What the Rich Teach Their Kids About Money -- That the Poor and Middle Class Do Not! ROBERT KIYOSAKI and SHARON LECHTER

Transcription

1 RICH DAD, POOR DAD What the Rich Teach Their Kids About Money -- That the Poor and Middle Class Do Not! ROBERT KIYOSAKI and SHARON LECHTER SUMMARIES.COM is a concentrated business information service. Every week, subscribers are ed a concise summary of a different business book. Each summary is about 8 pages long and contains the stripped-down essential ideas from the entire book in a time-saving format. By investing less than one hour per week in these summaries, subscribers gain a working knowledge of the top business titles. Subscriptions are available on a monthly or yearly basis. Further information is available at

2 Rich Dad, Poor Dad - Page 1 MAIN IDEA It s what s in your head that ultimately ends up determining what s in your hands. Therefore, if you want more money, change the way you think. That will automatically change the way you act, which in turn will impact on the results you achieve. It all starts in the mind -- successful people invariably start small and build from there. The same applies in every area of making money. The key is not how big you are when you get going -- it s the ideas that you re harnessing. Take the time to find the best ideas and you can ride it all the way to whatever level of financial achievement you decide upon. Nobody else chooses for you -- it always come down to what you decide. Above all, educate yourself. Develop financial intelligence. Spend time with successful people. read books, attend seminars and learn how to make money work for you. Your life will be more rewarding and more fulfilling if you just take the time to learn and think about where you re heading. The path to financial wealth doesn t lie in playing it safe. It s far more important to play it smart. Lesson 1-- Instead of working for money, create ways to make money work for you Page 2 A job is really a short term solution (getting enough money to pay the bills) to a long-term challenge (building your net worth). Yet many people get locked into such high expenditure habits they are forced into continuing to work for someone else all their lives. Those who build high net worths, however, realize the key is not how much they are paid -- it s finding ways to make their assets work for them generating additional wealth irrespective of what they do with their own personal time. Lesson 2 -- Teach financial literacy so that you can distinguish between an asset and a liability, and buy assets Page 2 In life, it s not really how much money you make that counts but how much you keep, and how many generations you keep it. To achieve that takes financial literacy. The foundation of financial literacy is to know the difference between an asset and a liability, and buy assets. The rich build and acquire assets. The middle class and the poor acquire liabilities in the mistaken belief they are assets. Lesson 3 -- Take the time to invest in and build your own business as the foundation of your financial health Page 3 Your profession or career revolves around the income section of your personal Income Statement. Your business, on the other hand, is centered squarely on the asset column of your personal Balance Sheet. Never confuse your profession with your business. The middle class focus on their profession, and consequently spend their entire lives building someone else s business. The rich, by contrast, focus on building their own businesses. Lesson 4 -- As part of your financial strategy, form a corporation to own the assets you are accumulating Page 3 Having a corporation own your assets is universally used by the rich to minimize their liabilities and maximize their opportunities to structure their financial affairs as advantageously as possible. Lesson 5 -- Use the skills of financial intelligence to create ongoing, profitable business opportunities Page 4 The main benefit of developing financial intelligence is that it gives you more options -- more opportunities to develop creative solutions to your financial requirements than the standard issue Work hard, save some money on a regular basis strategy most people adhere to religiously. Lesson 6 -- Whenever you have to work for someone else, do it to learn something new -- not just for the money Page 5 The smart approach to working is to select a job that will teach you something you don t already know rather than on the basis of what you will earn. Lesson 7 -- To achieve financial success, you have to be prepared to overcome the obstacles and roadblocks you ll face. Page 6 The five main reasons people fail to develop abundant assets are: 1. They have a fear of losing rather than making money. 2. They are cynical and don t believe it can be done. 3. They are too lazy to change their habits. 4. They let their habits control their behavior. 5. They re arrogant -- a combination of ego and ignorance. Lesson 8 -- To arrive at your ultimate goal of financial success, you first need to get started Page 7 To awaken the financial genius within you and start on the journey to financial freedom, try these steps: 1. Find an emotional reason to start the journey. 2. Reinforce that decision on a daily basis. 3. Choose your friends carefully. 4. Continue learning until you master it; then learn new ideas. 5. Develop the self discipline to pay yourself first. 6. Pay well for good advice from professional advisers. 7. Find ways to make your investments freehold. 8. Use your assets to pay for luxuries, not your capital. 9. Develop some financial heroes -- high achievers. 10. Make the time to teach others what you learn.

