6 Life-Changing Lessons from "Rich Dad Poor Dad" đź’°đź“š
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Use of scripts:“Rich people don’t work for money Before we get to the famous financial lessons, we’re going tell you a story. The story of 9-year old Robert Kiyosaki. It begins in the 1950’s. Robert and his friend Mike were curious boys with big ambitions: When they grew up, they wanted to become rich and make a lot of money. But just how they were going to accomplish that they didn’t actually know. So, after a failed attempt to produce coins from melted toothpaste tubes, the boys decided to get some advice. They asked their dads how they could start becoming rich. You might be able to guess what Robert’s own well-educated but “poor dad” replied: “Go to school, study, and find a good job.” It’s familiar advice – but it’s pretty misguided. If you follow guidance like this, you’ll spend your entire life breaking your back to increase your pay, while others – the government, bill collectors, and your bosses – take most of the reward. In other words, Robert’s poor dad might as well have said, “Go and join the rat race, the endless routine of working for everyone but yourself.” Now, lots of people still follow poor dad’s mantra – but many do it out of a sense of fear, a powerful sense of distress at the idea of violating the expectations that society drills into us. A good job is what leads to wealth, we’re told, so we study hard as kids and work even harder as adults. The result? We may be avoiding poverty, but we’re certainly not growing any wealthier. But there are some people who don’t teach that mantra to their kids – people who know how money is created, increased and maintained. Rich people, in other words – people like Mike’s father, the rich dad who became a financial mentor to both boys. So what did Mike’s dad suggest? At first, nothing. He made a deal with the young Kiyosaki, offering to teach him what he knew about money if the boy would work for him at the measly rate of 10 cents an hour. Robert agreed – but after a few weeks of being underpaid, the boy returned to his “rich” dad, seething with anger and ready to quit. “You’ve exploited me long enough,” he said, “and you haven’t even kept your promise. You taught me nothing about money in all those weeks!” But there it was: his first lesson, delivered by his new mentor with a slight smile. Robert Kiyosaki had just learned that life often pushes you around. And he’d learned that working for money does not make you rich. Which is why: Rich people don’t work for money. So you might ask yourself: if the rich don’t work for money, then how do they get wealthy? Through theft, maybe, or by winning the lotto? Educate yourself about finances, identify real assets, and invest in them Let’s answer that question from the last HeardLy: No, it’s none of the answers above. The rich become rich by making their money work for them. Instead of spending all their income on fripperies and luxuries, they invest a portion of it in assets of various types. And then, rather than working for money, they let their assets make money for them. But let’s not get ahead of ourselves – when we left off, Robert was still just a kid, and the word “asset” didn’t belong in his vocabulary. But Mike’s dad, the rich dad, was about to change all that. One day he sat the boys down and explained to them that the rich buy assets, whereas the less well-off buy liabilities – often in the mistaken belief that it is, in fact, assets they’re acquiring. In truth, he explained, an asset is anything that adds money to your wallet. A liability, on the other hand, is something that takes money away. This differentiation is very important, and not many people get it right. So let’s look at an example. A house is often considered an asset, right? But actually, it’s one of the biggest liabilities you can have. Buying a house often means working your entire life to pay off a 30-year mortgage and property taxes, meaning it takes money out of your wallet. A house bought with a mortgage works against you in two ways: First, you’re guaranteed to have a massive expense taken away from your income every month – for the next 360 months, and this is a tell-tale sign of a liability. Second, those 360 payments could have been invested in way more lucrative assets that put money in your wallet. Rich dad phrased the lesson as simply as he could for the two boys: “If you want to be rich, all you have to do is identify true assets and buy them. Spend your life buying liabilities, though, and you’ll never make it.” Rich dad explained that a poor person’s salary goes straight to covering immediate expenses, like rent, tax and food. A middle-class person’s salary needs to cover similar expenses too – as well as liabilities like a mortgage, school loans, credit cards, and other forms of debt. But rich people? Instead of needing a salary, their assets bring in enough money to provide for them and often leave them with enough to invest again – like stocks, bonds, or real estate you rent to tenants. The result of that re-investment is that their income goes up once more, meaning that the rich