Rich Dad Poor Dad - Work to Learn –Don’t Work for Money

Lesson 6: Work to Learn –Don’t Work for Money

The Author’s Odyssey

After college graduation Robert Kiyosaki joined the Marine Corps. He learned to

fly for the love of it. He also learned to lead troops, an important part of

management training. His next move was to join Xerox where he learned to

overcome his fear of rejection. The thought of knocking on doors and selling

copiers terrified him. Soon he was among the top 5 salespeople at the company.

For a couple of years he was No.1. Having achieved his objective – overcoming

his shyness and fear—he quit and began minding his own business.

Learn skills like PR, marketing, and advertising.

Take a second job if it means learning more.

A Difference in Education

Schools train professionals. Professionals become so specialized they cannot

apply themselves in other fields and need to form unions to protect their jobs.

Remember you can have a profession, say, learn to be a pilot if you want to learn

how to fly, but at the same time mind your own business.

The rich “groom” the next generation by training the heir in all aspects of running

the business. They move him from department to department so he learns how

each one relates to the other. Specialization is not the key here, but picking up

important lessons from each area and seeing the business as a whole.

Rich Dad groomed Kiyosaki and Mike in the same manner. Mike would later take

over Rich Dad’s empire, which included restaurants, convenience stores, and a

construction company. Kiyosaki created his own empire with real estate, new

products and educational materials.

Three Main Management Skills

1. Management of Cash Flow

2. Management of Systems (Includes Time with family and time for your self)

3. Management of People

Five Obstacles to Financial Independence

1. Fear. Don’t play it safe and cling to what you think is secure. If you don’t

go for it and think big you won’t be able to earn big.

2. Cynicism. Don’t listen to advice of others who are not doing what you

intend to do. Listen to your self and those who are doing what you aim to

do.

3. Laziness. Greed is good and fights laziness. Think about the freedom and

money you’ll have and you will put in those extra work hours. Change your

thinking. Instead of saying “I can’t afford it.” Ask yourself “How can I afford

it?” Challenge your mind to create solutions.

4. Bad Habits. Spending habits should turn into saving and investing habits.

5. Arrogance. Don’t think you know everything there is to know about

money. Listen to others. Enroll in useful seminars.

Rich Dad Poor Dad - The History of Taxes and the Power of Corporations

Lesson 4: The History of Taxes and the Power of Corporations

Income tax has been levied on citizens in England since 1874. In the United States it was introduced in 1913. Since then what was initially a plan to tax only the rich eventually “trickled down” to the middle class and the poor.

The rich have a secret weapon to shelter themselves from heavy taxation.

It’s called the Corporation. It isn’t a building with the company name and logo in brass signage out front. A corporation is simply a legal document in your attorney’s file cabinet duly registered under a government state agency. Corporations offer great tax advantages and protection from lawsuits. It’s the legal way to protect your wealth, and the rich have been using it for generations. Do your own research and find out what tax laws will bring you the best advantages.

The Golden Rule: PAY YOURSELF FIRST.

Rich dad says paying yourself first forces you to create more sources of

income to cover your expenses. It’s a simple rule that works like this:

The Rich with Corporations People who work for

corporations:

Earn Earn

Spend

Pay taxes

Pay taxes Spend

Key Financial IQ Components:

It helps to take some courses to gain financial literacy; rich dad stresses

the importance of learning –

1. Accounting. It pays to know how to read financial statements. When

acquiring businesses or assets you need to quickly see the financial

standing of the company you are acquiring. Many grown adults do not

know how to balance a balance sheet. In the long term, this knowledge

will pay off for you and your business.

2. Investment Strategy. This skill will sharpen with experience. Talk to

investors and observe how they play the game. Kiyosaki and Mike

spent many boyhood hours sitting in on Rich Dad’s meetings with

brokers, accountants, and attorneys.

3. Market Behavior. Know the laws of Supply and Demand. No business

owner can do without understanding these basic principles of the

market. Bill Gates saw what people needed. Open your eyes to

opportunities. Look at what sells and who buys.

