Rich Dad, Poor Dad: Three Profitable Lessons For Small Business Owners and Creatives - Part 2
Welcome friends, today we will look at three more valuable lessons from the book Rich Dad Poor Dad written by Robert Kiyosaki. My name is Lucas and welcome!
If you’re not familiar, Rich Dad Poor Dad illustrates the financial habits of the wealthy and empowers the reader to improve their finances.
Growing up, my financial education was poor so when my uncle Owen introduced me to the book at 17, I felt like I had struck gold. After two and a half decades of using the book as an instruction manual, I thought it would be fun to point out which lessons have been the most profitable and share how I use them to build businesses and improve my finances. So let’s get into it..
(If you prefer to watch the video, please check it out here…)
Know The difference between Assets & Liabilities and buy assets.
In Robert’s words, “An asset puts money in my pocket. A liability takes money out of my pocket.” He goes on to say, “The rich buy assets. The middle class buys liabilities they think are assets and the poor only have expenses”.
Now, Robert discusses the importance of acquiring income producing assets like rental real estate and owning businesses and if you’d like to dive deeper, check out chapter four but I’d like to talk about assets and liabilities from a slightly different angle.
After years of working with clients who were raised in a consumer culture, it’s obvious to me that most of us trap ourselves in the paycheck to paycheck cycle because we buy too many liabilities. There’s a lot of reasons why we do this but in my experience, the most common is that we have no accountability for our spending.
So, I’d like to offer a simple solution - every time you’re about to spend, ask yourself… “Will this put money into my pocket or will it take money out of my pocket”. You can still buy the thing but by running our purchases through this filter, we yank ourselves out of mindlessly consuming.
It’s a simple way to interrupt our old spending habits and create more accountability. Plus, the answer is always relative to your specific situation. For instance… Buying a $5k camera for most people would be a liability but as a photographer, I know that the camera will put a tremendous amount of money into my pockets.
A liability for one person can be an asset to another so If you’d like to improve your business and personal finances, ask yourself, “Will this put money into my pocket or take money out?” Practice focusing your time and energy on acquiring assets and once they put money in your pockets, use some of the proceeds to buy yourself a few fun liabilities!
The Poor and Middle Class Work for Money. The Rich Have Money Work for Them.
Robert shares several ideas and strategies throughout the book on how we can get money working for us and I highly recommend you read through it.
Having said that, most of the people I work with feel like they don’t have money to invest so I’d like to offer a second way to getting money working for us. As Robert says, “it’s not about how much money we make, it’s about how much money we keep”
In session one of The Big Split Program (which is free by the way - click here to schedule a call), we look at your income and expenses for one simple reason. Most of us have a surplus of cash that we’re not aware of.
For example: I recently met with a family of four - we ran their income and expenses and I showed them how they had been wasting $60k a year.
Ninety nine percent of the people I meet with are sure that they don’t have money to save or invest and so they hustle - thinking more money will fix their finances. This couple had two jobs each, meanwhile, they were sitting on $60k per year that they could easily put to work.
The fastest way to get money working for you is to do more with the money you already have.
Mind Your Own Business
In Robert’s words,
“The rich focus on their asset columns while everyone else focuses on their income statements.”
Most people are hyper focused on making more money so they work overtime, get more certifications in hopes of a raise, or work a few side gigs. All the while, they’re not buying assets and as you learned in the previous example, not entirely sure how to manage what they already have.
In my experience, “Minding our own business” is a combination of acquiring assets and removing the habits that are keeping us poor. When we identify and then plug our financial leaks, we’re able to free up more cash, buy more assets and when more money does come in, we know exactly what to do with it.
In Summary
And there you have it.. Three extremely profitable lessons from the book Rich Dad, Poor Dad by Robert Kiyosaki. Robert does a fantastic job of simplifying complex financial concepts so if you’d like to improve your business and personal finances - give it a read.
And if you’d like 3 more helpful tips from the book, check out this video…
Thank you for your time and energy! I’ll see you in the next one!
- Lucas Z.