Have you read the book Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money — That the Poor and Middle Class Do Not! written by Robert T. Kiyosaki? This should definitely be on your list of books to read and learn from to improve your money mindset.
This book shows us a solution to getting out of the Rat Race, which Kiyosaki defines as a situation where people “work for the owners of their company, for the government paying taxes, and for the bank paying off mortgage and credit cards.” This scenario sums up most of our parents’ and our lifestyle in our 9-5 jobs. Kiyosaki proposes that we learn and practice investing as a solution to get out of this trap, retire early and live wealthier lives.
The book is full of great advise and real-life examples from the author’s own experience on how to go about investing. I will not be providing a summary of the lessons here. I think you should read the book yourself to get the full learning experience.
However, I will share some of the concepts in the book that had a great effect on me as it challenged a lot of my ideas about money and how to get rich. This book will definitely help you in transforming your money mindset into a wealth mindset.
Assets First, Luxuries Last
Most of us think that our homes are our greatest assets. Kiyosaki points out that this is the wrong way to think about assets. Assets are the things that generate income for you. If it doesn’t generate income for you, then it is a liability.
Assets include a business that generates income, an apartment that you have for rental or a car that you also lease out.
When you acquire a house or a car, unless you have them rented, these do not generate income for you. Instead, you spend more on them because you have to pay the mortgage and taxes that come with your purchase of the house or car. Thus, both of these items can be considered luxuries and you should only acquire luxuries when you have generated enough income from your assets to cover the expense of owning these items.
Pay Yourself First
Kiyosaki also stresses the concept of paying yourself first. This is an important aspects of having a good money mindset. You should have a budget for Financial Freedom and Savings. These are the portions of your budget that you should prioritize. Of course you should aim to be able to pay all your bills on time, but if money is short, you should prioritize paying yourself first.
He states that you are your greatest asset, especially your brain and body. So you should take care of your health and continue to educate yourself in order to maximize your knowledge and skills to pursue your goals. I could not agree more.
Most of us focus on working hard to gain wealth forgetting to take care of our health. In the end, we may succeed in acquiring wealth but we end up spending that on hospital bills to recover from our health issues instead of being able to enjoy our wealth for our goals such as buying a house, travel, running our own business, etc.
Always Look for Opportunities and Act on Them
Kiyosaki also advises that even when things look bad, you should always look for opportunities to turn around the situation. The way to do this is to use your creativity to think of solutions on the best way to handle the situation. This is how someone with a good money mindset will approach a seemingly negative financial situation.
A classic example is, if you feel you are not earning enough and you want to have your own business. You shouldn’t wait until you have saved enough to quit your job and start your business. Instead, keep your job, keep saving for your business and start it on the side while you are earning from your day job. This can be done more easily now with the rise of online platforms to start your online business.
The goal is to look for opportunities to earn more income without incurring major risks. If you quit your job to start your business, you will not have another source of income if the business venture fails or if it needs to be funded with more money. Most of us would commonly try to get a loan to fund a business but Kiyosaki discourages this.
Start Early, Learn Along the Way
One of the best advise in the book which I wished I had learned when I was young was to start early. Most of us already know that we should start saving for our retirement early. But we often do not think of investing early. Instead, what most of us do is start acquiring credit card debt or loans early on in our careers.
By starting early, he suggests not only learning to save early but investing in yourself early as well by taking classes that may not be useful in your main profession but will be useful to you when you start investing and start your own business.
By learning, he doesn’t only mean thru books but also seminars, classes as well as actually taking jobs and from mentors that would help you learn business skills such as in sales or marketing or how to work with and manage other people. These are all skills that you will need in order to work smarter, not harder and they will be useful when you finally start your own business.
Don’t Forget to Give
Kiyosaki encourages us to be greedy in our pursuit of building wealth but he does not mean doing so without taking into consideration our relationships with people in the process. That’s why he encourages that employers should get the best people to help them run their business and pay them what they deserve instead of focusing on how to cut costs. He shares that when his staff get a big paycheck, he feels happy because it means that his business is going to get big profits too.
He also encourages giving without the thought of getting something back. That’s why so many rich people make it a habit to contribute to their favorite charities or have created charitable institutions of their own. Being able to help others is a big part of having a good money mindset.
A simple form of this is to share your knowledge with other people. It is a great feeling when someone you shared your knowledge with comes back to you and tells you how it improved their life. In the process, you also gain new friends and expand your network for future opportunities.
It’s Never Too Late
This being said, it is not too late to start learning and investing and looking for opportunities to build your wealth. Kiyosaki provides several examples of people who started building their success after they have retired or after losing much of what assets they previously had.
As long as you have an open-mind, are willing to keep learning and are bold enough to go after opportunities as they come, then you will always spot opportunities to build your wealth. In the process you will keep honing your money mindset until you acquire a wealth mindset. The key word here is to build gradually instead of indulging in get-rich-overnight schemes. It may happen to a lucky few but it may not happen to you, so its better to do it slowly but surely as long as you keep on doing it.
Learn, earn, learn some more, earn some more. That’s how Kiyosaki did it since his younger years. He was lucky to have a rich dad and a poor dad who showed him contrasting beliefs and attitudes about money and wealth and he was able to learn from them. Now, we are lucky that he has provided us the chance to learn what he has learned and it is a great opportunity that we should not pass up.
Go and get the book yourself and start reading. I will be reading it again to see what nuggets I can learn that I missed before.
Updated. First published on Pinoy Smart Living as “Thoughts After Reading Rich Dad, Poor Dad” on 2018.07.31.