4. Law Kiyosaki recommends doing everything you can to grow your

business within legal boundaries. Know your corporate, state, and

accounting laws.

Lesson 5: The Rich Invent Money

Self-confidence coupled with high financial IQ can certainly earn more for you

than merely saving a little bit every month.

Make good use of your time and find the best deals.

An example: In the early 90’s the Phoenix economy was bad. Homes once

valued at $100,000 sold for $75,000. Kiyosaki shopped at bankruptcy courts and

bought the same houses at only $20,000. He resold these properties for $60,000

making a cool $40,000 profit. After six more transactions of the same manner he

made a total $190,000 in profit and it only took 30 hours of work time.

Rich Dad explains there are Two Types of Investors:

1. Buyers of Packaged Investments.

This is when you call a retail outlet, real estate company, stockbroker

or financial planner and put your money in ready-made investments.

It’s a simple, clean way of investing.

2. The Professional Investor

Design your own investment. Assemble a deal and put together

different components of an opportunity. Rich dad encourages this type.

You need to develop three main skills to be this type of investor,

namely how to:

o Identify an opportunity everyone else has missed.

o Raise capital

o Organize smart people

Identify an opportunity everyone else has missed.

Learn to identify hidden Freebies in business deals. For example: The real

business of McDonald’s isn’t hamburgers. It’s the free real estate underneath

each franchise, on every important intersection, in cities all over the world that is

the real wealth of its owners.

THERE IS ALWAYS RISK. You need to learn how to manage risk and not avoid

it.

Rich Dad Poor Dad - Mind Your Own Business

Lesson 3: Mind Your Own Business

KEEP YOUR DAY JOB

BUT START MINDING YOUR OWN BUSINESS.

Kiyosaki sold photocopiers on commission at Xerox. With his earnings he purchased real estate. In 3 years’ time his real estate income was far greater than his earnings at Xerox. He then left the company to mind his own business full time. He knew that in order to get out of the rat race fast, he needed to work harder, sell more copiers and mind his own business.

Don’t spend all your wages. Build a good portfolio of assets and you can spend later when these assets bring you greater income.

Thanks

Pradip

Rich Dad Poor Dad - Why Teach Financial Literacy?

Lesson 2: Why Teach Financial Literacy?

They don’t teach this at school. The growing gap between rich and poor is rooted in the antiquated educational system. The system trains people to be good employees, and not employers. The obsolete school system also fails to provide young people with basic financial skills rich people use to grow their wealth. Know your options and use this knowledge to build a formidable asset column.

In an age of instant millionaires it really isn’t about how much money you make, it’s about how much you keep, and how many generations you can keep it.

Steps to get out of the proverbial rat race:

1. First, understand the difference between an asset and a liability.

Assets Liabilities

· Real Estate · Mortgages

· Stocks · Consumer Loans

· Bonds · Credit Cards

· Notes

· Intellectual Property

The poor have day-to-day expenses, the middle class purchase liabilities that they think are assets (i.e., a home or a car), and the rich build a solid base of income-generating assets. The middle class finds itself in a constant state of financial struggle. Their primary income is wages, as wages increase, so do their taxes. Expenses increase as wages increase. Hence the phrase “the rat race.” They treat their home as their primary asset instead of investing in incomegenerating assets.

The rich get richer because they keep acquiring more assets and investments to generate more income, which far exceeds their expenses.

Reasons why the home is not an asset but a liability:

1. People work almost all their lives to pay off a home (30-year loans)

2. Maintenance and utilities expenses.

3. Property tax

4. House values can depreciate.

5. Instead of investing in income-earning assets, your money goes out to

payments for the house.

Your losses:

1. Time that could have been used to grow value in other assets.

2. Capital which could have been invested rather than paying home-related

expenses

3. Education that makes you a Sophisticated investor If you want to buy a house, first generate the cash flow by acquiring assets, which bring income to pay for it.

Examples of real assets are:

· Apartments for rent

· Real estate

· Businesses that do not require your physical presence. You hire managers.

