Rich dad, Poor dad – Learn before you invest your money

Invest your money wisely

So, you’ve been saving your money all this while and now you are planning to invest it? Well, investing your money can be one of the most effective way to help you build wealth in the long run. Let’s learn from what Mr. Robert Kiyosaki is saying about investing.

 “Rich Dad Poor Dad” by Robert Kiyosaki is one of the top-selling books in the world. The book focuses on the importance of financial independence and emphasizes the importance of building wealth through investments

Be a Financial Literate

Invest your money wisely! Most schools do not teach about financial literacy. Usually kids learn from their parents or grandparents about it to have a foundation in finances. Robert’s rich dad told him, “if you want to be rich you need to be financial literate.” Lack of financial education creates trouble for people in understanding how to spend their money and differentiating between assets and liabilities.

Many believe it is usually the parents’ job to teach their children about how to manage money and where to invest it. Parents need to teach their children that they won’t get everything just because they want it, they need to work to get whatever they want. There is a process they need to follow. They need to work hard, be frugal and learn how to save.

“It’s not about how much money you make, but how much money you keep.”

“Intelligence solves problems and produces money, but money without intelligence is soon gone.”

–   Robert Kiyosaki

Paddle Your Own Canoe (Mind your own business)

Your job and your business is different from each other. Don’t rely on your job to give you financial stability. But you can focus on your business to help you build assets. You can invest your money in something rather than spending it on materialistic things. You can maintain a financial budget to help you with maintaining low debts and accumulate assets such as stocks and mutual funds to help generate money.

“Financial struggle is often directly result of people working all their life for someone else”, says Mr. Kiyosaki. Majority of the people have nothing left at the end of their working days. Mr. Kiyosaki rich dad always used to say, “Acquire assets and use them to purchase income generating real assets.” In addition, the rich also understand that real estate is one of the best ways to generate income.

Pay Yourself First

One of the significant difference between Rich Dad and Poor Dad was that Poor Dad would get his monthly pay check, take care of the bills, and utilize the rest of. However, Rich Dad would pay himself first, regardless of whether his bills exceeded the remaining amount.

Pay yourself first. Each month, first invest a certain amount of money into income generating assets before you pay your bills. What if you come up short? Use this pressure to pay to inspire you to come up with innovative ways to get enough money to pay the bills before the bill collector comes knocking at your door. This is a difficult, but very important principle. However, it does not mean you should be irresponsible. Always pay your bills. Just pay yourself first, not last. If you pay yourself last, you would feel no pressure, but you would probably not come up with new sources of income either.

The whole point in the end is to motivate yourself to find creative ideas that may lead to some business ideas or other income generating ideas.

Overcoming Obstacles

The primary difference between rich and poor is how they manage their mindsets like fear.

Fear: For many people, the fear of losing money is so much so that they play it safe, take no chances and live a balanced life. The poor might not have lost anything on their investment, but they are not getting rich either. On the other hand, the rich may lose some investments along the way. But it’s about managing those risks, and consider these failures as learning for success.

There is a big difference between hating to lose and being afraid to lose money. Most play it safe by being afraid of losing. They don’t play to win. And it is not always the balanced one who gets far. In fact, they never do. All rich people were unbalanced but focused.

Self-doubt: More often than not, there will be some kind of self-doubt and negativity forming in the mind. This can potentially stop you from achieving more. So, change the system. The problem is not with external parties, it is with you. Surround yourself with positivity and learn from others who are successful.

Overcoming limiting belief: The recipe is to have a “little greed”. Not a lot of it, but a little. “I can’t afford” shuts down the brain. “How can I afford” opens up a world of possibilities and opportunities by simulate your thoughts to push the boundaries.

Overcoming bad habits: Our lives are a reflection of our habits even more than education. One habit is to “Pay yourself first, and pay others later”. Do that every single month. You will be motivated to pay others even when you experience shortages as you will find ways to do it.

Overcoming arrogance: Usually arrogance is a result of ignorance. In the money industry, most people don’t know what they are talking about. This can lead to arrogance, in which we start to treat things we don’t know as unimportant, thus hindering progress. If you feel you are ignorant, go out there to learn and improve.

Taxes Punish Those Who Produce and Reward Those Who Don’t Produce

Taxes began when individuals were made to believe that it was to punish the rich. Truly, poor people and working class, the very individuals who acknowledged and decided in favor of it, were the ones burdened.  “Once government got a taste of money, the appetite grew,” said rich dad.

Rich dad believed in not paying too much tax (legally and not evading). He believed in starting a company so that he can pay tax after spending on the company expenses which will reduce the tax. For example, individuals get a salary and they pay the tax upfront before they can spend, but it doesn’t flow the same way for companies. For companies, they spend on expenses first and then they pay tax on whatever is left. You can cover things on company expenses like parties, employees’ salaries and more importantly expense on buying assets, and that is one of the secrets the rich pay taxes a lot lesser.

Conclusion

If you want to take a single idea from the book, that will be this one. Whenever you feel you are short or in need of something, give what you want first and it will come back to you in abundance. Give selflessly. Selflessly is the keyword here. This is true for money, a smile, a love, or friendship. It is counterintuitive but true. Giving is usually not the first thing a person would do, but it works. In the case of money, love, happiness, sales, and contracts, all one needs to remember is to give first. Teach and you shall receive back. You learn more by teaching others. New ideas and connections start coming in.

 

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