Wisdom of Rich Dad

I would like to briefly talk to you about opportunity. Many people fail to see opportunity before them – either because they claim they are too busy or because they just are not looking in the right place. Or maybe it’s because they have immersed themselves in life: from their job to their children, there really isn’t much time for anything else.

Oftentimes, people miss opportunities before them because of these reasons – or should I say, excuses.

A great opportunity lies ahead of us over the next few years. Those who have prepared have already reaped the benefits and will continue to do so. There are people out there profiting off of this recession. There are people who have used this recession as their opportunity.

I would like to share a quote with you to further explain what I mean: “Success always comes when preparation meets opportunity.” Most often attributed to a Mr. Henry Hartman, on whom I was unable to find information, this quote resonated deeply with me since I first heard it.

Instead of looking at the recession as a bad thing, look at it as an opportunity to accumulate wealth. Look at it as a stepping stone for your retirement goals. Look at it as a chance to start a business. Look at it as a chance to prepare.

As Robert Kiyosaki, entrepreneur and author of Rich Dad Poor Dad, has said: “This crisis is the biggest opportunity in the history of the world.” This statement could not be more true. It just depends on how you look at life.

I firmly believe that, in America, anything is possible. I believe people come here looking for a better life. Whether rich, middle class, or poor, there is always a chance for you. While we may not all start off in the same position in the marathon of life, there are always opportunities for us to cross the finish line together. Don’t let fear or self-doubt stand in your way.

So what can you do to start? Here are a few suggestions:

1. Get your financial education, as Kiyosaki always says. (And yes, there is ALWAYS time. It just depends on what you want to spend your time doing).

2. Read magazines and newspapers like Forbes, Money and The Wall Street Journal. Watch channels like Fox Business and CNBC. CNBC is a great place to learn about money and entrepreneurship.

3. Read as many books as you can. My suggestions to get you started are: Rich Dad Poor Dad by Kiyosaki, The Lexus and the Olive Tree by Thomas L. Friedman, and The 4-Hour Work Week by Timothy Ferriss.

4. Don’t ever stop being a student. Take classes and attend seminars on finance, economics, and investing.

5. Learn about handling your personal finances.

6. Get out of bad debt as quickly as possible – particularly credit card debt.

7. Save money and invest in things like real estate – so your money doesn’t lose value. There are many opportunities for novice investors out there as property values continue to decline. Do your due diligence. (You may even have a chance to help somebody in foreclosure by assuming their mortgage).

I have implemented, or am in the process of implementing, all of these strategies. They are all things I have read about or learned about over the past few years. I would not recommend them if I didn’t think they would work. Some things may not work for you. That’s fine. The point is to try things and learn things that will make life better for you and your family.

Here’s to your success this year and in years to come.

I’ll see you at the finish line.

~ Matthew Sapaula

A few years ago, Donald Trump and Robert Kiyosaki wrote a profound book titled, “Why We Want Your to be Rich”.  This was eye-opening work which shares shocking facts about the American economy that most Americans don’t realize.

Whether your are rich or poor…the fact is the American middle class is disappearing…quickly.  It is no secret that we have losing manufacturing and jobs to countries overseas by the millions. Middle-class families like the one I was raised in are having a tougher time each year.  Staying ahead of the economic shifts which affect retirement planning, the ability to send our kid’s to college, keeping gainfully employed and staying on a path aimed towards financial security is tougher and tougher when you don’t put time on our side. (Yes, that means STOP procrastinating!)

Some might say that we are already in financial slavery to banks and credit card companies.  A favorite Proverb of mine says that, “A borrower is a slave to the lender.”  Do you owe anyone money?  How does that feel when you walk in the same room with them and you haven’t settled your debt?  Catch my drift?

In short, you have to decide whether you want to be rich, because there will no longer be a middle-class America.  It’s either you are going to be rich…or poor. 

In an age of consumerism, it is easy to get the “financial handcuffs” shackled on our wrists before most kids graduate college and enter the workforce.  Families have to continue borrowing to keep up with lifestyles they can’t really afford.

A Saturday Night Live spoof with Steve Martin displayed a parody on actually buying something only when you have to CASH to do so!  That’s right, don’t buy stuff you can’t afford!  I know, easier said than done.

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TORONTO – As Canadian consumers waded deeper into debt during the so-called Great Recession, the federal government decided it was time to boost financial literacy, a life lesson many Canadians missed before their balances plunged deep into the red.

Finance Minister Jim Flaherty launched the Financial Literacy Task Force in June, citing his belief that a financially literate population would create a more stable economy.

After a 20-year trend of increased household debt and reduced savings, combined with easy credit and dwindling pension plans, financial planning must be ingrained in Canadians, said Tom Hamza, president of the Investor Education Fund, an arm of the Ontario Securities Commission.

“The recession has caused us to focus on these things to a certain extent, but these problems have been brewing for a long, long time,” he said.

The fund is part of a working group charged with figuring out how to integrate financial lessons, such as how loans and credit work, into Ontario’s curricula for Grade 4 to 12 students by September 2011.

