Rich Dad Poor Dad
It’s a self finance book written by Robert Kiyosaki, an America businessman, investor, best selling author and motivational speaker.
The main reason that over 90 percent of people struggles financially is because they play not to lose, They don’t play to win
Rich Dad And Poor dad is a self finance book and our favourite finance book of all time. Over 32 millions copies of this book has been sold. This book is liked by new generation. This book is totally mind changing and is considered best personal finance book.
This book is about the life of Robert Kiyosaki, how he grew up with two fathers, “one rich and other one poor.” Both of his fathers worked hard all their life, were successful in their respective career, and earned substantial incomes.
However, one of them always struggled financially and other one went to become one of the richest man in Hawaii. Leaving behind great wealth and empire for his son, Mike.
One dad would think money is the root of all evil and other one would think lack of money is the root of all evil. Poor dad was the biological father of Robert and believe in studying hard, getting in college and get a safe job in a big company. Whereas rich dad would believe in learning, and using money to make more money instead of working hard.
Rich dad told him that when we say “I can’t afford it” our brain stop working, but by asking the question how can I afford it our brain is put to work to figure out all possible ways. Saying I can’t afford it, is a sign of laziness.
Robert noticed, “Rich dad had a habit of exercising his brain by thinking when it comes to money-matter, while the poor dad had a habit of putting his brain to sleep.” Proper physical exercise increases chances for health and proper mental exercise increases chances for wealth, laziness decreases both health and wealth.
One dad recommended to study hard so you can find a good company to work for, other dad recommended study hard so you can find a good company to buy. After listening both the dad for years finally he decided to follow the rich dad’s advice.
He also cursed our school system all well, saying society says’ “ go to school, study hard, and get a good job, isn’t it what society considers as success?, but being in this system nobody can be financially free, And what is the point of being successful when we are not financially free and can’t stop working for money. This education system teaches us to work for money instead of have money to work for us. He called education system as trap that is unseen to most of us.
Many people work very hard but they never seem to earn enough, they struggle financially and stay in the rat race for all their life
Luckily, he also offers a way out. A way to get ahead. The fundamental trouble with working for money is that a job is a short term solution to a long term problem. People believe that if they get that raise, or get a new job they will finally have enough. However, if you do not know how money works, you can never have enough. Money alone will not solve anything, it will even get most people into more debt.
Want to know what are the secrets to achieve financial freedom? Keep reading,
Acquiring the assets not liability
Sounds easy? Huh, it may sound easy but in reality it’s hard, the problem is most people don’t know difference between assets and liabilities. They think of liabilities as assets, keep acquiring them thinking they are acquire assets but in reality they are acquiring liabilities, and getting in debt. For example when one take loan for a car we keep paying it for years and the value of car actually get depreciated year by year. But investing the same amount for a plot will give you a positive return. Than we should not buy car? No we should buy the cheapest, non-impacting liability.
“Assets are something that puts money into our pocket and liabilities are something that takes money out of our pocket”.
The only way to become financially independent is to acquiring income generating assets which will pay for our expenses and keep generating money all our life. But most of people rather buy liabilities and stay in debt. Acquiring a home our society considers as an assets but in reality buying a home is too a liability if it is bought on mortgage, because it will keep taking money out of our pocket for long time. The game is simple, acquire income generating assets first, assets will generate the money and soon we will have enough money to buy a home.
How owning a house takes money out of our pocket
- People work all their life paying for the house they never own if it’s bought on mortgage.
- Despite a tax deduction for interest on mortgage payments, all expenses are paid with after-tax.
- Value of house not always go up, sometimes the value of house can get reduced as well, in this case loss will have to be bear.
For those who think of CAR as an asset, a car has never been an asset whether it is bought in cash or on credit unless it makes you money. Buying a car keep taking money out of our pocket and some years later we realises that it worth its worth is not even half of what we bought it for, the value of it get diminished by 10 to 15 percent as soon as it gets out of showroom.
Then what kind of assets shall we acquire?
- Stock, bonds and mutual funds
- Royalties from intellectual property such as music, scripts, and books
- Income generating real estate
Business- Business doesn’t need our presence, we own it but it is run by other people for us. It keeps making money for us even in our absence. The bigger our business gets the more money it makes for us. It’s easy to save taxes as well in businesses.
Stock, bonds, and mutual funds- Knowledge is the unbeatable power in today’s world. The more n more we know about the money making system the easier it becomes for us to make money. Hence acquiring knowledge about how to invest money in stock, bonds, and mutual funds can help one to use money to make more money.
Royalties from intellectual properties- it is a best form of acquiring or creating income generating assets, these assets are risk free and all It takes is one’s effort over money. If one writes a book and his book becomes best selling, he will keep getting money all his life as royalty as long as his books are being bought, same goes with music and scripts.
Income generating real estate- Investing money in real estate can help you make money if you understand the game. Real estate investment are considered huge return giving, buy a house for less money, get it furnished, hold it for some time, sell it for more money once you find buyer. Real estate property can be rent out as well, before acquiring property to rent out do some calculation like the money you get from rent is enough to pay your mortgage and other expenses. Understanding rules of the game is must to make money in real estate.
From the above discussion the importance of acquiring assets has been cleared, If you want to become rich, financially independent, and free from pay-cheque, first acquire the assets and buy the luxury last. Acquiring income generating assets will create a cash flow that will keep putting money into your pocket. Don’t buy luxury unless assets start to generate enough income to cover all of your expenses.
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