If you’re like most people, you’ve probably heard the term “rich dad” in reference to some sort of a man who is able to make more money than his poor dad. But what exactly is the difference between a rich dad and a poor dad?
Assets make money
Robert Kiyosaki’s Rich Dad Poor Dad is a motivational book about wealth development. It is a bestseller, and has been translated into dozens of languages. Originally published 20 years ago, it has become a classic in the personal finance world.
The book is about the relationship between assets and liabilities. It teaches the difference between the two, and how they can make you money. Essentially, it teaches that rich people invest in assets and make them work for them.
A liability is a thing that takes your money away. It could be a car, subscription, or unused vacation. The more expensive an investment, the more risk it involves. For example, a 100,000-share purchase for 25 cents each can be worth $2 six months later. If you can get a return of 100 percent, you can earn $1 million in less than a year.
For a poor person, they only have a small amount of money. They rely on their job to make enough to live. They often spend their salaries on immediate expenses, such as eating out. Alternatively, they may have school loans, credit cards, and a mortgage.
Liabilities take money
Wealth comes from having more assets than liabilities. Assets include businesses, real estate, stocks, and bonds. The more assets you have, the more income you generate. However, the key to investing is to avoid liabilities.
Having too many liabilities can destroy your cash flow. It’s important to be focused and stay motivated. This is the first step to creating and expanding assets.
The rich aren’t born rich. They work hard to accumulate assets. The poor, on the other hand, work for money. They also have plenty of liabilities. These include mortgages, car loans, and school loans.
The poor do the same things day in and day out. They rely on their jobs to make enough money to pay for basic necessities. The rat race keeps them busy. They’re not financially literate. They take advice from financial experts without knowing the truth. They have a fear of losing their investments, and they keep doing the same things, only expecting different results.
Avoid obstacles to building wealth
The rich get richer and the poor get poorer, but building wealth can be achieved if you are willing to put in the time and effort. You may need to take some drastic steps to do it. A small loan, some shares of stock, or a hefty chunk of cash is the ticket.
You will likely need to buy a home or rent an apartment. You will also need to decide what your social security is going to be, and if you are lucky you may get to keep it. Then there are the day to day decisions like which car to buy, what type of insurance to get, and when to take vacations. As you become older, the ability to feign interest in life’s more mundane tasks may diminish. But the best way to build your own wealth is to stay on top of your game and if you can do so early on in life, you will be a lot better off in the long run.
Kiyosaki’s appearance on Oprah
Robert Kiyosaki is a personal finance guru who has written a number of books and made his first appearance on Oprah Winfrey’s show in 2000. His book “Rich Dad Poor Dad” was a huge success, earning him a spot on Oprah’s book club. Despite the success, he hasn’t lived up to his hype and he is now facing legal disputes with his former sponsor.
Although Rich Dad, Poor Dad has helped millions of people learn about financial literacy, there are still a lot of questions about Kiyosaki’s success. One of the most common issues is that he has never actually lived in Hawaii, and there is no proof that he has ever earned a single penny.
Robert Kiyosaki’s books are often about his own personal upbringing. In his book, “Rich Dad Poor Dad,” he claims to have been taught by a father named Ralph H. Kiyosaki. This man was the second best teacher in Kiyosaki’s life.
The author of the book, however, has admitted that he fictionalized parts of the story. He also cited a confidentiality agreement he signed with the Rich Dad family, keeping the name of the man he was writing about anonymous.