Do you want to become rich? What is the difference between the rich and the poor? Watch this video to find out! Rich Dad Poor Dad is a book written by Robert T Kiyosaki, that tells you what the rich teach their kids about money – that the poor and middle class do not.
The book tells about 2 dads, rich dad and a poor dad. The poor dad was highly educated with a Ph.D., while the rich dad didn’t even finish the eighth grade. They both were successful and worked hard. They both have substantial incomes, one always struggled financially, while the other became one of the richest in Hawaii. Having two dads allowed Robert to choose whose advice to follow. You can become wealthy by using these principles found in this book.
Principles to become rich By Robert T. Kiyosaki’s RICH DAD POOR DAD
Principle #1: The rich don’t work for money Here is Person A. He works very hard nine to five and can’t wait to have a 3 week holiday every year. When he gets paid he goes to buy a big house and a brand new car. Then he repeats that for 40 years and wonders why he doesn’t have any money Here is Person B. He also works nine to five…wait a second didn’t I just say that the rich people don’t work for money?
Yes, the rich also work for money, but the rich people don’t spend it on vacations and brand new cars… at least immediately. Rich people buy assets, poor people buy liabilities that they think are assets. The difference between an asset and a liability is, that an asset puts money into your pocket, while a liability takes money out of your pocket.
Rich people build their asset column, and then later on money works for them, and they can stop working for money. Rich people also buy liabilities, but only with the money they make with the assets. Most people are controlled by two emotions, fear and greed. Because of fear many people can’t get out of the rat race, they work 9-5 because the job gives them security.
Principle #2: Why teach financial literacy? Getting rich is not about how much money you make, it’s about how much money you can keep. To become rich, you must know the difference between assets and liabilities, how taxes work, and so on. When you are financially educated, you are prepared and flexible for market changes. Winning a lottery makes you rich quickly, but having no financial intelligence, makes you lose that money quick too.
Principle #3: Mind your own business “The rich focus on their assets while everyone else focuses on their income statements” Too many people spend their lives minding other people’s businesses because they work their whole lives for someone else. Rich people’s business is around building their asset column, so that they don’t have to work their whole life for somebody else.
Principle #4: The history of taxes and the power of corporations Taxes were made popular to masses by saying that taxes punish the rich, while in fact, taxes punish the middle class. Why is this? Well, because of the power of corporations. While the middle class works 4-5 months a year just for taxes, the rich use corporations to minimize their taxes. To do this you must train your financial I.Q., which means accounting, investing, understanding markets, and the law. To put it short, rich people with corporations earn, spend, and then pay the taxes for what is left, while the employees earn, pay taxes, and then spend with what is left.
Principle #5: The rich invent money You don’t have to be smart to become rich, you have to be bold. By having the courage to take more risks, you tend to make more money too. The rich people look for opportunities to make money, and when they find one, they dare to act. This way they can turn a small amount of money to a large amount of money.
Principle #6: Work to learn, don’t work for money In school and workplace, the popular opinion is to specialize in something. The rich dad’s suggestion was different, “you want to know a little about a lot”. Most people choose job security over learning. “Job is an acronym for “just over broke”.” If you want to become wealthy, work to learn new skills, not for money. This will make you more money in the long run. The book says that the most important skills are sales & marketing. It is also important to learn to communicate with people
Principle #7: Overcoming obstacles The book mentions five main reasons while financially literate people may not become rich, which are fear, cynicism, laziness, bad habits, and arrogance.
So how can you overcome them?
Fear:- Winning follows losing. Remember when you tried to learn to ride a bike? You failed a lot of times, but once you learned it, it is easy. So don’t be afraid to lose. Some people are so afraid of losing, that they don’t even try.
Cynicism:- How many times have your friends and family said that you can’t do something? Or it is not possible? Or why even try? All of us also have self-doubt that we have to overcome
Laziness:- A little greed is a cure to laziness. Rather than saying “I can’t afford it” say “How can I afford it”, this makes your brain look for solutions. When you just say “I can’t afford it” your brain will just accept that, and you will continue being lazy
Bad Habits:- Our lives are a reflection of our habits. To become successful, we must develop successful habits. For example, always pay yourself first, and stop watching television for 5 hours a day.
Arrogance:- When you think that what you don’t know is not important, you are going to lose money. Many people use arrogance to hide their ignorance. You should start educating yourself, to become less ignorant.
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The book Rich Dad Poor Dad also has 10 steps on how to get started
Number one. Find a reason greater than reality Have a strong reason why you want to become rich? What do you want and what do you don’t want in life?
Number two. Make daily choices play attention to your daily choices, like spending habits. Should you buy a book to educate yourself, or a video game?
Number Three. Choose friends carefully Associate with people that inspire and who you can learn from.
Number four. Master a formula and then learn a new one master one formula, and once you have done that move quickly to a new formula for making money.
Number five. Always pay yourself first. Be self-discipline and pay yourself first. This also motivates you to make more money, when you pay yourself first, you have to have money to pay the bills later..
Number six. Pay your brokers well information makes you money, so pay your brokers well.
Number seven. Be an Indian giver Invest on investments that give you something good, like land for free
Number eight. Use assets to buy luxuries mentioned earlier, rich people buy assets first, and then they buy liabilities with the money they get from the assets.
Number nine. Choose heroes Choosing heroes like Warren Buffett inspire you, and make things look possible. If they can do it, so can you.
Number ten. Teach and you shall receive. If you want something, give it first, and it will come back in buckets.
The ending of the book also has some more to-dos, but to put it, shortstop, doing what you are doing now, and look for new ideas.
Rich Dad, Poor Dad is an extraordinary book, in the literal sense. I cannot fully express how much this book transformed my vision of money and most especially my perception of wealth.
My advice is that if you need to start your financial education with one book, begin with Rich Dad, Poor Dad and I guarantee you that you will not regret it. And you should not make a mistake.
The objective of Kiyosaki is to coach you and to motivate you to allow you to take the path that leads to financial freedom. Not to offer you any ready-made answers.
So read the book Rich Dad, Poor Dad and set yourself objectives and also take the plunge!, Most importantly, never lose sight of the fact that wealth is first and foremost an extraordinary life experience. Have a good trip!
When you find what you want to do, TAKE ACTION! Thank you for reading my article. Leave a comment down below what you think, and if you have any suggestions.
Click here if you want to see how you can start building your asset column with just a couple of dollars. If you are interested in achieving financial freedom