Has the thought ‘How Do I Get Rich?’ ever gone through your mind?
We all live busy lives, and sometimes to read a whole book is overly time consuming. We all know we should read more, and nothing will beat the positive impacts of reading a full book on a regular basis, but Rich Dad Poor Dad may be an exception. It has many valuable pieces of information and the book condensed down to a list of 20 lessons can still give a good indication of some good steps to take towards financial freedom.
How Do I Get Rich?
The author, Robert Kiyosaki, is constantly asked, ‘How Do I Get Rich?’, and he points to the following list of 20 lessons from Rich Dad, Poor Dad:
1. For most people, their profession is their income. For rich people, their assets are their income.
2. If I want to buy something, I must first generate enough cash flow from my assets to cover these expenses. Buy luxuries last, not first.
3. Excess cash flow generated by my assets should be reinvested into other assets.
4. Do not simply aim for more income, aim for more assets.
5. Keep your expenses low and reduce your liabilities.
6. Create a corporation to protect your assets and reduce tax expenses. An employee earns, gets taxed, and then spends what is left. A corporation earns, spends everything it can, and then gets taxed on what is left. This is the biggest legal loophole that the rich use!
7. Know a little about a lot. Learn something about accounting, investing, markets, the law, sales, marketing, leadership, writing, speaking, and negotiating. An investment in knowledge pays the best interest.
8. Work to learn, don’t work to earn. Find a job where you can learn one or more of the above mentioned skills.
9. Do not simply buy investments. First invest in learning about investing.
10. You will become what you study, so choose your study materials carefully. Find people who are the best in their field. Then study and emulate them.
11. Every rich person has lost money at some point, but many poor people have never lost a dime. Playing not to lose money means you will never make money. “Winning means being unafraid to lose.”
12. Failure inspires winners and defeats losers. When something does not work out the way you planned, let it inspire you to try a different approach. Learn and move on.
13. Be in control over your emotions. Do not let fear or opinions of the general public dictate your actions. When stock prices decline, people run away. However, when the local supermarket has a sale, people buy as much as they can.
14. Most sellers ask too much. It is rare that the asking price is lower than something is worth.
15. Surround yourself with people who are smarter than you, and pay them well!
16. Saying “I can’t afford it” shuts down your brain. Asking “How can I afford it?” opens up your brain and triggers your financial genius to come up with a creative solution.
17. Pay yourself first. Each month, first invest a certain amount of money into income generating assets before you pay your bills. 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.
18. Have a clear purpose in mind. Why do you want to earn more passive income? For me, because I do not want to work all my life. I want to have control over how I decide to spend my time. Also, I want to support my parents financially, because they have been working hard all their life and they deserve an amazing retirement. Write down yours, because it will keep you motivated.
19. Listening is more important than talking. Do not constantly argue and think with your mouth, but instead ask questions and absorb new ideas.
20. On the market: do not follow the crowd, and do not try to time the market. Profits are made when you buy, not when you sell.