3 Rich Dad, Poor Dad - Page 2 Lesson 1 Instead of working for money, create ways to make money work for you. A job is really a short term solution (getting enough money to pay the bills) to a long-term challenge (building your net worth). Yet many people get locked into such high expenditure habits they are forced into continuing to work for someone else all their lives. Those who build high net worths, however, realize the key is not how much they are paid -- it s finding ways to make their assets work for them generating additional wealth irrespective of what they do with their own personal time. An astute financial strategy is to start a business that will generate money even when you re not physically there. The majority of people, however, are so focused on what they re paid that they miss all the opportunities to achieve this goal. This creates a couple of paradoxes: 1. The majority of people work for someone else because it makes them feel safe and secure. In other words, they re working out of fear of not being able to pay their bills. By contrast, the people in society who are paid the most are often so wealthy they don t have to work to pay their bills -- they work because they are passionate about whatever it is they are doing. 2. Most people who are paid more money for their work end up getting into more debt rather than building their net worth. Their expenses rise as their income rises, because of all the desires they have. The key to overcoming these paradoxes is to learn how to make money work for you, instead of looking at a job or even a career as a way to earn money. If you can achieve that, you start to make fear and desire work for you instead of against you. Ignorance intensifies fear and desire. Instead of thinking with your emotions, learn how to use your emotions to think creatively. Choose what to think about rather than react to your emotions and you lay a good foundation to move ahead. Most people have a price. And they have a price because of human emotions named fear and desire. First, the fear of being without money motivates us to work hard, and then once we get that paycheck, greed or desire starts us thinking about all the wonderful things money can buy. The pattern of get up, go to work, pay bills, get up, go to work, pay bills is then set. Their lives are then run forever by two emotions, fear and greed. Offer them more money, and they continue the cycle by also increasing their spending. This is what I call the Rat Race. More money seldom solves someone s financial problems. Intelligence solves problems. There is a saying a friend of mine says over and over to people in debt: "If you find yourself in a hole...stop digging." Lesson 2 Teach financial literacy so that you can distinguish between an asset and a liability, and buy assets. In life, it s not really how much money you make that counts but how much you keep, and how many generations you keep it. To achieve that takes financial literacy. The foundation of financial literacy is to know the difference between an asset and a liability, and buy assets. The rich build and acquire assets. The middle class and the poor acquire liabilities in the mistaken belief they are assets. An asset is anything that puts money into your pocket. Income Statement Income Expenses A liability is anything that takes money out of your pocket. Income Statement Income Expenses Balance Sheet Assets Liabilities Balance Sheet Assets Liabilities Understanding the relationship between an Income Statement and a Balance Sheet is the key to financial health. The rules are deceptively easy to understand. In essence, to build a high net worth, spend your time building or buying assets. To stay poor or to tread water financially, spend the majority of your time building liabilities. Most people fall into the trap of building liabilities without realizing that s what they are doing -- they are financially illiterate, and fail to understand the difference between an income statement and a balance sheet, and the relationship between the two. This is particularly true with home ownership. Many people consider their home to be the greatest asset, and keep working to get into a bigger and better home. Doing so, however, usually requires taking on more and more debt, which has to be serviced -- therefore they have to work harder to pay the mortgage. By focusing on their home, they are building a liability rather than an asset. In addition, they are: 1. Losing time, when they could have been growing other assets. 2. Allocating capital resources to home maintenance expenses rather than asset building. 3. Missing the opportunity to gain investment experience by avoiding investment into areas other than residential real estate.