keep getting richer. This is so important, I am going to say it one more time: If you can keep your liabilities and expenses low, you’ll be able to invest what’s left over in assets – and have your money work for you. Do that, and before long you’ll find yourself amassing a small fortune. Mind your own business: make money for yourself, not your employer At this stage, you might feel like objecting. Sure, it’s easy to criticize secure, “rat-race” jobs while telling people to acquire assets – but how can you afford to buy those assets if you don't have a job in the first place? Is the money meant to fall from the sky? Nope. No one’s telling you to quit your day job – not yet, at least. What Kiyosaki does stress, though in his third lesson, is the importance of “minding your own business”. Now, that doesn’t mean keeping your nose out of other people’s lives – not in this context. It simply means tending to your own finances, and making money also for yourself, not only your employer. In other words, minding your own business means making money through your portfolio of assets rather than through promotions, bonuses and raises. When it comes to personal finances, though, there’s a difference between your profession and your business: Your profession is whatever you do 40 hours a week to pay the bills, buy groceries, and cover other living costs. Usually, it gives you a specific title such as “restaurant owner” or “sales manager“. Your business, on the other hand, is what you invest time and money in to help grow your assets. So, how does this tie in with Robert’s journey toward financial success? Well, when he was young, his poor dad advised him to focus on finding a secure and well-paying job. His rich dad, on the other hand, told him to start buying assets. Guess whose advice he took? That’s right – Rich Dad’s. Robert opened his first business at age 9, where he paid his friend’s sister to rent out comic books to the kids in the neighborhood. Others did the work, he just collected the money. When he was older, he worked a day job too. In fact, he put in long hours as an employee of large companies like Xerox and Standard Oil of California – but all the while, he was keeping his expenses and liabilities low, investing what remained of his salary, and collecting a healthy portfolio of income-producing assets. That’s how Kiyosaki learned to mind his own business. Sure, he had a job too – but what ultimately made him rich was the growth of his assets. The time he spent working for companies and investing his earnings taught him to think of his assets as his own employees: every single dollar he put into assets was working for him, making him money even while he slept. Sounds pretty sweet, right? Well, if you want to get rich, adopt the same attitude. Odds are that your salary won’t make you really wealthy, even with promotions and bonuses thrown in. What your salary can do, is help you buy the assets that will enrich you. The lesson? Learn to distinguish between your profession and your business, because only one will make you rich. You know which one. By understanding the tax code and the legal system, the rich stay one step ahead of the systems designed to rein them in When Robert was back in school, one of his favorite stories was the tale of Robin Hood and his band of Merry Men – the pack of traveling vagabonds who stole from the rich to give to the poor. It was a thrilling story, he thought – but his rich dad disagreed. To him, Robin Hood seemed like a crook. You see, rich dad blamed the Robin Hood fantasy for inspiring the tax system he despised. Just as Robin Hood took money from the rich and gave it to the poor, so too did the government try to take from the rich to give to the needy. But, as rich dad explained, they didn’t actually succeed. The way rich dad saw it, it was the middle class that ended up shouldering the burden of taxation, not the rich. The rich were far too clever and well-equipped for that, and deflected tax with sophisticated tools. One of the tools that the rich use to shelter themselves from tax is the corporation. A corporation is allowed to spend pre-tax dollars, after all, and is only taxed on what remains after expenses. Individuals, on the other hand, are taxed first – and only then are they allowed to spend the remainder. It’s an important distinction. Imagine if you were only taxed on the part of your salary you didn’t spend! By shielding their assets using corporations, the rich can avoid paying tax like the middle classes and the poor do. But that’s not the only benefit a corporation offers the rich. When you form a corporation, it limits the amount of money that you can lose if your enterprise goes under. Think of it this way: if you, as an individual, default on a loan, you need to sell your possessions, declare bankruptcy, and do whatever else the law of the land requires. But if a corporation fails and can’t repay its creditors? Well, the owners lose their investment – but that’s it. No one comes and takes their personal belongings. No one reclaims their houses. Corporations allow the rich to reap huge financial rewards without facing comparable