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Robert Kiyosaki compares two case studies of financial knowledge through his two “dads”. The first being his "Poor dad", who was a well-educated, highly paid government official and the other being his "Rich dad", a who owned a successful business despite only having an 8th grade education. Although the well-educated father had a high paying job, he was constantly struggling financially. The business owner, however, developed a fortune allowing him to live comfortably and not be concerned with current expenses. This goes against common logic where job security and income are the key markers to wealth. Kiyosaki illustrates through his two dads, income isn’t everything, it’s the approach to money and wealth that is life changing. Kiyosaki gives the reader 6 main lessons of the wealthy to help provide guidance.

Let the money work for you
Rich people owns a lot of assets, e.g. properties, land, stocks, bonds etc. ‘The poor’ have liabilities, which they believe are assets. The classic example is one’s home. For a lot of people, one’s home is life’s biggest investment and ‘the poor’ regard it as their most valuable asset. However, it’s only the equity in one’s home that can be regarded as an asset. The rest is money you owe the bank; hence, it’s a liability, not an asset.

Unless an asset generates a cash-flow or return for you, it can’t be regarded as an asset. .

Mind your own business
Robert distinguishes between having a profession and a business. The former is your day job, e.g. doctor. Your business, however, is what you’re doing ‘on the side’ that generates a stream of passive income for you. Robert’s business is real estate and rental housing. Robert’s advice goes: Find your own business, cultivate your skills and soon you won’t be dependent on your profession.

Consume, then pay taxes
‘The poor’ pay their taxes, then consume. The rich consume, then pay their taxes. Robert highlights that most rich people set-up holding companies or businesses through which they buy cars and travels for pre-tax dollars. One’s car is a company car, and a vacation is a board meeting abroad. ‘The poor’, however, pay their taxes and if there’s money left at the end of the month, they can spoil themselves. I won’t condone Robert’s approach to the taxman – it may end in quite a reckoning.

Treat your personal finances as a company’s
Robert advises that you should regard your personal finances as a company’s. Compose an income statement, a balance sheet, keep a keen eye on your cash-flows, and build You Inc. He underscores repeatedly that you should focus on building and growing a solid asset column that can generate free cash-flow to further expansion of your asset column. In other words: Use the profits from your assets to buy more cash-generating assets.
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