4 Rich Dad, Poor Dad - Page 3 Lesson 3 Take the time to invest in and build your own business as the foundation of your financial health. Your profession or career revolves around the income section of your personal Income Statement. Your business, on the other hand, is centered squarely on the asset column of your personal Balance Sheet. Never confuse your profession with your business. The middle class focus on their profession, and consequently spend their entire lives building someone else s business. The rich, by contrast, focus on building their own businesses. Having a good career only helps a person become more financially secure if they invest the additional money generated in the purchase of income generating assets. What constitutes an asset? An asset is anything that: 1. Has value. 2. Produces income. 3. Appreciates in value and has a ready market for resale. Some possibilities include: 1. A business that will generate income while you are not physically present. 2. Stocks or shares in companies. 3. Bonds. 4. Mutual funds. 5. Real estate that generates income. 6. Notes or IOUs. 7. Royalties from intellectual property rights. I love stocks of small companies, especially start-ups. The reason is I am an entrepreneur, not a corporate person. I like starting companies, not running them. So my stock buys are usually of small companies, and sometimes I even start the company and take it public. Fortunes are made in new-stock issues, and I love the game. Many people are afraid of small-cap companies and call them risky, and they are. But risk is always diminished if you love what the investment is, understand it and know the game. As your cash flow grows, you can buy some luxuries. An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first. The poor and middle class often buy luxury items such as big houses, diamonds, furs, jewelry or boats because they want to look rich. They look rich, but in reality they just get deeper in debt on credit. The old-money people, the long-term rich, build their asset column first. Then, the income generated from the asset column bought their luxuries. The poor and middle class buy luxuries with their own sweat, blood and children s inheritance. Lesson 4 As part of your financial strategy, form a corporation to own the assets you are accumulating. Having a corporation own your assets is universally used by the rich to minimize their liabilities and maximize their opportunities to structure their financial affairs as advantageously as possible. Financial intelligence and knowledge is required to build your own asset base. The four specific areas of expertise which comprise financial IQ are: 1. Accounting or financial literacy -- the ability to read and understand financial statements. Master this and you can identify the strengths and weaknesses of any business. 2. The strategies and formulas of investing -- or the science of making money. 3. An understanding of the technical aspects of markets -- the way in which supply and demand are affected by emotions on one hand and fundamental economic considerations on the other. 4. A grasp of commercial and tax law -- which will have a direct impact on the long-term creation of wealth you will achieve. The main advantages of forming your own corporation to manage your assets are: 1. Tax advantages. Individuals get taxed on what they earn first, and are paid the balance. A corporation, by contrast, earns revenue, spends as much as it can and then gets taxed on anything that is left. A corporation can structure its finances in a number of ways individuals cannot. 2. Protection from lawsuits. Corporations and trusts protect assets from creditors. The very rich generally control everything but own nothing themselves -- all their assets are tied up in trusts or corporations. Forming a corporation is an extremely straight forward process which generally involves simply filing the correct forms with a regulatory authority and paying a small fee. The corporation, which may only exist in a file drawer somewhere, can then act as a separate legal entity to yourself -- enabling you to structure your affairs in such a way that your tax liability is minimized legitimately and legally. It s a smart strategy. It is the knowledge of the power of the legal structure of the corporation that really gives the rich a vast advantage over the poor and middle class. As part of your overall financial strategy, we strongly recommend owning your own corporation wrapped around your assets. The idea that it takes money to make money is the thinking of financially unsophisticated people. It does not mean that they re not intelligent. They have simply not learned the science of making money. Money is only an idea. If you want more money simply change your thinking. Every self-made person started small with an idea, then turned it into something big.

