The Rich Dad & Poor Dad Mindsets
Rich Dad only had an 8th grade education:Now this is not to discourage a full formal education. Rather, it highlights the fact that despite not finishing high school, or going to college, Robert's Rich Dad was able to become a very successful businessman.The point here is that the main tools necessary for financial success - financial literacy - are not being taught in our schools today. This is alarming! And yet we can all testify to that. Even while we pursue our advanced degrees, or encourage our kids to do so - we should be sure to seek and build our financial literacy. Knowing the difference between assets and liabilities... knowing how to read an income statement and a balance sheet... these are the key things that the Rich Dad was able to learn. Despite only having completed the 8th grade. How Can I Afford It?Asking oneself this question isn't, as it may seem at first glance, materialistic. It doesn't suggest that you go out and buy that Mercedes you've been wanting, on credit.Rather, it suggests that you get rid of the Poor Dad way of thinking, which simply says "I can't afford it". Instead, you determine how much you would need in order to purchase the item... and then (here's the key), you figure out how to generate that money via passive income (not by borrowing against your credit, or your savings). "Study hard, so you can find a good company to buy."This is another point that highlights the problems with our education system. Indeed, our schools train most of us to be good employees. But not good business owners.As is illustrated in a future book by Robert Kiyosaki, the "Cash Flow Quadrant", employees, and the self-employed, own a job. Their entire financial existence is tied to that job. if they stop working, they stop making income. On the other hand, business owners and investors generate passive income. That is, even when they don't show up, they still have money flowing in. The only wall between employees and business owners, is financial literacy. Unfortunately, most of us employee types don't look for a ladder with which to climb that wall. Instead, we look over the wall at the nicely-trimmed hedges and swimming pools on the other side. And then go back to work. There is no pride, in coping with a situation you can change. "Learn to manage risk."Risk aversion is one of the main reasons why those of us on the employee side of the equation don't learn how to become business owners. It is different from everything we've learned, everything we've been, up until now. And most of the people we know are also employees. Thus, there seems to be safety in numbers. There seems to be financial security in numbers.The unfortunate reality is that it is much more risky to tie our financial future to being an employee. These days, with rising oil and gas prices, threats of a recession, and lots of fluctuation in global markets... one's job is never guaranteed, from day-to-day. I've had the good fortune of losing 2 jobs in the past 4 years. Each time, it has been a great opportunity for reflection. That time off has allowed me to step back from the grindstone, and realize that so much is out of my control, as an employee. Even assuming I play everything safe, play the perfect employee, and hang on to a well-paying job for 10 years or more... the price of doing that is too high for me. It is trading my time for money. And there is no leverage in that.
Visit Robert Kiyosaki's Rich Dad, Poor Dad web site.
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