanding wealth requires the mastering and understanding of three basic concepts : assets, income, and cash*. Income must be budgeted to make cash available. Cash must be used to acquire assets. Assets must be managed to produce more income. And so the cycle starts again.
*Cash is a very liquid asset, of course.
Unfortunately, comments the training course .. ‘Most Americans do not understand these relationships, nor how to put it to use. Most people live on economic myths and fairy tales, using depression-era concepts taken from their parents and grandparents’.