“Schools focus on scholastic and professional skills, but not on financial skills.” - Robert T. Kiyosaki
The following article comprises of my notes and takeouts from Rich Dad, Poor Dad; a book written by Robert T.Kiyosaki that aims to teach people how to escape the corporate trap and find financial freedom by becoming independent of a salary. The main point of this article is to start saving early by spending less than what you make and investing what’s left on income producing assets. Under no means does this article aims to sell an easy path to financial freedom or richness but instead, provides different tips that everyone can apply to improve their financial situation and get closer to achieving an ultimate financial freedom from a salary.
The quote that opens this article by Robert T. Kiyosaki, makes reference to the financial illiteracy presented among many, even after they complete undergraduate and/or graduate education. Our current school system does not teach people about personal finance. Through his book, he emphasizes on the importance of always having fun when learning the vocabulary of investing and building your asset column. I found this important because you must always have fun with it. Sometimes you will win and sometimes you’ll learn. But have fun because if not, you will end up quitting. As a matter of fact, most people never win because they are afraid of losing.
Lesson 1: Don’t Work For Money
“The poor and the middle class work for money. The rich have money work for them”
You must accumulate income producing assets through your life. If you want to be rich buy income producing assets, do not buy liabilities.
Opportunities come and go, you must be able to make quick decisions. Do not involve your emotions because you will always have emotions of fear and greed. By not letting your emotions control your thinking; you will be able to delay your reactions and think more rationally.
Lesson 2: Learn Financial Literacy
“Intelligence solves problems and produces money. Money without financial intelligence is money soon gone”
Your financial IQ is really important if accumulating wealth is one of your goals in life. You must learn about accounting, investing, law and have an understanding of the markets.
Its not about how much money you make but how much money you keep. Wealth is a person’s ability to survive if you stopped working today.
Lesson 3: Mind Your Own Business
“The rich focus on their asset columns while everyone else focuses on their income statements”
You must differentiate between your profession and your business. The first, has to do with your vocation and is most likely related to what you studied in university. The second, is going to be your source of income.
You must build a portfolio of assets that you love because otherwise you won’t take care of them. Such income producing assets are anything that has value, produces income or appreciates. It consists of (but is not restricted to) the following: businesses that do not require your presence, stocks, bonds, income generating real estate (not your house), notes and royalties from intellectual property.
Lesson 4: Taxes & Power of Corporations
Use a corporation to protect yourself and pay lower taxes.
Lesson 5: Invent money
“Often in the real world, it’s not the smart who get ahead, but the bold.”
In today’s economy, wealth is in information and the person who has the most timely information owns the wealth.
Be an investor who creates money by learning to put the different pieces of a business opportunity together. This consists of three major steps: find an opportunity that other missed; raise money and organize people.
Lesson 6: Work to learn - Don’t work for money
“You want to know a little about a lot”
Today’s education has a great degree of focus on specialization. It is recommendable to learn a little bit of everything because this will allow you to skip the corporate rat trap and become knowledgable about the different areas that encompass a business.
It is highly recommendable for young people to seek work in which they will learn the most as appose to earning the most.
The different ideas on this post are taken from Rich Dad Poor Dad written by Robert T. Kiyosaki. I recommend that you purchase the book if you have enjoyed this article because he really has a point on financial freedom. You can learn more about him: http://www.richdad.com/