5 Rich Dad, Poor Dad - Page 4 Lesson 5 Use the skills of financial intelligence to create ongoing, profitable business opportunities. The main benefit of developing financial intelligence is that it gives you more options -- more opportunities to develop creative solutions to your financial requirements than the standard issue Work hard, save some money on a regular basis strategy most people adhere to religiously. The fastest and biggest game in the world is going on all around you. Money, in the information age, is increasing exponentially, with some individuals getting rich just on the basis of a good idea and an agreement with someone else. In this type of environment, the greatest single asset any person can have is their mind -- and by developing financial intelligence, every person is developing the most powerful asset at their command. In this type of environment, clinging to old ideas -- to the way things worked in the past -- can be extremely detrimental to your financial health and prosperity. Failing to realize that the rules of the entire game have changed can be a sever disincentive to actual achievement. Another impediment is to limit your options by waiting for the right opportunity to materialize before moving. The financially intelligent have more options, because they are creatively looking for ways to play their current hand as aggressively and successfully as possible rather than sitting on the sideline complaining about the hand they ve been dealt. By developing your financial intelligence, you have the opportunity to participate in the ongoing evolution in business transactions -- the dawn of an era in which humans work purely with their minds and not with their bodies. By mastering the four technical skills of financial intelligence: 1. Financial literacy; 2. Investment strategies; 3. The supply and demand cycles of markets; 4. Compliance with the appropriate legal requirements; a solid foundation is laid for success in the pursuit of wealth in whatever field of specialization you feel the most affinity for. There are several advantages to continuing to increase your financial intelligence on an ongoing basis, including: 1. The most spectacular opportunities for gain are generally offered by investments that are speculative rather than sanitized. As a rule of thumb, uneducated investors tend to only be offered sanitized investments, while speculative investments are offered to the more sophisticated investors with more financial intelligence. 2. The more sophisticated you become, the better equipped you are to analyze the relative merits of investment opportunities. Subsequently, the more you will be aware of business opportunities others don t even recognize. 3. The smarter you are financially, the better your chances are of beating the odds and generating above average returns. As a rule of thumb, the two broad categories of investors are: 1. Those who buy packaged investments from real estate companies, stockbrokers or financial planners. 2. Those who create their own investment opportunities by assembling the packaging themselves or by working alongside people who do. If you d like to join the ranks of the second group, you need to supplement your financial intelligence with additional skills such as: 1. Learning how to see opportunities that everyone else has missed -- looking at things differently and creatively. 2. Learning how to raise capital efficiently and legally. 3. Learning how to organize smart people to act as advisors. If you prefer to specialize in pre-packaged opportunities, there is no driving need to develop these additional skill sets. If, however, you re interested in taking advantage of the greater investment opportunities available to those who create their own, supplement your financial intelligence with those three additional skills. The point I would like to make is that investments come and go, the market goes up and down, economies improve and crash. The world is always handing you opportunities of a lifetime, every day of your life, but all too often we fail to see them. But they are there. And the more the world changes and the more technology changes, the more opportunities there will be to allow you and your family to be financially secure for generations to come. But great opportunities are not seen with your eyes -- they are seen with your mind. Always remember to have fun. This is only a game. Sometimes you win and sometimes you learn. But have fun. Most people never win because they re afraid of losing. That is why I found school so silly. In school we learn mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk. The same is true for learning to ride a bike. I still have scars on my knees, but today I can ride without thinking. The same is true for getting rich. Unfortunately the main reason most people are not rich is because they are terrified of losing. Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success. So why bother developing your financial intelligence? Only you can answer that. I know why I continue to learn and develop. I do it because I know there are changes coming. I d rather welcome change than cling to the past. I know there will be market booms and market crashes. I want to continually develop my financial intelligence because at each market change, some people will be on their knees begging for jobs. Others, meanwhile, will take the lemons that life hands them -- and we are all handed lemons occasionally -- and turn them into millions. That s financial intelligence.

