Mind Your Own Business

Lesson 3: Mind Your Own Business

Quotes from Rich Dad, Poor Dad Chapter 4

Chapter starts off with a retelling of a story about Ray Kroc, the founder of McDonald’s, who was giving a talk to MBA students. Ray Kroc asked the students “What business do you think I’m in?”

The students replied that he was in the hamburger business. “I’m not in the hamburger business. My business is real estate.” Ray Kroc declared.

The primary business focus was to sell hamburger franchises, but what Ray never lost sight of was the location of each franchise. The real estate and its location was the most significant factor in the success of each franchise. McDonald’s today (1997) is the largest single owner of real estate in the world, owning more than the Catholic Church.

*Fast food and church being the places that we regularly supply our money to. How’s that working for you and me?*

Kiyosaki says, “Most people work for everyone else but themselves. They work first for the owners of the company, then for the government through taxes, and finally for the bank that owns their mortgage.”

“There is a big difference between your profession and your business. Often I ask people, “What is your business?” and they will say, “Oh I’m a banker.” Then I ask them if they own the bank? And they usually respond. “No, I work there.” In that instance, they have confused their profession with their business.

“The mistake in becoming what you study is that too many people forget to mind their own business. They spend their lives minding someone else’s business and making that person rich. To become financially secure, one must mind their own business. Your business revolves around your asset column, as opposed to your income column. The no.1 rule is to know the difference between an asset and a liability, and to buy assets. The rich focus on the asset column, while everyone focuses on their income statements.”

“Start minding your own business. Keep your daytime job, but start buying real assets, not liabilities or personal effects that have no real value once you get them home.”

For adults, keep your expenses low, reduce your liabilities and diligently build a base of solid assets. For young people who have not yet left home, it is important for parents to teach them the difference between an asset and a liability. Get them to start building a solid asset column before they leave home, get married, buy a house, have kids and get stuck in a risky financial position, clinging to a job and buying everything on credit.”

“So what kind of assets am I suggesting that you or your children acquire? In my world, real assets fall into several different categories:

1. Businesses that do not require my presence. I own them, but they are managed or run by other people. If I have to work there, it’s not a business, it becomes my job.
2. Stocks
3. Bonds
4. Mutual funds
5. Income generating real estate
6. Notes (IOUs)
7. Royalties from intellectual property such as music, scripts, patents
8. And anything else that has value, produces income, or appreciates and has a ready market.

“As a young boy, my educated dad encouraged me to find a safe job. My rich dad, on the other hand, encouraged me to begin acquiring assets that I Loved. “If you don’t love it, you won’t take care of it.”

Kiyosaki says he collects real estate because he loves buildings and land. He also loves stocks of small companies, especially start-ups.

“Many people are afraid of small cap companies and call them risky, and they are. But risk is always diminished if you love what the investment is, understand it and know the game. With small companies, my investment strategy is to be out of the stock in a year. With real estate the investment strategy is to generally hold real estate less than seven years.”

“When I say mind your own business, I mean to build and keep your asset column strong. Once a dollar goes into it, never let it come out. Once a dollar goes into your asset column, it becomes your employee. The best thing about money is that it works 24 hours a day and can work for generations.

“A true luxury is a reward for investing in and developing a real asset. For example, when my wife and I had extra money coming from our apartment houses, she went out and bought her Mercedes. It did not take any extra work or risk on her part because the apartment house bought the car. She did, however, have to wait for it for four years while the real estate investment portfolio grew and finally began throwing off enough extra cash flow to pay for the car. The car now means a lot more to her than simply another pretty car; it means she used her financial intelligence to afford it.”

Rich Dad Poor Dad Chapter 3: Lesson on Financial Literacy

Robert Kiyosaki, the author, says he retired at the age of 47 years. “Retirement does not mean not working, it means we can work or not work and our wealth grows automatically. The assets are large enough to grow by themselves. It’s like planting a tree. You water it for years and then one day it doesn’t need you anymore. Its roots have gone down deep enough. Then, the tree provides shade for your enjoyment.”

“I am concerned that too many people are focused too much on money and not their greatest wealth, which is their education.”

“If you want to be rich, you need to be financially literate.”

“You must know the difference between an asset and a liability and buy assets.”

