Secrets of the Rich
Below are some of the secrets the rich dad shared with Robert:
Rich don’t work for Money – Rich people work primarily to educate themselves and not for the money. Robert and his friend Mike, the son of the rich dad were employed to work for the rich dad for small pay in a retail store. Because they received small pay, they wanted to quit. Little did they know that this was a lesson that the rich dad was trying to teach them. The lesson was that people should learn the business of where they’re working with the aim of starting their own business in the future. The author also stresses that opportunities in life come and go; the rich recognise them straight away and make a fortune from them.
Learn financial literacy – people buy a house using a mortgage and instantly consider it as an asset when its actually a liability as the house is not creating any extra income. The house is just using up all the resources of the person who has bought it on mortgage. Financial literacy is something which is not taught generally in schools as you are mainly taught how to earn good grades, get a good job and be good at working for someone else. The rich dad advised the author to build a steady asset base which will create income to self fund the purchase of other assets. The key lesson the rich dad tried to show in this chapter is learning how to differentiate between an asset and a liability and think how to make money from your assets.
Mind your own business – The lesson to be learnt in this chapter is people should aim to start up a business side by side alongside their day job. Don’t spend all your salary. Save on the side and think of ideas of which the money could be used for in the future. Don’t sit and wait for opportunities to present themselves. Strive for ways to become your own boss
The History of taxes and power of corporations – The rich possess the knowledge and are savvy enough to use the power of the corporation to protect and enhance their assets. The benefit of a corporation versus that of the individual is based on how companies pay taxes, according to Robert. Individuals earn money, pay taxes on that money, and live with what’s left. The corporation, on the other hand, earns money, spends everything it can, and is taxed on anything that’s left. He adds that individuals may not be aware of how much they’re being manipulated; they work to enrich the government by paying taxes on their income whilst the rich are hardly taxed. Understanding how a business operates is very important and Robert suggests analysing financial statements of companies.
Rich Invent Money – “Often in the real world, it’s not the smart who get ahead, but the bold.” There are countless numbers of poor people that are extremely talented and many rich people with relatively little or no intellect at all. We tend to assume that more money always has a positive correlation to being more educated, more talented, or adding value to society. The truth about money is quite different.
“The poor and middle class work for money,” Rich Dad would say. “The rich make money. The more real you think money is, the harder you will work for it. If you can grasp the idea that money is not real, you will grow richer faster.”
I hope this post can educate us all as we all strive to become rich! Never limit yourself or be content with your current level – being content leads to complacency placing yourself in a false sense of security, which is detrimental in the long term. Go hard!