The Consumer Economy and Rich Dad. Poor Dad. What The Wealthy Teach Their Kids About Money That The Poor And Middle Class Don t.

Transcription

1 The Consumer Economy and Rich Dad. Poor Dad. What The Wealthy Teach Their Kids About Money That The Poor And Middle Class Don t.

2 The Consumer Economy Continuous growth through continuous consumption. Most of us define ourselves in terms of: How much and what we consume. Our role in the making of what we consume. Our ability to persuade others to consume. Its philosophy is spreading throughout the world. Is it truly satisfying? If your reason for becoming rich is to look rich, you will never become rich.

3 The Consumer Economy We are a free country, not necessarily a fair country. We are all free to fail. We re being taught to be Good Employees. Go to school Get good grades Get a good JOB Work hard Maintain good credit So we can consume lots of stuff. JOB for most means Just Over Broke. Should we be taught how to become Wealthy?

4 Most of the following ideas about money and wealth creation are From Robert Kiyosaki and his partner and co-author, Sharon Lechter. I highly recommend that study their writings more deeply on your own.

5 Financial Intelligence It is not your boss job to make you wealthy or secure. It s her job to give you a paycheck... nothing more. Making more money will not solve your problem if money management is your problem. Money is a drug.

6 Financial Intelligence Money pushes you around. You will obey money. Employers/Bosses Landlords Bill collectors Tax collectors Family and friends Can you push back? Are you smarter than your money? Answer: Do you work for money, or does money work for you?

7 Financial Intelligence When money works for you, every dollar is an employee. Each dollar works to bring you even more dollars while you re asleep. Passive : Interest, dividends, real estate income, royalties, residuals, annuities Your money can work for you or it most certainly will work for someone else. What do you do? versus What do you own? The key is What investments do you own that will bring you passive income?

8 Financial Intelligence Being Rich versus Being Wealthy Being Rich is about how much money you possess in a specific moment in time. Being Wealthy is about... how much money you keep how hard it works for you how much is left for future generations (who know what to do with it) Being Wealthy is about exploding your Passive. (How long you can survive without ever having to go to work?)

9 Financial Intelligence Rich Dad. Poor Dad s Basic Philosophy Know the difference between an ASSET and a LIABILITY, and only buy assets. A True Asset gives a positive cash flow each and every month. Live below your means, while constantly increasing your means. Make your PASSIVE INCOME cover your Lifestyle Expenses forever.

10 Financial Literacy Sadly, most of us have been taught to read words and books, but not numbers and financial statements. Two key personal and business financial statements we all must be able to read. The Statement shows the amount of money coming in and going out. The Balance Sheet shows the balance of what you own and what you owe.

11 Financial Literacy (continued) Statement Expenses (Payments) Balance Sheet Assets (Own) Liabilities (Debts)

12 Financial Literacy (continued) Statement Paycheck, dividends, interest, rents, royalties, profits, advances Expenses (Payments) Balance Sheet Assets (Own) Liabilities (Debts)

13 Financial Literacy (continued) Statement Balance Sheet Paycheck, dividends, interest, rents, royalties, profits, advances Expenses (Payments) Taxes, mortgage/rent, cards, car, food, fun, rent, clothes, child care, insurance, medical Assets (Own) Liabilities (Debts)

14 Financial Literacy (continued) Statement Balance Sheet Paycheck, dividends, interest, rents, royalties, profits, advances Expenses (Payments) Taxes, mortgage/rent, cards, car, food, fun, rent, clothes, child care, insurance, medical Assets (Own) Liabilities (Debts) Mortgage, car loan, credit cards, school loans

15 Financial Literacy (continued) Statement Balance Sheet Paycheck, dividends, interest, rents, royalties, profits, advances Expenses (Payments) Taxes, mortgage/rent, cards, car, food, fun, rent, clothes, child care, insurance, medical Assets (Own) Stocks, bonds, notes, real estate, business, intellectual property Liabilities (Debt) Mortgage, car loan, credit cards, school loans

16 How The Poor Live They only have small incomes and small expenses Statement Expenses Balance Sheet Assets = Zero Liabilities = Zero

