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How to become rich in 2020? Your 3 Step Financial Plan | Rich Dad Poor Dad

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Hello, Mr. Robert Kiyosaki says that he has two Dad’s, one is rich and one is poor. A dad is educated and very intelligent and has completed his Ph.D. And his second dad has not even completed schooling.

Both were successful in their respective careers. But one was financially straggling. He was one of the richest person in his city. When they talked about money, their views were different.

One believed that love towards money is the root of all problems. The second dad believed that a lack of money is the root of all the troubles. Now in his childhood, Mr. Robert Kiyosaki had a problem with whom he should listen to money. Because both had different views about money. One of his dads always had the habit of saying that we cannot buy this, we cannot buy that. And his second dad never used the word.

He even refused to use the term to Robert Kiyosaki. He used to say that you ask yourself how can you take that thing. He believed that when you say that I cannot take this thing, then your brain stops working, but when you ask yourself how you can buy that thing, your brain gets put to work.

learn how money works

He did not say that you should buy everything, he said that keep the brain on, put it to work, which will be more than your brain. And he would grow stronger day by day, one of his dads used to say, “Never take a risk, same as his second dad used to say learn to manage risk”. One of his dads used to say, study, get a college degree and do a good safe and secure job. The second dad used to say, study and learn how money works. Do not work for money, but put money to work for you. And then at the age of nine, Robert Kiyosaki decided that he would listen to Rich’s dad and learn about his money. And in a matter of money, now he will not follow his educated father ie poor dad.

Rich Dad Poor Dad are thinking
Rich Dad Poor Dad are thinking

In fact, Mr. Robert Kiyosaki’s poor dad was his real father. Those who were very educated and used to do teacher jobs. He was financially poor. The same Robert whom his rich dad says is, in fact, the father of his friend Mike. Those who have Robert and his friend Mike go to learn how to make money. and This dad of Robert did not even complete schooling, yet he was one of the richest people in his city. So on the request of Robert and Mike, his rich dad agreed to teach him how to make money. So the rich dad told him a lot of important lessons about money.

Which we will talk about now.

Rich dad told him that how much money you earn is not important. Important or how much money you save by keeping it. Many people do not know this rule. So we see that a poor lottery or middle-class man suddenly become rich. So after a few years, he returns to his old condition again. Even after winning millions in the lottery, they arrive at the same place from where they started. So how much money you earn in the long term does not matter. But how much money you are keeping with you does matter. Let us understand this in detail.

important lessons about money
Learn about money

So the first rule is that you should know what the assets and liabilities are. And they should know the difference between them. Rich dad told him in simple language that assets put money in your pocket. The same liabilities come out of your pocket. If you want to become rich, then you have to buy assets. And if you want to become poor or middle-class, you have to buy liabilities. Any rich man may be literate (IE, educated) or not, but financially literate definitely happens. That is, he definitely knows how money works.

Income Statement

And how money works are not taught in schools or colleges. Every person has an income statement, there is a balance sheet, there is cash flow, there are two sections in the income statement and the income statement tells us how much money we have earned. How much more expenses have been incurred and how much money you have left after all expenses are incurred. Or save or not. There are also two sections in the balance sheet. Assets and liabilities. Your Assets make money for you, your real estate and your buildings, machines, long-term investments, land, etc. These are all assets that help you make money and liabilities mean home or car loan, credit card loan, etc.

Read MoreInvest Rs.500 Per Month And Get 1.55 crore Rs. in Hindi

In the following diagram, the arrow tells us the flow of cash. That is to say, the cash flow. That is, how the money is coming to you and how it is going out.

cash flow diagram
Cash Flow

Poor Man Cash Flow

Let’s understand with the help of some basic diagrams, what is the cash flow of poor man middle-class man and a rich man. The cash flow of a poor man is like this, the income of a poor man is sourced, his salary almost goes into food, clothes, education of children and other expenses. Most of the time there is nothing left till the end of the month. The poor man’s assets column is always empty. Because after his expenses, he has no savings and if he has savings, then he never thinks about assets. Because no one has taught them about assets. Neither mother nor father in school colleges nor friends.