Hamza said that educating children about money matters can help combat some of the damaging examples many parents have inadvertently taught their children over the last two decades.

“That is the exact time period that our household debt levels have gone up, our savings levels have plummeted, and we’ve changed our perspective from ‘Can I afford it?’ to ‘Can I afford the payments?”‘ he said. “That’s the circumstance in which our kids are learning.”

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Financial freedom is the dream land of personal finance. It is the freedom to stop working anytime you want and still be able to live the lifestyle you desire.

To achieve it, the key is passive income, which is the income you earn without doing active work. For instance, the interest of your saving account is a kind of passive income. You do not need to work to earn it. You can sit and leave the account alone, and you will still earn the interest. To achieve financial freedom, your passive income should be greater than or equal to your expenses.

From what I learn, what we should do to achieve financial freedom can be boiled down to two rules:

1. When you work, work to build a system
2. When you buy, buy an asset

Pretty simple, aren’t they? They are simple but powerful. I might miss something (and feel free to let me know in the comments), but I think these two rules cover practically everything we need to do to build passive income and achieve financial freedom.

Let’s look at them in more detail:

1. When you work, work to build a system

This first rule deals with how you should spend your time. I first learned about this from StevePavlina.com podcast #006. Instead of spending your time working for money, you should spend your time building a system that will generate money for you. There is a big difference between them.

If you work directly for money, you always need to work to earn more money. There is no way you can earn money if you do not work. Here are some examples:

• A freelancer must work on a project to earn money.
• A doctor must work with the patients to earn money.
• An employee must work at the company to earn a salary.

When they stop working, their income will also stop. No matter how hard or how long they have worked before, when they stop working their income will also drop to practically zero.

Compare it with those who build a system. If you build a system, you can stop working anytime you want and the system will still generate money for you. Here are some examples:

• A business owner who has a system in place can leave the business to a manager and still earn income.
• A web site owner can stop working on the site and still earn income (e.g. from “automatic” advertisements like Google AdSense).
• A book writer can stop writing and still earn royalties from the books she has written.

When these people stop working, their income won’t just fall to zero. Instead, their system will continue to generate money for them. When they feel that the system they build is already strong enough, they can move on to create a new system and therefore a new income stream.

From these examples we can see in which category we currently fit. Are we now building a system or work directly for money?

Of course, if you find yourself working directly for money, it doesn’t mean that you should quit your job right away and start a business. There should be a transition period, or – if you love your job – you can work on both of them. The important thing is balancing your priorities. You should prevent yourself from being too absorbed in the job that you can no longer build a system, but you should also be sure that you have the financial resources to meet your needs.

2. When you buy, buy an asset

This second rule deals with how you should spend your money. I first learned about this from the book Rich Dad Poor Dad by Robert Kiyosaki. The definition of asset here is something that generates money. Based on this definition Kiyosaki said that house is a liability and not an asset because a house incurs costs (such as electricity, water, and maintenance) without generating income (unless you rent it).

So – in other words – this rule says that when you buy, buy something that generates money. Of course, it doesn’t mean that you may not buy a cup of coffee (which doesn’t generate money), but the idea is you should use your money as much as possible to buy assets.

Here are some examples of assets:

• Real estate (from which you earn rental income)
• Mutual fund
• Stock
• Business tools or equipment
• Education

Using this rule, you can see whether or not an expense is wise. If the expense allows you to generate more money in the future, then it is a wise one. Otherwise… well, you can guess.

One cause why many people never achieve financial freedom is they use their money mainly to buy liabilities and not assets. On the other hand, people who achieve financial freedom are those who are willing to postpone pleasures to first build their assets. It is the passive income from the assets that will eventually buy them luxuries.

***

From these two rules, there are two questions you should ask yourself:

1. “Am I building a system?”
2. “Do I buy something that generate money?”

The goal is to answer “yes” to these two questions as often as possible. Spend your time to build systems, and spend your money to buy assets.

About a year ago, I picked up the book ‘Rich Dad, Poor Dad’ by Robert Kiyosaki. The read was revolutionary for me and inspired me to move past fears that have stopped me from doing more with my life financially.

Since reading that book, I have read several others by Robert Kiyosaki and his ‘Rich Dad Advisors’. I have also attended several of his seminars and classes, both in person and via audio materials and workbooks. He and his advisors cover everything from real estate investing to increasing your financial IQ to starting your own business to conspiracies of the rich.

Robert Kiyosaki is a man from humble beginnings that learned 2 different ways of thinking from 2 different fathers. By employing them later in life, he was able to retire in his forties, never having to work again, and started a new life as a financial educator, business man, and investor. Everything he said about how his poor dad managed money – was the same as what I had learned growing up.

Reading through ‘Rich Dad, Poor Dad’ a second time, I really focused on the opposite of all I knew – and those were the ideas of his rich dad. These ideas were very logical, simple, and completely achievable. I knew then that I had to start thinking differently about how I managed my life not only financially, but personally and professionally as well.

 Here are the top 5 things that I have either gained a greater understanding of or learned more about from Robert Kiyosaki:

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