The only difference between a rich person and poor person is how they use their time. – Robert Kiyosaki
The secret behind the rich people getting richer. What Rich Dads tell their children that poor people don’t and how billionaires spend their money.
Rich people handle their money differently than poor people. The reasons why rich people keep getting richer are explained in this article. These lessons are taken from the book – Rich Dad Poor Dad.
WILF (What I learned from) – Rich Dad Poor Dad By Robert T Kiyosaki
About The Book
The book is divided into 10 chapters through which the author has tried to explain 6 lessons. This book is about “what the rich teach their kids about money that the poor and middle class do not.” It’s not so much a manual on how to get rich, but more of a book on the underlying worldview of the wealthy.
Robert T. Kiyosaki had two fatherly figures while growing up. His biological father is highly educated but still struggled financially. His friend’s father who was an eighth-grade drop-out that became a self-made multi-millionaire. Both of them had contrasting ideas related to money.
The two men respected cash in a different way, which made Robert think and contemplate the diverse things both the fathers instructed. In doing as such, he needed to pick which way to take after, instead of just aimlessly acknowledging what he realized. He connected these standards throughout his life, and, similar to his rich father, flourished financially and retired at 47.
This book can completely change your perspective regarding wealth. The narration is straightforward and enlightening. It sounded good to me and I could relate to it. It is filled with examples and applications.
I am sure many people will be able to relate to the story on the part where we were being brought up the conventional way to become employees and not employers. If you rely on earning a wage or salary to put money in your pocket, you will be forever caught up in the vicious cycle of needing money, earning money and spending money which he calls the rate race.
This book focuses on promoting financial literacy. It will help you understand the difference between an asset and a liability. It will make you understand the importance of buying things which put money in your pocket. But since things like “If you’re gonna go broke, go broke big” and college is for suckers kind of ideas are mentioned in the book which disregard the idea of the importance of education and stability in life, I am not in complete favor of this book.
But the best thing about this book is that it will make you think about your finances and definitely motivate you towards the idea of financial freedom. It fails to provide personal strategies but it will help you understand that it’s not about how much money you make but how much money you keep.
WILFThis Rating – ★★★☆☆
After reading this book, I was able to formulate these 6 principles about money that the rich people follow but the poor people ignore.
Lesson #1 – The Rich Don’t Work for Money
- You shouldn’t get stuck in an endless cycle of fear (fear of being without money compels them to work for it) and greed (greed makes them spend what they work for).
- Even rich people lose money but they learn how to limit their losses, and turn those losses into opportunities.
- “The poor and middle-class work for money. The rich have money work for them.”
- Invest time in creating assets that generate money.
Lesson #2 – The Rich Are Financially Literate
- Study accounting, investing, economics, and law as it will allow you to recognize opportunities and methods to successfully build wealth.
- You should know the difference between an asset and a liability, and buy assets.
- Assets create income and liabilities to create expenses.
- Assets move cash into your pocket and liabilities move cash out.
- Making money is not nearly as important as how you spend what you make.
- Wealth is not net worth but it is the number of days you could survive if you stopped working today.
Lesson #3 – The Rich Mind Their Own Business
- Rather than putting your time and energy in someone else’s business, one should try creating a business for themselves.
- You can keep your day job and mind your own business by putting your money in assets – businesses (as long as you don’t have to be around for them to make money), stocks, bonds, mutual funds, rental properties, notes, intellectual property royalties, etc.
- When you want to buy liability, first buy an asset that generates enough cash to cover the liability
Lesson #4 – The Rich Invest In Tax Saving Assets
- It is important to understand the concepts of financial literacy.
- You should invest in tax saving investments such as Tax Saving Mutual Funds.
- You should learn about accounting and taxes.
- The poor earn, pay taxes, then spend whereas the rich earn, spend, then pay taxes.
Lesson #5 – The Rich Invent Money
- Rich people invent money by developing their financial intelligence and harnessing the power of their brain to create assets.
- Don’t rely on traditional investments and use your creativity in the field of investments also as it will help you generate money from your ideas.
- Putting things in your asset column should be your first priority, before what your employer, government, and bank want.
Lesson #6 – The Rich Work to Learn But The Poor Work for Money
- Don’t invest in packaged investments.
- The rich create investments by assembling a deal themselves – finding an opportunity, raising money, and organizing people.
- Take a job only for the skills it will teach you.
- Never take a job for the money it pays you.
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