Poor Man Cash Flow
Poor Man Cash Flow

Middle-Class Man Cash Flow

Now let’s look at the cash flow of middle-class man. Middle-class people have a set pattern. Those who have recently got married first go to live in a rented house and then think about getting a new house, after buying the house they buy furniture and as the income increases, they buy a car and something similar. Instead of all these things, his liabilities column increases his expenses due to car loan, credit card loan, and EMI of the loan, so now his entire salary goes to the expenses of months. And almost their entire assets column remains empty.

Middle Class Man Cash Flow
Middle-Class Man Cash Flow

Rich Man Cash Flow

Let us now see the cash flow of a rich man. The cash flow of rich people is something like this. Their assets make money for them.

cash flow of rich people
cash flow of rich people

Mr. Robert Kiyosaki’s poor dad‘s entire income was spent on expenses and later he had nothing left to buy assets. The same his rich father, who, despite not being very educated, was investing in assets for many years. Due to which his assets column was much higher than his Liabilities column. And now his assets were earning more for him than his expenses.

First of all, pay yourself

The rich dad of Robert Kiyosaki was not much educated. But he was definitely financially literate. That is, they knew very well how money works. Whether it is a poor man or a middle-class man, he knows how to earn money, but does not know how to manage the money he has earned. They know how to work hard, but do not know how to work with their money. They just keep working. But they do not put their money to work.

Read MoreWhat is Mutual Fund and SIP How it Works? In Hindi

As their income increases, their expenses increase in the same manner. They think that having more income will solve all their problems. That is why we constantly work to increase salary, no matter how big their salary is, their financial problems never end. They do not understand that their real problem is hidden in how they are spending the money they have. And this problem is due to not being financially literate. So the first thing that you should follow is that first of all, pay yourself, keep some of what you earn for yourself and buy assets with money that can generate income for you.

 work to increase salary
work to increase salary – salary and expenses

Biggest differences between rich and poor people

One of the biggest differences between rich and poor people is that the poor and middle-class people spend all the money first and finally keep the money with them, instead of which they are unable to save anything for themselves most of the time and neither Invest in any assets. The same rich people first pay for themselves and later spend.

It takes a lot of self-discipline to follow this thing. It takes a lot of practice many times you will face financial problems, but at that time you have to pay yourself first. When you take this self-discipline, then you have understood that you have taken the first step to making yourself rich.

The cash flow of those who pay themselves first is something like this. Your income source will increase as soon as you save money and invest in assets.

 pay themselves first
pay themselves first

Difference between the two cash flows

And for those who do not pay themselves first, their cash flow is like this. On this, you can clearly see the difference between the two cash flows.

difference between the two cash flow
difference between the two cash flows

The second thing is that rich people focus on assets column, poor people focus on the income statement, rich people invest their money in business, invest in stocks and bonds, invest real estate and many other places… Where they get income. So this investment of his is called assets for him. Which generates income for them, which assets you like, you should invest in them. So you also do which asset classes you like.

Invest in assets first and then buy some.

Mr. Robert Kiyosaki loves building and land. That is why they invest in land and building. They like to invest in small companies as well, so they also invest in small companies.

The third thing is that rich people buy luxury products, such as jewelry, expensive vehicles, etc. later. First, they buy assets. While the rest of the people buy luxury products first, the rich people first strengthen their assets column and buy luxury products from the income they get from the assets.

Rich people buying process
Rich people buying process

Rich people buying process

If they want to buy an expensive thing, then they first think of how their assets can be strengthened. The income from which assets will increase and with that income, we will be able to buy that expensive thing. So they continuously use their mind to get him excess, which he keeps getting ideas for earning money. In this way, they think about increasing their income and income sources before buying luxury products. The rest of the people have only one income source, that is a job and when they buy a luxury product, their entire financial budget gets interrupted.

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Those poor and Middle-class people who get lottery also increase their expenses instead of strengthening their assets column and after some years they again come back to their old financial position. So it is not an income problem but the problem is the management of money. How are you using them for money?

I have told you all this from Mr. Robert Kiyosaki’s book Rich Dad and Poor Dad (Buy) Dad, you must read this book. in this book, three more rules of becoming rich are told. Which we’ll cover soon

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SACHIN AHIRWAR

Hey, I’m Sachin. I’m a Blogger living in India. Guide for Personal Finance Planning & financial planning, Tax, Investment, Managing Money, Insurance, Retirement, Real Estate and Loans & more.

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