6 Rich Dad, Poor Dad - Page 5 Lesson 6 Whenever you have to work for someone else, do it to learn something new -- not just for the money. The smart approach to working is to select a job that will teach you something you don t already know rather than on the basis of what you will earn. To succeed in business over the longer term, there are several skill sets that are required: 1. An understanding of business cash flow and how to manage capital resources cost-effectively and productively. 2. An understanding of business systems, particularly how to allocate time, how to plan goals and how to develop concrete action plans. 3. A background in people management skills -- how to organize, motivate and lead people. 4. A strong grounding in sales and marketing -- how to package product benefits persuasively and compellingly. 5. Good communication skills -- how to write, speak and negotiate with other people. As a general rule, very few jobs will provide a good grounding in all five areas. Most jobs will have a large degree of reliance on one or another of these skills, and completely ignore all others. Therefore, to become well versed in all these key areas, you have to be prepared to move from job to job in the early days of your career. Specialization is a trap that should be avoided. It s more beneficial to know a little about a lot of business subjects than to know everything there is to know everything about just one area. By having a broad business background, you have more options available to you. The ideal situation is to work for someone who is smarter than you are, or to become part of a team of very smart people. If you can position yourself in that situation, you ll learn at a vastly accelerated rate. You ll also have an opportunity to observe exactly how a group of smart people working as a team can create synergy that will far outweigh anything they could have created working by themselves. In the real world, simply having talent is not enough. In fact, many highly talented people end up working at low paying jobs, mainly because they have not learned how to leverage their skills by developing sound business systems around their area of specialization. Over the longer-term, the education that can come with a job that teaches any of the necessary business skill sets can be highly beneficial. To realize that benefit, a life-time perspective is required, rather than simply focusing on the immediate money and security a job offers. When I ask the classes I teach, "How many of you can cook a better hamburger than McDonalds?" almost all the students raise their hands. I then ask, "So if most of you can cook a better hamburger, how come McDonalds makes more money than you?" The answer is obvious: McDonalds is excellent at business systems. The reason so many talented people are poor is because they focus on building a better hamburger and know little or nothing about business systems. The world is full of talented poor people. All too often, they re poor or struggle financially or earn less than they are capable of not because of what they know but because of what they do not know. They focus on perfecting their skills at building a better hamburger rather than the skills of selling and delivering the hamburger. Maybe McDonalds does not make the best hamburger, but they are the best at selling and delivering a basic average burger. If you have any desire of being rich, you must focus. Put a lot of your eggs in a few baskets. Do not do what poor and middle-class people do: put their few eggs in many baskets. Balanced people go nowhere. They stay in one spot. To make progress, you must first go unbalanced. Thomas Edison was not balanced. He was focused. Bill Gates was not balanced. He was focused. Donald Trump is focused. George Soros is focused. George Patton did not take his tanks wide. He focused them and blew through the weak spots in the German line. The French went wide with the Maginot Line, and you know what happened to them. At the age of 66, Harlan Sanders lost his business and began to live on his Social Security check. It wasn t enough. He went around the country selling his recipe for fried chicken. He was turned down 1,009 times before someone said, "yes". And he went on to become a multimillionaire at an age when most people are quitting. He was brave and tenacious. Whenever you feel in doubt and feel a little afraid, do just what Col. Sanders did to his little chicken. He fried it. Do what you feel in your heart to be right -- for you ll be criticized anyway. You ll be damned if you do, and damned if you don t. -- Eleanor Roosevelt If you cannot get control of yourself first, do not try to get rich. It makes no sense to invest, make money and blow it. It is this lack of self-discipline that causes most lottery winners to go broke soon after winning millions. It is the lack of self-discipline that causes people who get a raise to immediately go out and buy a new car, or take a cruise. Never ask an encyclopedia salesperson if you need an encyclopedia. I look for people who want to buy first, then I look for someone who wants to sell. A friend was looking for a certain piece of land. He had the money and did not have the time. I found a large piece of land larger than what my friend wanted to buy, tied it up with an option, called my friend and he wanted a piece of it. So I sold the piece to him and the bought the land. I kept the remaining land as mine for free. Moral of the story: Buy the pie and cut it into pieces. Most people look for what they can afford, so they look too small. They buy only a piece of the pie, so they end up paying more for less. Small thinkers don t get the big breaks. If you want to get richer, think bigger first.

