“Rich Dad, Poor Dad”: Summary of R. Kiyosaki's Book // Briefs * Nonfixing

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: From his rich dad, the future millionaire learns how to break out of the “rat race” using his intellect, will and financial literacy.

Fear of condemning society does not allow us to leave the “rat race” and become rich

Rat race is an endless work routine for everyone but yourself. Only you work, and others - the government, collectors and superiors - receive most of the reward. Why do we continue to participate in them? Because in the life of most people the fear of condemnation on the part of society prevails.

Example. Mantra "go to school, study well, find a good job."

This is an outdated piece of advice based on our parents ’past ideas. In those days, it was customary to get a job right after graduating from college, to work for one company for decades and retire with a good allowance. Nowadays, this method does not provide life without financial difficulties and poverty. You can study hard, enter a good school and find a well-paid job. But never make a fortune, bogged down in "rat race". Thanks to your hard work, your superiors are getting richer, but not you.

Fear and greed can make financially illiterate people make foolish decisions

Money causes fear and greed in everyone. If you have money, then most likely you will only think about things that you can buy from them (greed). If you do not have money, you only worry about the possibility that they will never exist (fear).

People who are illiterate in managing their finances tend to let such emotions control their decisions.

Example. You got a raise and a hefty increase in salary. You can invest additional amounts in stocks or bonds that will bring you profit, or please yourself with new purchases. Fear of losing money may prevent you from investing in stocks or other assets due to potential risks, although such investments will bring you wealth. Greed inspires you to buy a large house for an increased salary, which seems a more realistic and safe option than buying stocks. But this option means higher mortgage payments and exorbitant utility bills, effectively nullifying your increase.

Study the issue of investments, risks and debts, and you can make rational decisions even in the power of greed and fear.

Financial literacy is vital for both personal and social well-being.

To become rich does not have to be talented and capable. The world is full of poor talented people. It is necessary to be financially competent - to understand accounting, investing etc.

This is not taught in schools - the study of finance is not included in the program. Children are not taught saving money or investing. As a result, they are illiterate in many topics. This is a problem not only of youth, but also of highly educated adults who make the wrong decisions about their money. Most senior politicians are financially illiterate. As a result, exorbitant government debt. The complete lack of retirement planning for many citizens is a sign of incompetence in making decisions on monetary matters.

Example. In the USA, 50% of workers live without a pension; and the rest (almost 75–80%) - on a meager allowance.

If society does not give us this knowledge, we need to learn on our own. In times of great economic change, the need for good financial education becomes even more acute, especially for those who want to get rich.

Financial self-education and a realistic assessment of one’s means - steps towards wealth

The sooner you begin to follow the path to personal wealth - the better. More likely to become rich, starting at 20 rather than 30 years.

First, honestly assess your financial condition. What income can you expect now and in the future, and what fixed costs can you afford?

Set realistic financial goals. For example, buy a Mercedes over the next five years. Develop your financial literacy. Learning is an investment in your mind. A great way to do this is to work for knowledge, not money.

Example. If you are afraid of failures - try working in a network marketing company. The salary will be small, but you will develop sales skills and gain self-confidence. Get financial education in your free time. Sign up for courses and seminars, read books and communicate with specialists.

Learn to take risks to become rich

Madness is doing the same thing over and over, while expecting different results. If you want to change your current financial condition, start treating your funds differently. Learn to take risks - all successful people take risks, they are not afraid of them, but manage them. To take risks means not always to feel financial security, placing funds in the main and savings accounts in the bank. Invest your money in stocks or bonds. They are more dangerous than regular bank accounts, but they bring more profit in a shorter time. Or use other types of investments: real estate, tax lien certificates (in the USA).

The higher the potential profit, the greater the risk. There is always a chance to lose all your investments, but without risking, you certainly will not receive large incomes. Do not miss the opportunity and try to cope with the risks. These are necessary conditions to improve your financial situation.

Do not lose motivation

The path to wealth is long and tiring. It is very easy to lose heart when you encounter obstacles. It is necessary to find ways to maintain motivation, even in case of failure.

Make a list of "I want" and "I do not want".

Example. I do not want to work hard, like my parents. I want to pay all my debts within three years.

Browse through these lists, be persistent on the path to wealth.

Another good way to stay motivated is to spend money on yourself before paying bills.