“Assets put money into your pocket.”

“A liability is something that takes money out of your pocket.”

“The flaw is in thinking that money will solve all problems.”

“Money only accentuates the cash-flow pattern running in your head. If your pattern is to spend everything you get, then most likely an increase in cash will just result in an increase in spending.”

“What is missing is from education is not how to make money, but how to spend money- what to do after you make it. It’s called financial aptitude- what you do with the money once you make it, how to keep people from taking it from you, how long you keep it, and how hard that money works for you.”

“If you found that you have dug yourself into a hole… stop digging.”

“Many great financial problems are caused by going along with the crowd and trying to keep up with the Joneses. Occasionally, we all need to look at the mirror and be true to our inner wisdom rather than our fears.”

“A bigger home means bigger expenses, and the cash-flow will go out the expense column.”

“A nice home is an emotional thing. And when it comes to money, high emotions tend to lower financial intelligence.”

“When I want a bigger house, I first buy assets that will generate the cash-flow to pay for the house.”

“This pattern of treating your home as an investment and the philosophy that a pay raise means you can buy a larger home or spend more is the foundation of today’s debt ridden society.”

“Focus on keeping liabilities and expenses down. This will make more money available to continue pouring into the asset column.”

“Wealth is the measure of the cash-flow from the asset column compared with the expense column.”

Rich dad,poor dad chapter 1 &2

Rich Dad, Poor Dad

One day in October 2014, a friend visited me, asking to borrow some reading material. I went through the bag containing some books, I gave him a copy of Nadine Gordimer’s “the conservationist” (a book which I did not finish reading).
As I rummaged through the bag of 2nd hand books I had bought years ago, I came across a copy of “Rich Dad Poor Dad” by Robert Kiyosaki.

I picked it up, and read through it. This would be my second time reading the book, the first time I didn’t get through the whole book. But this time, I was engrossed. I could not put it down, I couldn’t wait to turn to the next page, to get to the next chapter. Before I knew it, I had finished reading the whole book in the space of one week.The book just resonated with me at this time, in this journey with the Get Rich Savings Club

Rich dad, poor dad by Robert Kiyosaki is an easy to read book where he chronicles the financial attitudes of this two dads: the rich dad and the poor dad. He contrasts the financial mindsets of his rich dad from his poor dad, and the outcomes of their mindsets.

Kiyosaki outlines six lessons that he has learnt from the financial decisions taken by his rich dad and poor dad. These lessons are titled:

1. The rich don’t work for money
2. Financial literacy
3. Mind your own business
4. The history of taxes and the power of corporations
5. The rich invent money
6. Work to learn- don’t work for money

Below, are excerpts from the first two chapters of the book that resonated with me.

Rich Dad	Poor Dad
Left tens of millions of dollars to his family, charities, and his church	Left bills to be paid
“How can I afford it?”	“I can’t afford it.”
“study hard so you can find a good company to buy”	“study hard so you can find a good company to work for”
“the reason I must be rich is because I have you kids”	“the reason I am not rich is because I have you kids”
“my house is a liability, and if your house is your largest investment, you’re in trouble”	“our home is our largest investment and our greatest asset”
Paid his bills last	Paid his bills first
Taught me to write strong business and financial plans so I could create jobs	Taught me how to write a good resume to find a good job

“There is a difference between being poor and being broke. Broke is temporary, and poor is eternal”

“A nice car and a nice house does not necessarily mean you’re rich or you know how to make money”

“Most people want everyone else in the world to change but themselves. Let me tell you, it’s easier to change yourself than everyone else”

“The poor and the middle class work for money. The rich have money work for them”

“You see, true learning takes energy, passion, a burning desire. Anger is a big part of that formula, for passion is anger and love combined”

                                                       Passion= anger +love                           

“When it comes to money, most people want to play it safe and feel secure. So passion does not direct them. Fear does.”

“By not giving in to emotions, you’re able to delay your reactions and think.”

“Master your emotions.”

“Learn to think, in spite of being emotionally charged.”

“Choose your thoughts”

“The moment you see one opportunity, you will see them for the rest of your life”

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If you have read this book by Kiyosaki, I welcome further discussion so feel free to drop a comment here on this blog post!

 

SAVE TO INVEST!