17 How The Poor Live They only have small incomes and small expenses Statement Expenses $ The Wealthy Balance Sheet Assets = Zero Liabilities = Zero

18 How The Middle Class Live They buy expenses and liabilities they think are assets Statement Expenses Balance Sheet Assets Liabilities

19 How The Middle Class Live They buy expenses and liabilities they think are assets Statement Expenses $ The Wealthy Balance Sheet Assets Liabilities

20 How The Wealthy Live They take the income of the poor and middle class, and buy assets that produce more income Statement Expenses Balance Sheet Assets Liabilities

21 How The Wealthy Live They take the income of the poor and middle class, and buy assets that produce more income Statement Expenses $ Poor and middle class income Balance Sheet Assets Liabilities

22 Rich Dad s Cash Flow Quadrant (modified) Note: Kiyosaki calls the D Quadrant the Big Business Owner Quadrant.

23 Rich Dad s Cash Flow Quadrant (modified)

24 Rich Dad s Cash Flow Quadrant (modified) You have a job. Someone else is the boss. Security before money.

25 Exempt vs Non-Exempt Jobs Management/Exempt Considered a professional At least 50% of time using intellect, directing, creativity Has discretion with decisions Sets own work schedule Receives a salary No overtime pay Non-Exempt Considered non-professional Up to 100% doing routine, non-thinking tasks Does only what is told to do Has a pre-set schedule Punches a time clock Paid hourly Receives overtime pay

26 Rich Dad s Cash Flow Quadrant (modified) You have a job. Someone else is the boss. Security before money. You own a job. Loner/ boss. Perfectionists. Small bus. owners: Drs. Restaurateurs. Independence before money.

27 You own a job. Loner/ boss. Perfectionists. Small bus. owners: Drs. Restaurateurs. Independence before money. Rich Dad s Cash Flow Quadrant (modified) You have a job. Someone else is the boss. Security before money. You own a system that others operate. Coordinator. Delegator. Franchiser. Use other people's time and money.

28 Rich Dad s Cash Flow Quadrant (modified) You have a job. Someone else is the boss. Security before money. You own a system that others operate. Coordinator. Delegator. Franchiser. Use other people's time and money. You own a job. Loner/ boss. Perfectionists. Small bus. Owners: Drs., restaurateurs. Independence before money. Your money works for you. Make money with money. Other s liabilities are your assets.

29 Rich Dad s Cash Flow Quadrant (modified)

30 Rich Dad s Cash Flow Quadrant (modified) Rat Race Side Job Security Financial Freedom Wealth Side Financial Security Ultimate Financial Freedom

31 Sample Paths To Financial Freedom Rat Race Side Start Wealth Side or Start End

32 Sample Paths To Financial Freedom Rat Race Side Start Wealth Side End

33 Sample Paths To Financial Freedom Rat Race Side Start Wealth Side End

34 In Which Quadrant Are You Headed? What are your financial goals? Which would you choose? Job security Financial security Financial freedom

35 Systems and Discipline Are The Key For All Quadrants Am I hauling buckets or building a pipeline? Can you make a better hamburger than McDonald s? Can you build a better system for making hamburgers than McDonald s? There are tons of great ideas, but few great systems. You must also have the discipline to diligently work the system.

36 Some Final Thoughts Risk It s risky not to build a business or not to invest. 9 out of 10 business fail; so I need to fail 9 times. Money There are two problems associated with money: You can have too little or too much. Money comes from inside out, not the outside in. So, money is an idea, not a thing. Thus, your ideas can create money out of nothing. You create money in your spare time. Creating ideas and searching for bargain assets. It s not how much money you make; it s about how much you keep.

37 Some Final Thoughts (continued) Emotional Intelligence Practice delayed gratification. Buy assets first, luxuries last. Ask how can I afford it? This stimulates your creativity.

38 Some Books and Stuff by Robert Kiyosaki and Sharon Lechter Rich Dad. Poor Dad. Cashflow Quadrant Cashflow Game Cashflow, The E-Game Rich Dad s Guide to Investing Retire Young. Retire Rich. Rich Kid. Smart Kid.