There are a few books which leave an ever lasting impact on our minds — I would even go as far as admitting, they could alter the course of our lives.
Rich Dad Poor Dad by Robert Kiyosaki is one of those gems which I first happened to read when I was 19 years old. It opened my eyes to concepts of Wealth Creation, Personal Finance, Assets & Liabilities, and more than anything else, to innumerable possibilities, only if I learnt to make my money work for me.
I recently re-read this classic and it offered a new dimension this time. After more than a decade long relationship with money, I realized how hard it was to really practice money discipline. Admittedly, despite having some knowledge of basic money principles, I found myself stuck in the ‘Rat Race’ still. Here is sharing 4 ideas which stayed with me from the book along with a short roadmap which helps me implement these learnings.
1. Know the difference between ASSETS and LIABILITIES Robert simplifies these terms — Assets are what bring money IN and liabilities are what take money OUT of your pocket. Period. This made me reflect on the fancy bags, clothes, shoes, car, which were merely liabilities (in financial terms) — of course, they were much required, however, they did not count as Assets.
It also talks about buying a house purely to live in it — which again is not considered an asset — however, he maintains that it is often a highly debated subject since most people are emotional about owning their own home. My Roadmap: I built myself a VISUAL Asset — Liability graph which I track Monthly. I have also added a “Desired Value” visual for the Networth goal over the next 3 months. There is an unparalleled sense of accomplishment when I watch my assets column grow! This helps me stay on track.
2. The Rich Invent Money
“Why not seek to learn more than earn more.” ~ Robert Kiyosaki
Robert strongly recommends Upskilling, clearly calling out four key skills which include accounting, understanding taxation, marketing and negotiation. The rich often groom their children to understand various departments to get an overall understanding of business. To make money work for us requires us to get out of the emotions of fear and greed and think logically. My Roadmap: I have decided to build my stocks portfolio this year through study and learning from others’ experience. In that quest, I have created study time in my weekly calendar, I’m part of an investor community, have initiated email subscriptions of top investors and personal finance experts. With a clear goal of building my own portfolio of 10–12 stocks with a target annualized return and duration in mind, I am taking baby steps in my upskilling process. *Side note: I’m teaching my 6-year-old daughter about the importance of earning money through chores and trying to show her that you need to work to get money. I am also actively working with her to teach her the concepts of saving towards something. Recently, she saved for a birthday gift for her dad and are now working towards saving for a gift for her dog sister!
3. Choosing your network wisely No man is an island. Any drastic change requires support from those close to us, from professionals and from like-minded people. Don’t listen to the ‘Chicken Little about the Sky is Falling’ theory — there will always be cynics who will talk about all that is bad in the world. Instead, communicate with the enterprising ones around you who are on the path of wealth creation. My Roadmap: Gradually, I have started having open conversations with those close to me about my understanding of money and the small changes I am making in my money life. I can also say that many of my dear ones have in fact started to talk about money and some are actively upskilling with me. Embracing this change has also expanded my network of like-minded people.
4. Making DAILY choices Our spending habits reflect who we are and our values. What we choose to do with our time and what we see, hear and consume everyday impacts these habits.
“If you want to be rich it’s important that you understand the power of choice and know how to make good financial choices.” ~ Robert Kiyosaki
Most of us struggle financially not because of what we know, but because of what we do not know. The book talks about the basic money principle of ‘Pay yourself first’ and the power of ‘self control’. My Roadmap: I have actively started keeping a tab on where my money goes daily — yes, daily. I consolidate my expenses on the last Saturday of the month. I have tried using apps, however, I find making a note of it as most helpful. In the last few months, this is how my expenditure looks across various categories. Tracking it monthly has started helping me keep check on categories I am overspending on, areas where I can cut back and budget better, and also helps me know how much I can pay myself first, given that the income is fixed and there are fixed expenses to be taken care of.