risks. So what’s the lesson here? It’s this: By understanding the tax code and the legal system, the rich stay one step ahead of the systems designed to rein them in. Most of us aren’t given a financial education Okay, let’s go back to Robert Kiyosaki’s story. When Robert and Mike were still young, Rich Dad took them under his wing, and gave them total access to his private business dealings. They sat in on his meetings with bankers, attorneys, and accountants, and discovered what being a successful business owner involves. As a result, the boys learned a lot, and they learned it quickly – but before long, they began to encounter problems. You see, the skills the pair were learning from rich dad made it pretty hard for them to take school very seriously. Over and over again, they were told that study and hard work lead naturally to success and wealth: the idea that financial literacy might also be important didn’t seem to occur to anyone besides rich dad. Children aren’t taught about subjects like saving or investing, and as a consequence are clueless about topics like compound interest. Clear proof of this is the fact that, today, even high schoolers often max out their credit cards. This lack of training in financial intelligence is a problem not only for today’s youth but also for highly educated adults, many of whom make poor decisions with their money. Think about it: Most people completely lack a retirement plan. In the United States 50 percent of the workforce are without pensions. And of the rest, nearly 75 to 80 percent have ineffective pensions. Well, clearly, society has left us poorly equipped in terms of financial knowledge. But getting financially literate is one of Kiyosaki's key lessons. So what do you do? Educate yourself! And start establishing a financial strategy. Get yourself a financial education by following three steps: assess your current situation, set financial goals, and finally build the financial intelligence to reach them You can start the journey toward personal wealth at any point in your life: but the earlier you get going, the better. Obviously, if you begin at 20, you’re far more likely to become rich than if you begin at 30. But regardless of your age, the best way to get started is by following these three steps. First, appraise your finances. Second, set yourself some goals. And third, acquire the education necessary to reach them. Let’s go through those in some more detail: In the first step take an honest look at your current financial state. With your current job, what kind of income can you realistically expect now and in the future, and what kind of expenses can you sustainably handle? You may find that the new Mercedes you’ve been drooling over simply isn’t affordable right now. Remember: be honest! And don’t consider money you don’t have. After this, you can set realistic financial goals. You could say that you want that Mercedes to be within your reach in five years’ time. Kiyosaki’s wife Kim waited four years and eventually bought her Mercedes from earnings from their apartment buildings. Alright, the next step is to then start building your financial intelligence. Consider this an investment into the greatest asset available to you: your mind. Learn how to deal with money. For example, if you’re afraid of rejection, try a short spell working for a network marketing company. While you might not get an amazing salary, you’ll gain a lot of sales skills and self-confidence, which will be very useful in the future. You can also improve your finance education in your spare time. Enroll in finance classes and seminars, read books on the topic, and try to network with experts. Did you get that? Let’s repeat these steps one more time: assess your current situation, set financial goals, and finally build financial intelligence to reach them. If you base your financial foundation on these building blocks, there’s a good chance you’ll become wealthy one day. And park that Mercedes in your garage. Financial intelligence and courage allows the rich to “invent” money in any situation In this HeardLy, we’re going to look at your attitude in financial matters. Because if you do want to change your current financial state, you’ll need to start handling your finances differently. The biggest change you most likely need to make is learning to take risks. In the real world, it’s often not the intelligent who get ahead: it’s the daring. Call it what you want – chutzpah, guts, audacity – being brave enough to take risks is something the rich all have in common. Why? Well, if you don’t conquer fear, you’ll allow great opportunities in life to pass you by. That’s why the studious and the intelligent often struggle financially – their fear of society’s disapproval prevents them from leaving the “rat race” and growing wealthy. And their fear of losing money is so powerful it prevents them from investing in stocks or other assets. They fail to appreciate that success always takes guts. That’s why financial intelligence can be boiled down to two key ingredients: knowledge, of course, but also courage. It’s these two factors that set the rich apart from everyone