When knowing is winning half the battle
If you are familiar with Robert Kiyosaki, (author of Rich Dad, Poor Dad), you may be aware that he retired at age 47. Retirement does not mean not working. Instead, for him barring extenuating circumstances he can choose to work or not work, and his wealth will stay grow automatically by themselves, staying ahead of inflation.
When your asset becomes large enough to grow by itself it can then support your livelihood, you no longer need to pump in money to develop and build the asset.
Think of it as planting a tree. You water it for years, and one day it grows into a huge tree with deep roots implanted. You need not look after it anymore, rather the tree provides shade and fruits.
Read also: 10 tips to living a better life
Money without financial literacy is money soon gone
Photo by Natasha Chebanoo from Pexels
Many people believe money alone will solve their problems, only to realise that they are in for a rough ride when they have no financial literacy.
Charles M. Schwab: Head of the largest steel company Bethlehem Steel, died penniless after living 5 years on borrowed money.
Samuel Insull: President of the largest utility company also died broke in a foreign land.
Howard Hopson: Head of the largest gas company went insane towards his final days.
Most people fail to realise it’s not how much money you make, it’s how much money you keep. You’ve seen it with lottery winners that have later on become broke, or even celebrities with huge millionaire status becoming bankrupt (eg Mike Tyson), where did it all go wrong?
Here is what I’ve learned from Robert Kiyosaki, Steven Siebold, and Napoleon Hil, it’s not how much money you make it’s how much money you keep.
If you want to be rich, you need to be financially literate.
Rule 1: Know the difference between asset and liability and buy assets
Rich people acquire assets.
Poor/ Middle class acquire liabilities that they think are assets.
What is an asset and what is a liability?
An asset puts money into our pockets.
Liabilities take money out of our pocket.
Buy things that create income and avoiding things that cause you to make payments is the goal. It’s honestly easier said than done.
Below is the cash flow of a middle-class person.
This cash flow looks all too familiar, and I’m sure just like me, you might have had this cash flow in your life.
Think about it, if you’re poor and not able to save, then where is your money going?
I spent so much money on stupid stuff in the past that I wondered why I never could get financially ahead, rent, student loans, bills, etc kept on piling up and I didn’t have any assets growing. This is not a lifestyle you want to be in.
Below is the cash flow of a rich person
CONTRIBUTED BY Marcus Tan
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