rich+dad+poor+dad+lessons

There are two main emotions which can prevent people from developing wealth: fear and desire; fear of not being able to pay monthly expenses or fear of losing money keep many entrenched in the day-to-day work, preventing many from evaluating investments and other sources of income. The desire to keep up appearances via buying expensive clothes or cars drives expenses so high that people have no choice but to stay focused on their jobs to maintain their lifestyle. Lesson one is all about understanding those two emotions and stopping them from hindering one’s success. The Rich Dad was more focused on ways of creating residual money, money that increases even if you don’t work, rather than waiting for the next job with a pay raise.
 * Lesson One: The Rich Don’t Work for Money**

Developing financial literacy is key to having any success with money. Financial literacy is simply the study of managing one’s finances. Robert Kiyosaki breaks down the basics of financial literacy in order to show the differences in cash flow for different income levels. There are a few key terms one would need to understand in order to see differences. Income is simply the amount of money you earn (wages, salaries, etc.). Expenses are things like (taxes, food, rent, clothes, fun, and transportation). An asset is something that puts money into your pocket (stocks, bonds, investments). A liability is anything that takes money out of your pocket (home mortgages, loans, credit card debts.)
 * Lesson Two: Learning Financial Literacy?**

As mentioned in the previous lesson, the key attribute that must be developed in order to gain wealth is to focus on your asset column. The rich focus on improving the size of their investments rather than simply waiting or demanding pay raises in their income.
 * Lesson Three: Mind Your Own Business**

This means keep your expenses low, reduce your liabilities and diligently build a base of solid assets.

This is the power of limited liability. By creating a personal corporation, the rich are able to avoid many of the personal taxes the poor face through corporate exemption. However, please note the word avoidance compared to evasion! Avoidance simply means using loopholes in tax laws to your advantage where evasion is simply not paying taxes at all, which is illegal. By filing as a corporation, the rich are able to mitigate their losses to only the amount they invested in the corporation. They are able to pay taxes after they pay for expenses. For people who have jobs, it’s the opposite case where taxes are taken out of paychecks before one is able to cover expenses.
 * Lesson Four: The History and The Power Of Corporation**

The idea behind this is that wealth takes a combination of financial intelligence and a little bit of guts. The one thing that holds a lot of people back is some degree of self-doubt. In order to gain wealth, there needs to be a degree of self-confidence. This means investing money outside of the comfort zone. While saving at the bank seems secure, it is not worthwhile because savings rates are often below the rate of inflation. As a Young Jeezy rap lyric once goes, “Scared money don’t make money.” Kiyosaki follows the same logic, if you truly want to see your investments grow exponentially you must be willing to put in the money in places that show relative risk.
 * Lesson Five: The Rich Invent Money**

A familiar acronym for job is just over broke. Oftentimes, it’s easy to get caught up in a job as a means of security or money. However, the rich use jobs as learning opportunities to develop necessary skills to be successful. As Kiyosaki recommends in the book, take a long view of life. Instead of simply working for the money and security, which are important, take a second job or take classes that will teach you a skill. He goes even further to describe the three main management skills necessary for success: 1. The management of cash flow (assets and liabilities)
 * Lesson Six: Work to Learn- Don’t Work for Money**

2. The management of systems (basic economic theory, political landscape, etc.)

3. The management of people If one is able to focus getting jobs that develop these three major skills sets, he is well on their way on the path to success. After sharing these main lessons of the rich, Kiyosaki goes a step further by addressing the 5 main obstacles keeping people from actually following through. 1. Fear- Overcoming the fear of losing money. The fear of losing money is real. Everyone has it. The difference becomes how a rich and poor person handles the fear. Wealthy individuals use failure as a teaching moment and aren’t afraid to fail. 2. Cynicism- This deals mostly with those around you. Follow your own path, because at the end of the day, wealthy individuals are a small percentage who go against the grain and don’t follow the crowd 3. Laziness- One must be willing to put in the time and effort to build up their financial knowledge. This means being selfish and taking time out to build one’s personal wealth. 4. Bad Habits- Reducing expenses is easier said than done, but one must be willing to break those bad spending/investing habits in order to be successful 5. Arrogance- Always be willing to reach out to those who are successful and those you want to emulate. To become wealthy, it’s often a collaborative effort, bouncing ideas from prospective mentors. With these main lessons in mind, one can walk towards the path of success. It just takes personal initiative to further develop the financial knowledge and management skills necessary for success. As Rich Dad, Poor Dad shows, higher education or a great job doesn’t guarantee success but rather the skills and knowledge you are able to apply with your income separates the lower and middle class from the wealthy.

Retrived from: Cain, Alexander. (2011). //6 key lessons from rich dad, poor dad//. Atlanta, GA: Atlanta post. (http://atlantapost.com/2011/04/01/6-lessons-from-rich-dad-poor-dad/6/)