What are financial assets?

A financial asset is like a toy that can earn you more toys or even candies, without you having to do extra chores.

Imagine you have a piggy bank full of coins. Each coin is a financial asset because it holds value and can be used later to buy something fun, like ice cream or a new game. Now think about when you trade your old toy for a newer one at the store, that’s also a kind of financial asset, because you’re getting something valuable in return.

Financial assets are things you own that have value and can be turned into cash or other useful items. They can be as simple as money in your pocket, like the coins in your piggy bank, or something more complex, like a certificate that says you’ll get 10 candies next week.

When you save up your allowance to buy a bigger toy, you're using financial assets, your saved money is working for you, just like how a piggy bank holds your coins until you need them.