Four things I learnt from the Rich Dad.

I have read man books and listened to numerous audio books, but one of the best is the Rich Dad, Poor Dad series from Robert Kiyosaki and Sharon Lechter. The books talks about the lessons the author learnt from his real dad and his dad’s best friend about money, entrepreneurship, investments, business and wealth. Here are four lessons I learnt from the Rich Dad.

1. Your problem is not money, it is education.

Many people believe that, their major problem is money and if they should have a lot of it, all their problems will disappear. Well that is not entirely true. Your major problem is education, and not just any type of education but financial education. How many times have you seen people who come to acquire lots of money either by lottery or a gift and easily lose all their money in a few months? There is something called a financial mental blueprint that becomes the default mode of every person in all matters involving our finances. This mental blueprint is formed as we grow up and it is influenced by our early experience of issues dealing with money mostly from our parents and other guardians. It is re-enforced as we grow and gradually sets itself in our mind. So anytime issues of money arises, our, minds quickly go into default mode and starts operating. So if you grew up hearing things like “money is hard to come by”, “we are poor “, “rich people are greedy” and all manner of negative things about money and wealth, you grow up behaving exactly that way. For instance, if you grew up hearing your parents and others around you always talking about being poor, broke and in debt you may form the mental blueprint which says “poor, broke and in debt” and no matter how much money you make, at the end of the day, you will go back to being poor, broke and in debt.  For some others, it is “spend all you get” and therefore let them earn a million cedis today, they will manage to spend it all without realizing it. Some people are able to repress their mental blueprint, but it eventually shows in their affairs. So how do you repair the default mode? By going to settings in your mind and resetting your mental blueprint. You do this by gaining financial education and replacing the old information you grew up with. Learn about investments, savings and money management. Learn about personal financial budgeting and economics. Remember this will take time. It took years to form your mental blueprint and therefore your mind requires sometime to reset. So repeatedly re-enforce your new knowledge and go to work on them. Practice is the best way to learn so put your education to work. Invest, save and manage your finances. Get the education and you will realize that no matter how much you earn, proper financial knowledge will enable you have a good life.

2. Know the difference between assets and liabilities.

One of the best things about the Rich Dad, Poor Dad book is how simplified the authors present their information.  Avoiding all the complex business definitions, an asset is simply something that puts money in your pocket and a liability is something that takes money out of your pocket. Now pause and ask yourself this question; how many assets do you have and how many liabilities have you accumulated? Not a very good sign huh? Well, that is the financial mess most of us have put ourselves in. We buy things that take money out of our pockets and think we are buying assets. I am very sure most of you, my readers, have not acquired a single asset. True? Well take stock now, the more liabilities you have, the longer it will take for you to achieve financial independence. So think twice, whenever another fancy gadget catches your attention. 

3. Let your assets pay for your liabilities

Now that we know about assets and liabilities, this is what you should do. Find an asset and acquire it as soon as possible. It could be a Treasury bill, bond certificate, business or anything that puts money in your pocket. Then use that money you receive to pay for your liabilities. Remember, it should be your profit from the asset and not the principal or just the earnings. Many people make the mistake of spending everything they make from an investment or business and end up destroying the asset. If it is a business, pay yourself a salary and invest the profit back into the business. If it is an investment, divide the earnings into two and reinvest half of the profit in addition to the original principal. This ensures progressive increase in profits. Get your assets and let them pay for your liabilities.

4. Work towards becoming a business owner, an investor or both

You do not have to quit your day job to become a business owner. These days it easy to start a part time self-owned job alongside your regular job. If you manage it well, it will definitely make you rich. Most times people have ended up quitting their regular jobs because their part time businesses earned them more than their regular jobs did. Added to the extra time it frees and the independence it comes with, being a business owner is the ultimate goal. Another level is being an investor. Learn about the various investment vehicles available and get involved. A good investor gets money to work for him every day, every minute and all the time. It is interesting to note that, almost all the wealthiest people in the world are either business owners, investors or most times, both.

In conclusion, the Rich Dad, Poor Dad book is awesome. Get the book and learn your lessons in addition to mine. As bonus packages for my cherished readers, if you would like a free e book, send me an email and I will send it to you as an attachment. Have a great day. My email ad is tinagyei@gmail.com.

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