7 Rich Dad, Poor Dad - Page 6 Lesson 7 To achieve financial success, you have to be prepared to overcome the obstacles and roadblocks you ll face. The five main reasons people fail to develop abundant assets are: 1. They have a fear of losing rather than making money. 2. They are cynical and don t believe it can be done. 3. They are too lazy to change their habits. 4. They let their habits control their behavior. 5. They re arrogant -- a combination of ego and ignorance. Each of these fears can be overcome logically and systematically: 1. Overcoming the fear of losing money. Rich people have this fear just as strongly as the poor -- the only difference lies in the fact the rich handle the fear while the poor get paralyzed by it -- or avoid talking about the fear in the hope it will go away on its own. It never does. The fact is everyone loses sometimes. The key is to make every failure inspire you to try harder and better the next time around. In that way, winners actually draw inspiration and motivation from their partial failures along the way. The rich look at a loss as a temporary setback. The poor look at a loss as a permanent state of affairs. 2. Overcoming cynicism. Doubts and cynicism in all its forms keep most people from participating in commercial enterprises that hold the key to securing a better future for themselves and their families. However, the real world of opportunities and wealth most certainly does exist -- you just have to give yourself permission to live a little and participate rather than watching from the sidelines in envy. Cynics criticize rather than analyze. They focus solely on their Don t wants and therefore fail to seriously consider what they Do want. Consequently, they avoid many opportunities that cross their paths. Overcome cynicism by increasing your analysis of the situation. With more information at hand, you are then far better prepared to make an informed decision rather than an emotional decision. 3. Overcoming laziness. Laziness generally means being prepared to accept the status quo rather than going to the trouble of achieving something better. For most people, the fires of greed generate sufficient personal ambition to overcome any tendency to strive for something better. Never say to yourself, I can t afford that because it simply isn t true -- the human spirit is capable of achieving anything. Rather, always focus on the question, How can I afford that? You re then setting yourself a challenge, that your mind can work on while you re bust doing other things. A little bit of greed -- but not too much -- will help overcome laziness. 4. Overcoming bad habits. Any person s life reflects their habits more precisely and unerringly than their education. To develop good habits, start by paying yourself first. Most people pay everyone else first, and then pay themselves if there is any money left over. That should be reversed. Each time you get paid, pay yourself first, then the government and your creditors. If there isn t enough money to pay all your creditors, that will motivate you to get out and find other ways to make more money, because creditors have refined their processes for collecting money to a fine art. They ll provide you with plenty of motivation to think harder. In turn, that will make you smarter, and help you develop good habits that will strengthen you financially. 5. Overcoming arrogance. People often will use arrogance to mask their own ignorance. Instead of admitting they don t know something, they ll try and bluster their way through. A better approach is to be open and candid -- it s only when you admit to others or even to yourself that you don t know something that you ll actively recruit some expert help -- either from someone with experience in that field or by finding some books or other material on the subject. Winning means being unafraid to lose. -- Fran Tarkenton I always try and turn every disaster into an opportunity. -- John D. Rockefeller Stacking the asset column is easy. It s really a low-aptitude game. It doesn t take much education. Fifth-grade math will do. But stacking the asset column is a high-attitude game. It takes guts, patience and a great attitude toward failure. Losers avoid failing. And failure turns losers into winners. Just remember the Alamo. To find million-dollar "deals of a lifetime" requires us to call on our financial genius. I believe that each of us has a financial genius within us. The problem is, our financial genius lies asleep, waiting to be called upon. It lies asleep because our culture has educated us into believing that the love of money is the root of all evil. It has encouraged us to learn a profession so we can work for money, but failed to teach us how to make money work for us. Unfortunately, 90-percent of the Western world subscribes to the above dogma, simply because it s easier to find a job and work for money. I would say one of the hardest things about wealth building is to be true to yourself and be willing to not go along with the crowd. For in the market, it is usually the crowd that shows up too late and ends up being slaughtered. If a great deal is on the front page, it s too late in many instances. Look for a new deal. Smart investors don t time markets. If they miss a wave, they search for the next one and get themselves into position. Timid investors are like sheep going along with the crowd. Wise investors buy an investment when it s not popular. They know the profits are made when they buy, not when they sell.