Average time of holding on to an asset before selling it for a higher value:

1 year

· Stocks (Startups and small companies are good investments)

· Bonds

· Mutual funds

7 years

· Real estate

· Notes (IOUs)

· Royalties on intellectual property

· Valuables that produce income or appreciate

In summary, the key steps to getting out of the rat race are the :

1. Understand the difference between an asset and a liability.

2. Concentrate your efforts on buying income-earning assets.

3. Focus on keeping liabilities and expenses at a minimum.

4. Mind your own business.

Thanks Pradip

Rich Dad Poor Dad - The Rich Don’t Work For Money

Lesson 1: The Rich Don’t Work For Money

At age 9, Robert Kiyosaki and his best friend Mike asked Mike’s father (Rich Dad) to teach them how to make money. After 3 weeks of dusting cans in one of Rich Dad’s convenience stores at 10 cents a week, Kiyosaki was ready to quit. Rich Dad pointed out this is exactly what his employees sounded like. Some people quit a job because it doesn’t pay well. Others see it as an opportunity to learn something new.

WORK TO LEARN

Next Rich Dad put the two boys to work, this time for nothing. Doing this forced them to think up a source of income, a business scheme. The opportunity came to them upon noticing discarded comic books in the store. The first business plan was hatched. The boys opened a comic book library and employed Mike’s sister at 1$ a week to mind it. Soon they were earning $9.50 a week without having to physically run the library, while kids read as much comics as they could in two hours after school for only a few cents.

Rich Dad Poor Dad - There is a Need

There is a Need

The rationale for teaching people financial literacy comes from the fact there is no real job security these days. Even after years of toil, the poor and middle class may find they do not have sufficient funds for their childrenÂ’s college education, or their own retirement. Why work for a corporation, the government, and the bank all your life? Awaken your financial genius and gain financial independence and freedom!

Pradip

Rich Dad Poor Dad - Words of Wisdom

Does school prepare children for the real world? "Study hard and get good grades and you will find a high-paying job with great benefits," my parents used to say.

In his Rich Dad Poor Dad he explains The Big Idea,

FINANCIAL LITERACY = FINANCIAL INDEPENDENCE

He talks about two dads; one is highly educated professor while other one is uneducated (eight grade dropout). Dad who was highly educated left his family nothing but some unpaid bills. The dropout later becomes one of the richest men in Hawasii. The Rich Dad left his son an empire.

One Dad used to say, “I can’t afford it”, While the other asked, “How can I afford it?”

Learn through experience was the theory of Rich dad who teaches two boys the lesson on money which are priceless. The most important lesson of all is How to Use Your Mind and Time to create personal wealth. Free yourself from the proverbial “rat race”.

He explain rat race as below :

If you look at the life of the average-educated, hard-working person, there is a similar path. The child is born and goes to school. The proud parents are excited because the child excels, gets fair to good grades, and is accepted into a college. The child graduates, maybe goes on to graduate school and then does exactly as programmed: looks for a safe, secure job or career. The child finds that job, maybe as a doctor or a lawyer, or joins the Army or works for the government. Generally, the child begins to make money, credit cards start to arrive in mass, and the shopping begins, if it already hasn't.

He talks about:

• Learn to spot opportunities,
  
• Create solutions
  
• “Mind your own business”
• Learn to make money work for you
• And not be its slave

And here are the Rich Dad’s Words of Wisdom:

1. You are what you Think
2. A job is a short-term solution to a long-term problem
3. A highly paid slave is still a slave
4. Why climb the corporate ladder when you can own the ladder?

Thanks
Pradip

Rich Dad Poor Dad - Introduction

Dear Readers,

As every human being on this earth work hard to earn money and fulfill there dreams. Our day to day activity starts and ends with money. Let me ask one question, Does school teaches us the importance of money or finance which is required in actual life? I am sure like me many of you will agree that we always got advice from our parents, teachers and relatives that work hard, get good grades and have a nice highly paid job. Well many of these kind of question I got answered in "Rich Dad Poor Dad" book by Robert T. Kiyosaki's

I will brief about the book in coming few days.

Thanks
Pradip