When it comes to money, there is a big difference between being a poor dad and a rich dad. The wealthiest people have a way of having their money work for them. They know exactly what to do with it, so that it grows and pays off. You will need to pay attention to taxes, assets and liabilities when it comes to your own finances.
Wealthy people have money that works for them
One way to become wealthy is to emulate the habits of rich people. They use financial discipline to build wealth.
Wealthy people live below their means, don’t spend money frivolously, and have money that works for them. They also save and invest, and use their expertise to help them.
The richest 1% of the population holds more than 30 percent of the world’s wealth. Their wealth can be attributed to investing in real estate. This has created the third highest number of billionaires worldwide.
Most wealthy people are self-made, and their wealth has a lot to do with their discipline. Many of them grew rich by saving and investing, but some were lucky.
Billionaires borrow against their assets, and invest in a variety of investments. This is called asset allocation. It’s important to spread your money out over many different types of investments to reduce the impact of taxes in retirement.
Millionaires set aside a fixed amount of money from every paycheck. Some millionaires have their savings set up so that they automatically transfer a specified amount into a savings account each month.
Assets vs liabilities
If you’re looking to get rich, you’ll find that you’ll need to pay attention to the difference between assets and liabilities. In Rich Dad, Poor Dad, author Robert Kiyosaki gives a thorough explanation of what they are and how to distinguish between them.
Assets, he explains, are things that put money in your pocket. Liabilities, on the other hand, take money out of your pocket.
Wealthy people invest in assets. They buy businesses, for example, that generate income. They also invest in real estate and dividend-generating stock and bond investments. By buying these types of assets, they can later sell them for a profit.
On the other hand, liabilities, like a house, consume money and don’t make any money for the owner. Even if the house appreciates, it won’t be enough to cover high monthly expenses.
One of the key concepts in Rich Dad, Poor Dad is cash flow. This refers to your ability to live right now, versus your income and expenditures.
Taxes
One of the biggest differences between Rich Dad and Poor Dad is the mindset. Rich dad is motivated by financial intelligence. He is a firm believer that the rich make their money work for them. On the other hand, poor dad was driven by the need to get a job and earn a living.
Rich dad’s success comes from a number of factors. Most importantly, he paid all of his bills first. This meant he worked harder to fund his obligations.
Kiyosaki’s book Rich Dad Poor Dad breaks down the main components of financial intelligence. It also covers market law, accounting, and real estate.
Throughout the book, Kiyosaki discusses how to increase your financial intelligence. There are four components: knowledge, passion, anger, and love. By learning about the different elements of your financial IQ, you can boost your odds of getting rich.
Taxes originated in England. They started as a way to pay for wars. As time went on, the taxes began to trickle down to the lower classes.
