Rich Dad, Poor Dad by Robert Kiyosaki The subtitle reads 'What the rich teach their
kids about money - that the poor and middle class do not.'
If you're like me, then your parents might come from a rather poor-to-average background
and their financial plan, if they even have one, is based on the common save-now-live-once-you-retire,
blame-the-rich mindset.
So, it comes as no surprise they couldn't teach you a whole lot about making a substantial
amount of money, because they didn't know.
And they didn't know, because their parents didn't teach them.
Robert makes a great point about our education system not teaching us financial literacy
and how to manage our wealth.
We're taught, not to say, conditioned, by our parents.
And so if your parents had a rather strong opinion about money being the root of all
evil and clipping coupons all day in order to save a few dollars being a good time investment,
you are more likely to associate money and the ones making it with a negative sentiment
and limit yourself to a mediocre financial situation or even lifelong poverty.
This is part of the reason why you can have doctors, or lawyers who got all the right
degrees and certificates and still live life always depending on their next paycheck.
Robert Kiyosaki offers us 6 profound lessons that he has concluded out of 30 years of learning
from both his friend's rich dad and his biological poor dad by contrasting their views and mindsets.
"Lesson #1: The Rich Don’t Work for Money" This is the concept of Fear and Desire.
These two core emotions can prevent us from reaching financial independence.
The fear of a missing paycheck, which could result in our inability to afford our monthly
expenses.
The fear of losing money keeps many of us entrenched in the devil's cycle that is the
office cubicle.
You work a lot of hours for a certain paycheck in order to maybe reach a promotion, so that
you could work even longer hours, to receive more money, but what happens for most is,
as our salary grows, our living standards tend to adjust, thus growing our expenses.
Now, going back to your former job would feel like a huge loss, even though you'd have more
time to spend with your family, but they rarely ever see you and they've gotten used to their
new pair of sneakers, smartphones and whatever else you can now afford to spoil them with.
It's a total mess and it can keep going forever, until you're on your deathbed and your biggest
regret is that you've been working way too much.
Your biggest regret would be that you worked for money instead of having money work for
you.
This devil's cycle is what's preventing them from evaluating investments and other sources
of income and how could they even find the energy to do so, if their job drains them
of all their energy.
That's the fear part.
The desire part is just as bad, as I mentioned, our expenses give us no other choice, but
to keep at it.
We want to continue our fake Facebook and Instagram lifestyle, that makes people miserable
for not having the pretentious awesome life that we do.
We have to stay "popular" and upload photos of us eating at expensive restaurants, documenting
our beach vacations and wearing that Louis Vitton bag.
"We feel the need to compete with eachother in order to have a false sense of importance."
Because believe it or not we are not our bank account, we are not our job.
Lesson one lets us understand the importance of seeing through this nonsense, induced by
fear and desire.
It's hindering your success.
Instead of living paycheck to pacheck like a slowlaner, you want to create income sources
for yourself that don't require your presence, meaning, income sources that grow and are
profitable without you, once you've set it up.
Check out my summary on The Millionaire Fastlane by MJ DeMarco, where I clarify this.
"Lesson #2: Learning Financial Literacy" Financial Literacy equals financial independence.
You study how to manage your finances most effectively considering the differences in
cash flow for various income levels.
The rich live well off of their investments' returns.
Their stocks and bonds cover any expenses they might have.
Whereas the poor use up most of their paycheck to keep themselves from drowning.
In order to become wealthy one must work on creating profitable assets instead of working
towards a higher salary.
You realize you can't depend on your paycheck alone and use any time window you have to
work on creating assets.
"Lesson #3: Mind Your Own Business" Little wordplay here, because it's meant literally.
Let me ask you this question "What if you get fired tomorrow and the paycheck you and
your family relies on doesn't come?"
Now some of you are going to say "Oh I'm good, I know plenty of people who want me to work
for them."
And that's great, but not all of us are that connected and so having those assets in place,
that you've built minding your own business, working after hours to create more wealth
for yourself, could not only dampen, but even prevent the fall of you losing your job.
Of course, you might be the best employee in the world, but if the 48 laws of power
have taught us anything, you cannot hope for mutual loyalty from any profit-above-all businessmen,
which are quite numerous at the top.
They'll saw you off the minute they think you may interfere with their careers or the
success of their business, even if you were quote on quote doing the right thing.
"Lesson #4: The History and The Power Of Corporation" By creating a personal corporation, the rich
avoid many of the personal taxes the poor have to deal with through corporate exemption.
They can pay taxes after they've paid for the expenses of their business, whereas it's
the other way around for the regular employee.
And we'll dive deeper into this and the concept of assets and liablities within Part II.
"Lesson #5: The Rich Invent Money" Saving at the bank might seem secure, but
often the savings rates are below the rate of inflation.
So, it's better to have our money circulating, to invest it.
In order to get rich you need both financial literacy and boldness.
I get pissed off when people talk to me about the risks of entrepreneurship.
You take calculated risks.
You test and see if there's a market or an audience for your product or service.
It's not like you just order 20'000 boxes of a new product that you created with capital
you borrowed from friends and family, no one ends up buying it and you're stacking those
boxes in the cellar.
There's always the smart way of doing things.
Unfortuneately, when talking about the subject of money with most people, they don't see
that, but what else would you expect checking their bank account.
I would rather a self-made millionaire told me how to make money, than a highly opinionated,
but "very qualified" co-worker who's not only been stuck at the same job for 20 years, but
sees that as an attribute.
"Lesson #6: Work to Learn" Here's why I think lots of young people are
currently making a mistake believing the way to riches is to have an idea, crowdfund it
with the right formula, raise a lot of money from unsuspecting people and then it just
happens for them.
The thing is, it's great to get that education first, then get into a company that sees your
potential, because you are working as hard as you can and really using that time in order
to learn.
Ask questions, get into programs and language classes that are offered for free.
Some coprorations really do invest in you, if you're doing a great job.
Guess what I did in my first two years in the office, I immediately befriended everyone
and had such a great co-worker relationship with the sales managers of all departments
that they loved to answer all my questions and teach me their most valuable insights.
Two of them became my mentors, because they saw me as an asset.
Investing in me now would pay dividends with time, as I'd become a very young Junior Sales
Manager aquiring new clients that they could take the praise for.
That's the game.
I'd join them for lunch and ask them questions, not like I was interviewing them, but merely
talking as friends and occasionally I'd feed their narcissism by acknowledging their success.
I made that time count, especially when I was an intern, when they have more patience
with you.
You're in this long-term.
You might hate your job right now and work on getting out of there, if so, I congratulate
you for doing something about it, but on top of that, use that time to learn as much as
you can.
Not only do I recommend you read this book 5 times this year, chances are you've got
children, who depend on your teaching them how the world works and a big part of that
is understanding money.
I wish I would've had a father to teach me anything valuable, other than being a prime
example for how not to turn out.
So, please do yourselves and your children a favor and buy a copy of this book.
You'll be helping young, potential thought leaders develop such a strong mindset surrounding
money that they will be better off financially for their whole life.
As always thanks for watching and subscribe for my upcoming animated summaries of Think
& Grow Rich, Secrets of the Millionaire Mind and The Richest Man in Babylon.
Talk to you soon.