BornEntrepreneur

Every day people go to work for money. You work harder to earn more money but then your taxes and expenses increase with your income. Is there any way to escape the rat race? How can you make money work for you? This best seller explains the real definition of an asset and a liability. It describes how the rich think about money differently than the poor and middle class, and how financial literacy is not taught in school. (Thanks to A.S. for this guest submission! If you’re interested in submissions, contact me.)

Rich Dad, Poor Dad
(What the Rich Teach Their Kids about Money – That the Poor and Middle Class Do Not!)
By: Robert T. Kiyosaki

Key Points:

• Parents cannot continue to tell their children, “go to school, study hard and get a good job.”
• The world is changing and that advice only leaves children growing up to enter the working world, having no real financial education and struggling to pay bills in the ‘rat race.’
• Most people are afraid of not having money and instead of confronting their fear, they react instead of think.
• Saying “I can’t afford it,” is mental laziness. Think of ways to create income to afford what you want.
• Rich Dad = his money works for him
• Poor Dad = he works for money
• Think of ways to buy assets that will pay for your expenses and wants.
• To become financial free you must be financially literate. People graduate from school with no financial foundation because the school systems do not teach financial literacy. Having a strong financial foundation starts with knowing the difference between and asset and liability.

• Assets – Something that puts money in your pocket
• Liability – Something that takes money out of your pocket

• Your home is not your greatest asset.
• You have to pay property taxes, mortgage, insurance, maintenance, utilities, and other expenses.
• Many people seek pay raises to get a bigger home, which only increases these expenses.

Real Assets

1. Businesses that do not require my presence
2. Stocks
3. Bonds
4. Mutual Funds
5. Income-generating Real Estate
6. Notes (like IOUs)
7. Royalties from intellectual property (such as music, scripts, patents)
8. And anything else that has value, produces income or appreciates, and has a ready market

How the classes see things differently:

1. The rich buy assets
2. The poor only have expense
3. The middle class buy liabilities they think are assets
4. Wealth is being able to cover your expenses with income from assets
5. Rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.

• Difference between your profession (working for someone else) and your business (working for you)

Net worth – not a good measurement because non-income generating assets are included that cannot be sold for how much you bought them for and you can be taxed on the gains from selling these possessions.

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