8 Rich Dad, Poor Dad - Page 7 Lesson 8 To arrive at your ultimate goal of financial success, you first need to get started. To awaken the financial genius within you and start on the journey to financial freedom, try these steps: 1. Find an emotional reason to start the journey. 2. Reinforce that decision on a daily basis. 3. Choose your friends carefully. 4. Continue learning until you master it; then learn new ideas. 5. Develop the self discipline to pay yourself first. 6. Pay well for good advice from professional advisers. 7. Find ways to make your investments freehold. 8. Use your assets to pay for luxuries, not your capital. 9. Develop some financial heroes -- high achievers. 10. Make the time to teach others what you learn. Step 1: Find an emotional reason to start the journey Most people quite like the idea of being rich, but when the reality of the price that has to be paid to achieve that goal becomes clearer, it looks too daunting and so instead they settle for a life of mediocrity. Therefore, create an intense, personal reason for wanting to achieve the goal -- either to avoid something you don t want to occur in the future or something positive you d love to be present in your future. Then, whenever you encounter the inevitable roadblock, you will have a reason to hang in there and keep going. The more intense, the more emotional, the more personal and the more vivid the reason, the better. Step 2: Reinforce your decision on a daily basis Develop the habit of giving yourself a short pep talk every day. Realize that your future will actually consist of the sum total of all the small decisions you make each day. Just because you may not have any money at present, that should not be an excuse not to be learning. Time is your most limited and most precious asset. Therefore, invest in learning. Use your time to learn about investing in more detail, so you ll be prepared when the opportunity arises. Most people repeat, I ll never make a lot of money over and over until they finally start to believe it. Never ponder that question. Whenever you catch yourself thinking that type of thought, replace it with, I can be rich, just like anyone else. All I need to do is to build my assets. What s the best way to do that? You ll immediately act and feel differently if you do that on a regular basis. Step 3: Choose your friends very carefully. The people you associate with will influence and color your actions strongly. The good news, however, is that some friends will show you the roads you should take, while other friends will show you which roads to avoid. The trick sometimes lie in deciphering what each of your friend s experiences are actually teaching. As a general rule, successful friends will enjoy talking about money -- it will be a subject they re interested in and well read on. By contrast, unsuccessful friends will often avoid the subject like the plague --you ll learn by observing what they do than you will by discussing things with them. Having good friends can truly create synergy. You ll be exposed to other viewpoints which can be combined to create new and creative ideas. You can access the brain power of your friends in the creation of new business opportunities. Step 4: Continue learning. The financial equivalent of the saying, You are what you eat is You become what you study. Therefore, you should choose what you study carefully and deliberately, if you aspire to build your personal assets column. The masses only know one way to make money: By working for it at a pre-determined rate. In reality, however, there are an infinite number of ways to make money -- all you have to do is learn some of the other formulas that are available. That requires a little time and effort, but the payoff can be spectacular. In an information-based economy, what you know is less important than how quickly you can learn new ideas. That s a great skill to develop. Master the art of learning and you ll be astonished at the number of other formulas for making money you can learn about and gain from. Step 5: Always pay yourself first. If you re more concerned with paying your bills than paying yourself, you re actually being pushed around by those obligations. You re also missing the opportunity to develop some good internal fortitude and other positive character traits. Actually, paying yourself makes good sense for a number of practical reasons. First, if you pay yourself first, you ll always be building your asset column -- certain to be one of your key objectives and personal motivators. Next, you ll be less likely to take on consumer debt if you know you have to pay yourself first. It gives you an incentive to avoid debt in the first place. And finally, the pressure of having to pay creditors and the government can be used to encourage you to work harder and more creatively. If you can harness that pressure to inspire your financial genius, you ll then be increasing your ability to earn -- an excellent by-product of paying yourself first. Develop the self discipline to always pay yourself first and you ll be amazed at how that act will increase your financial intelligence. Step 6. Pay well for good advice. The more money your professional advisers make, the more money they re making for you. Therefore, your goal should not be to find the cheapest advisers around. It should be to find and retain the very best available in a long-term association. If they re the best, you stand to gain far more than it will cost. Professional advisers and brokers are your eyes and ears in the market. They work there every day, so you don t have to. They also allow you to use your time cost-effectively by allocating more time to those business activities in which you create the greatest added value. They can significantly impact on your own personal productivity. The ideal situation is to find a broker or professional adviser who has your best interests at heart. They will take the time to educate and assist you in understanding the market. To form an association, you need to reciprocate, however. If all you re focused on is how to cut or eliminate their commission, there s hardly a lot of motivation on their part to guide or assist you. The real key is that by hiring and retaining good advisers, you have access to the expertise of people smarter than yourself.