else. And that is lesson 5. Financial intelligence allows the rich to “invent” money in any situation. They’re able to spot opportunities; they know how to respond to them; and they have the daring to follow through. From the outside, it looks like they’re just lucky – but in fact, they’re creating their own luck. Sitting in on rich dad’s business meetings, Robert and Mike learned a lesson school couldn’t teach them. In the real world, success takes guts, not just hard work. When you combine courage with financial knowledge, you can spot opportunities quickly and make the most of every one. In other words, you can almost “invent” money. Instead of playing it safe, try investing your money in stocks, bonds or tax lien certificates Alright, let’s dig a bit deeper into the notion of risk in this HeardLy. What does it actually mean? First of all, taking risks means not always being balanced and safe with your money, which is what you’re doing when you put it in basic checking and savings accounts at the bank. Instead of playing it safe, try investing your money in stocks or bonds. While these are considered more risky than typical bank accounts, they have the chance of generating much, much more wealth. Sometimes – as is the case with stocks – this can happen in a very short period of time. Or, if you don’t wanna commit yourself to the stock market, there are a number of other investments that will help grow your wealth in the long run. Take real estate or so-called tax lien certificates. With tax lien certificates, interest rates range between 8 percent and 30 percent – much higher than 0.21 percent, which was the average savings account interest rate for America in 2013. Of course, the higher the potential for return, the higher the risk. With stocks, for example, there’s always the slight chance you could lose your entire investment. But if you don’t take the risk in the first place, you’re guaranteed not to make any big returns. So you see that taking those bigger chances and handling the bigger risks they present is necessary in order to start making a bigger income. It is what rich dad would want us to do. Don’t just work to earn – working to learn is much more important So far, we’ve learned that your money should work for you, we’ve learned about financial intelligence, and we’ve learned the value of being bold. But there is one more important lesson to learn from rich dad. When Robert graduated from college, he landed a steady and well-paying job almost immediately. For most people, it would have been a dream come true – and that’s exactly how his educated but poor dad saw it. I mean, we already know it: poor dad saw a secure career and persistent work as the only sure-fire way to grow wealthy. Not rich dad, though – and not Robert either. After about six months, he quit his job, and joined the Marine Corps to learn how to fly. His poor dad was bewildered – but his rich dad congratulated him. Why? Not because he encouraged recklessness, but because he understood exactly what Robert was doing. He wasn’t trying to make a steady salary: he was trying to learn. He was searching for work with something useful to teach him. His rich dad had drilled it into him: knowing a little about a lot was important for anyone who wanted to make money. That’s why Robert was working to learn, not just to earn. After all, making money was what his assets would be for. His poor dad couldn’t understand. To his mind, Robert’s behavior was the precise opposite of what made people money. You see, he was an academic man, intelligent and well-educated, with a PhD. His path in life had taught him that it was specialization, not a broad base of skills and knowledge, that led to riches. In the academic world, the higher up you go and the more you learn, the narrower your topic of study. In much the same way, doctors are often eager to specialize in a single chosen field, like orthopedics or pediatrics, as soon as they graduate. For some people, specializing like that might make sense. It didn’t help poor dad, though, whose PhD never did much to boost his earnings. Rich dad, on the other hand, had a broad base of knowledge – but never finished the eighth grade. That’s why he encouraged young Robert and Mike to spend time in a whole host of different departments of his business empire. Over time, they worked in restaurants and construction, sales and marketing, accounts and reservations. The aim wasn’t to find one single field they might like to spend their careers in – it was to equip them with the range of skills and knowledge necessary for growing rich. That’s why the sixth and final lesson is: Don’t just work to earn – working to learn is much more important.” Title Usage:“Rich Dad Poor Dad : What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! · CELEBRATING 25 YEARS AS THE #1 PERSONAL FINANCE BOOKOF ALL TIME” Content in English. Title in English.Bilingual English-Chinese subtitles. This is a comprehensive summary of the book Using Hollywood production values and cinematic style. Music is soft. Characters are portrayed as European and American
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