The work of literature in 'Rich Dad, Poor Dad' by Robert Kiyosaki is a finance landmark. For any man looking to change his view on finances, this book is an excellent choice. Whether you are a starter or already in the financial world, lessons from this classic will give you a new perception.
Lots of lessons from society on investment, debts, and assets are actually bringing our wealth down in the long term. Robert Kiyosaki, with his example of a rich dad and a poor dad, differentiates both sides of the coin. So, here we bring you nine of the best lessons that will help you approach your finances in an efficient manner.
9 Lessons for Men from 'Rich Dad, Poor Dad'
Assets vs. liabilities
The first lesson to attain financial freedom is to understand liabilities and assets. They are much more than what you own or what you owe. We often put so much money out of our pockets, thinking we are spending on assets when we are actually increasing our liabilities. In simple words, assets should redirect the money back to your pockets by multiplying it. For instance, a luxury car is considered an asset, but with all the loan installments to be paid, it turns out to be a liability. In contrast, when you rightfully invest the same money, it will pay you back, turning out to be an asset.
Work on financial intelligence
Financial intelligence isn't limited to accounting students. In fact, to be financially literate, you don't need a college degree. You need not be a pro in all the financial studies, but a basic understanding of how finance works helps. The four pillars—accounting, investments, laws, and marketing—need to be understood. With this foundation, one can take manageable risks.
Often, we tend to think a positive income statement means financial success. But the real question is how long your income will support you if you stop earning. Surely, it wouldn't benefit your retirement phase. This stresses the importance of a passive income source.
Work to learn
As a society, we misinterpret that learning a single skill will get you past the financial barriers. But it doesn't always hold true. It is because even the most skilled person without proper marketing wouldn't be able to make money through it. So, a basic knowledge of a lot of things would be better than a narrow, deep understanding of a single skill.
Taking calculated risks
An essential factor that distinguishes poor and wealthy builders is risk-taking. The false safety net of a 9-5 job prevents a lot of men from taking risks. When we look deeper, layoffs are a threatening part of the corporate world. A few weeks of notice period is not really a risk avoidance. To build up wealth, it becomes necessary to take calculated risks rather than play it safe. One may face certain obstacles, but remember that failures are a part of every successful journey. Additionally, it marks the journey from thriving from income security to achieving financial freedom.
Taxes and debts
Another fascinating lesson from Rich Dad, Poor Dad is the concept of good debt and bad debt. Bad debts are indeed the worst financial mistakes. However, good debts bring you great results. For instance, buying a flat with cash and renting it out would bring you annual returns. However, if you use good debt to buy additional properties, it would bring you returns that would manage your loan installments besides filling your pocket. So, the point of being aware of the market is to know what property or asset is worth investing in with a good debt. In the same manner, the rich minimize taxes by investing. In contrast, the poor and middle class lead a paycheck-to-paycheck life and believe in a narrow manner. Hence, they fail to benefit from taxes and debts.
I can't vs. How can I
One cannot deny the strength of our brain. The mentality difference of how to accomplish a thing is better than not doing it at all. Every problem needs some resources and our creative abilities. And it applies to attaining financial freedom too.
A direct relationship exists between your investments and your financial status. Ticking the right boxes makes all the difference. The smartest way to invest your money is towards yourself. Essentially, nothing has a greater return on investment than your own skills. Besides, you need to cut down on your wrong investments.
Money works for you, or you work for money
In a generalized world, money is related to time spent. A month of your time pays your monthly check. So, what if the time stops for you? For instance, you fall sick for a day. It means you lose your day of income. So, passive income is the only way to make money work for you, rather than you working for the money.
Rich Dad, Poor Dad by Kiosaky has life-changing advice to achieve financial freedom. For men living the conventional study life and a 9-5 job, it opens a new world to use their income in the right manner for growth. The book captures a bird's-eye view of topics such as the right investments, good debts, and calculated risks, all of which are essential to establishing oneself.
Written By: Sameena
Edited By: Chirajita Gupta