When it comes to money and other financial matters, many people do not really understand or are ignorant about how to manage their finances and others shy away from it. The book Rich Dad, Poor Dad, by Robert T. Kiyosaki is a great financial educator when it comes to financial issues. Applying the lessons or failing to apply the lessons from this book can be the difference between being rich and being poor. This paper examines three points from the book that I find personally useful in managing finances.
Lesson 1: The Rich Don’t Work for money.
This lesson shows that financial security goes beyond being highly educated. The rich do not view money in the same as the poor and middle class do. As stated in the book Rich Dad Poor dad, “the poor …show more content…
Financial literacy is of interest to me I want to be able to manage my finances properly. As explained in the book Rich Dad, Poor Dad, the first basic requirement is to understand rule #1: You must know the difference between an asset and a liability, and buy more assets. (p. 80) Understanding the difference between an asset and a liability makes a big difference and is the first step toward becoming rich. (p. 80) I hear people talk about their houses, cars and they think of these as their assets. I used to think that way too but this is not true because that is not what a true asset is. The money in their possession after paying mortgage, car payment and other expenses or liabilities is what the asset really is. This has really changed my view on buying a car or a house. It is not enough to save up and buy these things because maintaining them requires more money and is a …show more content…
The gap between the rich and the poor is growing ever wider because with most people, the more money they make the greater the expenses. As brought out in the book Rich Dad, Poor Dad, as cash flow grows, people tend to buy more luxuries which may make them look rich but in reality, the easy access to credit cards plunges them deeper into debt. (p. 137) I do not want to be caught in their vicious cycle. To avoid making that mistake, I can start buying more assets in the form of stocks, bonds, Mutual funds and any other thing of value that can generate income. (p. 135) It is important to start small with areas of interest and gradually increases the assets. I have seen instances where people work and at the same time manage a small business of their own and I think that is a very practical thing to do. As the assets grow, so does your financial strength. Building the assets column is one way to have money work for you. It is reasonable and better to wait on the luxuries and focus on buying more assets because in the years to come, the dividends from the asset will be able to buy the luxuries without plunging into
Lesson 1: The Rich Don’t Work for money.
This lesson shows that financial security goes beyond being highly educated. The rich do not view money in the same as the poor and middle class do. As stated in the book Rich Dad Poor dad, “the poor …show more content…
Financial literacy is of interest to me I want to be able to manage my finances properly. As explained in the book Rich Dad, Poor Dad, the first basic requirement is to understand rule #1: You must know the difference between an asset and a liability, and buy more assets. (p. 80) Understanding the difference between an asset and a liability makes a big difference and is the first step toward becoming rich. (p. 80) I hear people talk about their houses, cars and they think of these as their assets. I used to think that way too but this is not true because that is not what a true asset is. The money in their possession after paying mortgage, car payment and other expenses or liabilities is what the asset really is. This has really changed my view on buying a car or a house. It is not enough to save up and buy these things because maintaining them requires more money and is a …show more content…
The gap between the rich and the poor is growing ever wider because with most people, the more money they make the greater the expenses. As brought out in the book Rich Dad, Poor Dad, as cash flow grows, people tend to buy more luxuries which may make them look rich but in reality, the easy access to credit cards plunges them deeper into debt. (p. 137) I do not want to be caught in their vicious cycle. To avoid making that mistake, I can start buying more assets in the form of stocks, bonds, Mutual funds and any other thing of value that can generate income. (p. 135) It is important to start small with areas of interest and gradually increases the assets. I have seen instances where people work and at the same time manage a small business of their own and I think that is a very practical thing to do. As the assets grow, so does your financial strength. Building the assets column is one way to have money work for you. It is reasonable and better to wait on the luxuries and focus on buying more assets because in the years to come, the dividends from the asset will be able to buy the luxuries without plunging into