9 Rich Dad, Poor Dad - Page 8 Step 7. Make your investments freehold. Whenever you make an investment, your first goal (naturally) is to buy something that will increase in value. As that occurs, liquidate part of your position until your original capital has been repaid. You can now stop worrying about market fluctuations, because your capital has been returned. At this happy point, your asset is now completely freehold. Any further gains are the icing on the cake, or if the asset starts to lose value, it really won t impact on your financial health -- it will just delay the accomplishment of financial wealth. Step 8. Use assets for luxuries, not your capital. Most people go into debt for their luxuries -- they increase the liability section of their personal balance sheets. A far better approach is to focus on creating the money needed to buy a luxury in the asset column of the balance sheet first -- in other words, using the appeal of the luxury to stimulate financial creativity rather than taking the easy path and borrowing money to acquire a luxury. By using the asset approach to luxury purchase, you harness the power of money to increase rather than becoming slave to money s ability to run your life. You also learn how to make money work for you, instead of simply looking for ways you can work for money. The difference may seem subtle, but the results are completely opposite. Step 9. The need for financial heroes. Everyone needs heroes -- not just when growing up but later in life as well. A hero can inspire, motivate and blaze the path for others to follow. Financial heroes, fortunately, can do even more. Through books and other materials, financial high-achievers can educate people on their points of view, on the way they structure transactions and a host of other worthwhile ideas. They make things look easy, and show us it can be done. Take the time and effort to select a few financial heroes you want to emulate. Who knows -- perhaps one day they ll even end up learning something new from you. Quite an interesting idea. Step 10. Teach others what you learn. Whenever you feel in need of more education, take the time to teach someone else what you know. Not only will it help you articulate the principles and ideas that have made you a success, it also has a flow-on effect. Often, you ll end up getting back more than you gave away. The more you teach others what you re learning, the more opportunities will open up for you to gain more knowledge and insight yourself. In the final analysis, the world you live in will always be a reflection of your own soul and personality. To receive more, you first must give more. I take a long view on my wealth. I do not subscribe to the "Get rich quick" mentality most lottery players or casino gamblers have. I may go in and out of stocks, but I am long on education. If you want to fly an airplane, I advise taking lessons first. I am always shocked at people who buy stocks or real estate, but never invest in their greatest asset, their mind. All of you were given two great gifts: your mind and your time. It s up to you to do what you please with both. With each dollar bill that enters your hand, you and only you have the power to determine your destiny. Spend it foolishly, you choose to be poor. Spend it on liabilities, you join the middle class. Invest it in your mind and learn how to acquire assets and you will be choosing wealth as your goal and your future. The choice is yours and only yours. Every day with every dollar, you decide to be rich, poor or middle class. Choose to share this knowledge with your children, and you choose to prepare them for the world that awaits. No one else will. You and your children s future will be determined by the choices you make today, not tomorrow. Find someone who has done what you want to do. Take them to lunch. Ask them for tips, for little tricks of the trade. Take classes and buy tapes. Make lots of offers. People who are not investors have no ideas what it feels like to be trying to sell something. I have had a piece of real estate that I wanted to sell for months. I would have welcomed anything. I would not care how low the price. They could have offered me ten pigs and I would have been happy. Not at the offer, but just because someone was showing interest. I would have countered, maybe for a pig farm in exchange. But that s how the game works. The game of buying and selling is fun. Keep that in mind. It s fun and it s only a game. Make offers. Someone might say "yes". Consumers will always be poor. When the supermarket has a sale on, say, toilet paper, the consumer runs in and stocks up. When the stock market has a sale, most often called a crash or correction, the consumer runs away from it. When the supermarket raises its prices, the consumer shops elsewhere. When the stock market raises its prices, the consumer starts buying. Stop doing what you re doing. In other words, take a break and assess what is working and what is not working. The definition of insanity is doing the same thing and expecting a different result. Stop doing what is not working and look for something new to do. Look for new ideas. Copyright All Rights Reserved Summaries.Com