The Texan mindset, which is the scarcity mindset, is the opposite of the growth mindset. It is based on investing your money in assets instead of liabilities. People with a scarcity mindset end up with large car payments or an unsustainable mortgage payment. They are operating from a place of fear and greed, which results in poor financial habits and debt. A growth mindset helps break the cycle of debt by teaching you how to invest your money wisely.
Rich dad mindset
A rich dad is someone who uses his money wisely and makes the most of income-generating opportunities. By following this mindset, you can experience exponential wealth. You’ll be able to multiply your money in a short period of time. On the other hand, a poor dad sinks further into debt because he clings to money, ignoring its power and risking losing it. But a rich dad can avoid these mistakes.
Kiyosaki’s rich dad taught him not to specialize in any one field. He taught Robert to work in various areas, attend meetings, and become as knowledgeable as possible in the different aspects of building an empire. Developing this mindset is key to building a successful business. While a poor dad’s father might not have had the education Robert did, he was able to create an empire that would make him very wealthy.
You might have heard the phrase ‘Texan mindset is rich’ from one of the books, Rich Dad Poor father. While Kiyosaki has no experience investing, the book is mostly written by Lector, a real CPA who wrote the book with Kiyosaki. The two split in 2000, so this book is based on her wisdom, not Kiyosaki’s.
Despite the title of the book, a few points from the series are worth mentioning. The first one deals with wealth. While wealth comes from one’s family background, wealth can be learned. The book encourages readers to develop wealth-building skills through discussion with wealthy people and attending seminars. Despite the book’s title, the book fails to address some key points. While recommending that readers learn about investing and spending less money, it fails to explain the risks involved.
Cash flow quadrant
If you’re looking for ways to become rich, the Cashflow Quadrant of a wealthy mindset may be just the thing you need. As the name suggests, it categorizes people based on their sources of money. Those who are employed in the E quadrant earn their paychecks in exchange for time, knowledge, and performance. In this case, your income is directly tied to how much time you trade. As such, you must be very efficient at your job to be able to make enough money to meet your obligations.
While money is a basic need, it is also an idea. It is something we must visualize in order to get it. As kids, we are often conditioned to stay in the left side of the cash flow quadrant. We are told to get an education so we can land a good job. We are surrounded by professionals who want us to become just like them. Our culture teaches us to be job seekers and producers.
Investing in assets rather than liabilities
The key to wealth is to distinguish between assets and liabilities. You can make a lot of money investing in assets, such as real estate, but your home is a liability because you have to pay off a mortgage every month. However, if you have a rental property, you can use it to cover your boat payment. By separating these two types of investments, you will have more money to invest in other things.
As Robert Kiyosaki notes, the key to success in investing is to buy assets rather than liabilities. Even though the statement may not be 100% true, it is generally true. For example, a car is not an asset because it decreases in value and requires repairs and maintenance. In addition, you’ll need to pay for the car’s depreciation. The same is true of a home, so make sure to invest in assets rather than liabilities.
Investing in assets that produce consistent cash flow
A lot of people try to follow the advice of the Rich Father and the Poor Father by buying property that produces a positive cash flow. After reading the books, many Australians make the mistake of trying to copy the same investment strategy and are left wondering why they never become rich like the Rich Dads. In reality, investing should be based on capital growth. Cash flow is an important part of asset building, but it should never be the only focus of an investment decision.
When Robert Kiyosaki’s book was first published, it was immediately rejected by every publisher. Critics of the book criticized the lesson that the house was not an asset. They argued that historically, people had considered their home as the largest investment they had. However, in 2007, when the market crashed, many subprime borrowers defaulted on their mortgages and Kim’s parents were left with a significant budget strain.