In this business competitive world, the worst advice you can give your child is ‘Go to school, get good grades and look for a secure, safe job.’ Robert Kiyosaki penned his advice down in 1997, but they are valid now more than ever. Some of the principles outlined by ‘Rich Dad Poor Dad’ are as follows:
- The rich don’t work for money
The rich have money to work for them, but the poor and the middle class struggle to work for money. Having a life depending on the size of a paycheck is not the right way to live life. Taking calculated risks is, in fact, an order to become financially stable. Economists have found that between the years 2009-2012, 95% of income gain went to the entrepreneurs and the investors but not the employees, clearly proving that the wealthiest people earn more.
- Knowing the difference between an asset and a liability
Be knowledgeable about what assets are and what liabilities are. The rich become rich by producing assets, but the poor and the middle class acquire liabilities which they think are assets. While publishing his book, every publisher who rejected his book criticised the lesson about a person’s house not being an asset. Initially, it was believed that a home was the biggest investment one could make. In 2007, people realised a house was not an asset when ‘subprime borrowers began to default on their subprime mortgages.’
- Build and keep your asset based strong
Focus on your assets column instead of your liabilities column to become financially secure.
Focus on buying real assets, not liabilities, not personal assets that have no value once you are home. In Mr Kiyosaki’s words, ‘an asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.’
- Know the power of corporations
A corporation has two primary advantages: tax advantages and protection from lawsuits. Knowing this would be far more helpful and will make you richer than being an employee or a small business owner.
- The rich have financial intelligence
The lack of self-confidence holds us back and not the lack of technical information. Being rich requires both financial knowledge as well as courage. They link themselves with smart people. They have financial intelligence. They work with or hire people that are more intelligent than themselves. Middle class or poor people often complain about the rich paying fewer taxes instead of focusing on learning from them further. When the president raises taxes, it is for the middle class, not the rich.
- Work to Learn, Don’t Work for Money
Learning new skills could be a jump exponentially. The people worldwide are smart, talented and educated; therefore, talent can never be enough. As Mr Kiyosaki mentions in his book, ‘Leadership is what you need to learn next.’
Mr Kiyosaki’s Rich Dad, Poor Dad, is just about becoming financially successful. The principles explained in this book are nothing everyone already knew, but how the author portrays them, so we understand its main importance. These principles were known to all long before, but it was never said like this.
‘It is what’s in your head that determines what is in your hands.’