Robert Kiyosaki is worth a hundred million dollars. He can spend a million dollars a year for the next 100 years.
How long can you survive without your paycheck?
We measure wealth in terms of your free time and not how much money you’ve in the bank.
For example, if your expenses are 104, 567 dollars a year and you’ve got an equal amount in savings, you only have one year’s worth of time.
How then do we afford ourselves a rich life and the freedom money can buy?
Robert will teach us what he learned from his rich dad.
1. Invest In Financial Education
The rich keep getting richer and the poor, poorer. Financial education is the difference maker.
At the tender age of 11, Robert and his friend Mike had a remarkable opportunity to learn from Mike’s dad how to get rich.
In perspective, the school teaches us calculus, geometric progression, and complex analysis. When in reality an Excel spreadsheet is what you make use of most of the time.
Well, at least for me.
What’s even worse, no one teaches us about money, despite most things having a price tag.
And here is where your wealth creation journey begins.
Educate yourself about money. As you learn, your awareness will improve, helping you make better financial decisions.
Understand how every transaction wholly affects your life.
That rent isn’t just another payment to make.
It’s a piece of your life you’re trading in.
For example, if you earn $20 per hour and your rent payment is two hundred dollars, you’re trading in ten hours of your life that month.
2. Watch Your Money Language.
Robert learned how incorporating money language into our daily lives can improve our chances of succeeding.
Is it that simple?
Familiarize yourself with investing and business jargon, for that’s where you want your life to end up.
For example, instead of saying: I can’t afford it, you ask how can I afford it?
A simple change in language, but opens your mind to possibility-thinking.
Buy books, tapes, and cassettes, and listen to audiobooks to improve your money vocabulary.
And keep reading this blog for your continued financial education.
3. Assets vs Liabilities
Is your car an asset?
It depends on who you’re asking. To your banker, yes. To you, no. that begs the question; what makes the difference?
An asset puts money into your pockets. A liability takes money out of your pockets. The rich buy assets, while the poor and the middle-class buy liabilities in the name of assets.
Back to the car example. You’ll have to pay for gas, insurance, and maintenance, hence bleeding money out of your pockets.
For the insurance company, it’s an asset because, for every policy you pay, they receive money in their pockets.
The good news is you have got a choice: to either buy Apple stock (an asset) or get their latest iPhone x (a liability).
By buying their stock, you’re growing your asset column as you own part of the company and by getting iPhone x, you are acquiring a liability.
Is your home an asset or a liability? Let us know in the comments.
4. Invest Your Income
In the infamous words of warren buffet: If you don’t find a way to make money while you sleep, you’ll work until you die. The rich have their money working hard for them. They invest in cash-flowing real estate, stocks and bonds, and mutual funds and earn royalties from their creations.
Money invested labors in diligence, without complaining or calling in sick.
5. Learn to Read a Financial statement
To truly be rich, become a serious student of money and how it works. Learn how to read a financial statement and how transactions affect your income statement.
The end goal is to have more income expenses and more assets than liabilities.
Here is how it should look. Your income goes into assets, which generate more income.
And this is what a statement for the poor looks like. Income spends on liabilities, which leads to more spending and financial troubles.
6. Work for Experience and Knowledge
When getting started, be ready to work for little or no pay. Try, fail. fail even harder and repeat until you succeed. You can fail eight times, but you only need to succeed once. By all means, try. Remember, action is your loyal friend.
7. If You’re Digging Your Own Grave, Stop!
At the time of finding this post, you’re probably buried in heaps of debt and in financial trouble.
Pause for a moment and diagnose the root cause of your financial troubles. You may have some bad habits to kick out, such as gambling or getting rid of bad debt.
After knowing the areas you need to work on in order to steer you in the right direction, get started on a new trajectory.
As Robert would put it: if you’re digging your own grave, then stop digging.
8. Take Control of Fear and Greed in Your Life.
Human decisions are driven by two emotions: fear and greed.
Fear of not being able to meet basic needs keeps people trapped in their jobs.
And with every raise, they inflate their lifestyle to compensate for the fear of missing out on their peers.
Greed, on the other side, drives us to take risks for the promise of a better outcome.
For example, the potential of becoming a millionaire drives us into starting a business or buying a lottery ticket. You know which path you should take.
We need to use the two emotions to our advantage and build assets that will buy our freedom instead of chickening out when faced with uncertainties or adversity.
9. See Yourself, The Person You Want to Be
Who you become is more important than the result you want.
For example, making a million dollars is a worthy ambition. But the beauty doesn’t lie in the amount. It lies in the person you must become to achieve that feat.
For example, such a person would have a certain code of contact, habits that keep him in check, and routines and rituals that propelled him to such heights.
Develop such habits and act like the person you’d want to become.
10. Pay Yourself First
What is your payday routine?
IRS gets its cut. You pay the landlord, the insurance company, credit card companies, Sallie Mae, the greengrocer, and the barber.
Who then pays you?
A part of your income should go straight into your assets column. That’s the way you’ll be able to buy your freedom.
The amount doesn’t matter, whether you do it or don’t is what matters.
Understand that every financial decision you make has an opportunity cost: And make the best possible choice, paying yourself before everyone else.
11. Mind Your Own Business
Start your own business to catapult you on your wealth-creation journey. Differentiate your career from your business.
The ideal business should make use of other people's time and money. It shouldn’t be a second job and should have a positive cash flow (read making you money).
12. Surround Yourself With People Better Than You.
The people you surround yourself with will determine how far you’ll go and how much you can achieve.
Be with individuals smarter than you. They’ll push you to the limits and make you a better person in your craft.
Negative people can have the opposite effect to a matching or even a greater degree.
Avoid naysayers, gossipers, and cynical people. They have a problem with every solution.
13. It’s Better to Give Than to Receive
As the good book says; It’s better to give than to receive and give in order to receive. Aim at affecting other people’s lives and changing your life, too.
For example, you can teach in your area of expertise, then monetize it. You give out knowledge. You receive the dollar. Don’t recklessly dish out money, or you’ll run broke.
14. Invest in Your Brain, The True Asset
Work on yourself.
It is very easy to get lost in a world where everyone wants our attention. You end up neglecting the most valuable part of the equation; YOU.
Your brain is the only true asset, and you need it firing on all cylinders. Mind what you let it consume.
As the old cliché says, garbage in, garbage out.
Your mind will help you navigate the landmines of the financial world and in converting liabilities into assets.
Therefore, take good care of it and feed it with a healthy mental diet.
15. Study Hard to Find an Excellent Company to Buy
Become a student of life and continuously learn.
That’s how you get better. Once you’ve perfected your craft, find an excellent company to buy.
This is possible by learning how to read a cash flow and financial statement to determine how healthy the company is. Is it a cash cow, or is it bleeding cash?
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