So you will see how much extra money is needed to fulfill your desires and satisfy the demands of collectors. Pay the bills, but first of all to yourself; the extra pressure in the form of unpaid bills will inspire you to find ways to earn enough money to meet both needs.

Self-discipline is a key feature of successful people. Hone and develop it.

Get inspired by learning life stories from rich people like Warren Buffett or Donald Trump. This will add ambition to you.

Laziness and arrogance can lead even financially literate people to poverty

Even being financially competent, you will encounter laziness and pride. They can harm you imperceptibly. Laziness is not necessarily inaction; it may be ignoring the tasks that need to be solved.

Example. A businessman who works more than 60 hours a week is far from lazy. Working at night, he gradually loses his family. Noticing the alarming signs of his behavior, he, instead of eliminating them, buries himself at work. He is lazy: avoids what he has to do, and is likely to suffer the consequences of an expensive divorce.

Arrogance in the event of a financial collapse can be defined as “illiteracy plus ego”: a combination of inadequate financial knowledge and too hyped ego to admit it.Arrogance is especially dangerous when investing.

Example: Some stock brokers will try to put pressure on your pride in order to sell more shares and increase your commission. They stimulate your ego with the positive aspects of investment, keeping you unaware of the negative.

Invest only in assets and avoid liabilities

An asset brings you money; a liability costs you money.

You will become rich if you invest in assets. Assets - enterprises, stocks, bonds, mutual funds, profitable real estate, royalties from intellectual property and everything else that generates income, increases in value over time and can be easily sold. When you invest in assets, your dollars are working to create income for you. The more “working dollars” you have, the better. The goal is income exceeding expenses. Reinvest excess earnings in assets using even more dollars working for you.

Investors may take certain liabilities for assets.

Example. The house is habitually perceived by the asset, but this is actually one of the largest liabilities. After buying a house, you will work your whole life to pay off a 30-year mortgage loan and property taxes.

Investing in such a liability is disadvantageous for the following reasons:

You will incur huge expenses every month for the next 30 years.
These payments could be invested in potentially more profitable assets: shares or real estate for rent.

For a reasonable investment, remember the difference between an asset and a liability.

Your profession pays bills, but only your own business will make you rich

The difference between profession and business:

Your profession is all that you do 40 hours a week to pay bills, buy food and cover other living expenses. As a rule, she gives you a certain position: “restaurant manager”, “seller” etc.

Your business is where you invest time and money to increase your assets.

To achieve wealth, you must build a business, and at the same time work in your profession.

Example. A cook who studied culinary art at school and knows all the tricks of the trade. His profession brings enough money to pay for an apartment and feed his family, but he still does not become rich. Therefore, he invests in business: real estate. He spends all the extra money on the purchase of apartments and apartments that can be rented out.

Professions monthly bring people enough income. By investing extra income in their business, they increase their assets. Your profession initially sponsors your business. Keep your workplace until the business begins to grow stably so that your assets, and not your profession, become the main source of income. This is a sign of true financial independence.

Study the Tax Code to Minimize Taxes

There are many legal ways to minimize taxes.

For example, investing money through corporations. If you invest through your own corporation, earned money is taxed at a much lower rate. In the United States, corporations have advantages: debts and obligations are placed in the name of the corporation, not the owner, which insures against losses on failed investments. As an employee, you first earn, then pay tax, and live on what remains. The corporation earns, invests or spends as much as it can, and then pay tax on what is left. Corporations can help people get rich very quickly.

Study this question, look for loopholes and benefits in the tax system of your state.

Example. In accordance with Section 1031 of the United States Tax Code, if you sell your current assets in the form of real estate in order to buy more expensive ones, the state will defer taxation of your new real estate until you sell your old one.

While the government defers tax collection, capital gains occur.

The most important thing

Why do people get stuck in "rat race"?

Fear of condemning society does not allow us to leave the "rat race" and become rich.
Fear and greed can make financially illiterate people make unwise decisions.
We do not learn financial literacy, despite the fact that it is vital for both personal and social well-being.

How can I begin my journey to a better life?

Financial self-education and a realistic assessment of one’s means are steps towards wealth.
To become rich, you must learn to take risks.
On the long road to wealth, do not lose motivation.
Laziness and arrogance can lead even financially literate people to poverty.