Money lessons from Robert Kiyosaki

Money is pretty intimidating for most people, and learning about money is probably even more daunting. But, here are two books by Robert Kiyosaki that will slowly ease you into the wonderful world of money the same way they have for us.

“Rich Dad Poor Dad” and “Retire Young Retire Rich” are among the first few books that jumpstarted our financial journey. Kiyosaki’s books are very inviting. He writes in such an easy‑to‑understand manner and newbies will find terms and concepts relatable and digestible. What’s also nice about Kiyosaki is that he has the tendency to repeat topics he wants to emphasize, and he does this with such ease and clarity. By doing so, readers will definitely remember his insights and will surely leave you with much to think about.

Here are our 5 most memorable takeaways from Kiyosaki’s Money 101 books:

• • Think rich.

There’s a certain way of thinking you get from wealthy people, so if you want to be wealthy, you need to associate with them and learn how they think, act, speak and interact. It’s exactly this frame of mind that separates the rich from the middle class and the poor. Instead of thinking “I can’t afford it,” the rich would rather think “How can I afford it?” making it more actionable and doable. It’s this kind of point of view that gets them ahead of the pack. It builds them a strong and sound financial foundation that will withstand any kind of roadblock, like fluctuations in the economy or any financial drawback.

• • Identify your sources of income.

Assets and liabilities are easily mistaken for one another. It’s important to know the difference because one gets more money into your pocket and the other pushes money out of it. According to Kiyosaki, most people think that a house is an asset. He challenges this by saying that a house can only be an asset if it lets you earn from it. Otherwise, it’s a liability.

He also teaches us the cashflow quadrant (E‑S‑B‑I). This quadrant identifies four sources of income: E for employment, S for Self‑employment/ Small business, B for big business and I for Investments. E and S are sources where people should work for money while B and I earn passive income, where money works for them. Knowing exactly these kinds of delineations make big differences in learning more and more about managing your finances.

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• • Make money work for you.

Once you’ve identified your sources of income, it’s important to know how to maximize them. Kiyosaki teaches us the magic of passive income. Passive income can be earned from real estate properties, various kinds of investments, and businesses. By doing so, you earn regularly without having to really work for it physically. That’s the beauty of it: you are making money work for you instead of the other way around.

• • Use other people’s time and money.

Through Kiyosaki’s books, we have been exposed to many other sources of income by using OPM (Other People’s Money) and OPT (Other People’s Time). We’ve learned to use good debt from banks and investors to grow our businesses and passive income in real estate. You may even use other people’s education too, and get yourself good financial advisors to help you with your businesses. It’s all about using the available resources around you and maximizing them to your advantage.

• • Leverage.

The concept of leverage is one of Kiyosaki’s most important and interesting lessons. According to him, if you want to retire young and retire rich, you need to use the leverage of your mind in your favor. Once you’re able to do that, the leverage of your plan and the leverage of your actions will follow.

Kiyosaki discusses the difference between people without leverage working for those with leverage. The poor and the middle class often shy away from financial tools of leverage thinking that they are too risky. Instead, they like using physical leverage—or also called hard work. While there really is nothing wrong with hard work, it does not get you to your goal as fast, as easy and as much as you want it to. Imagine these people working hard day‑in and day‑out with only having 24 hours a day. Working hard physically is not enough and will not get you ahead financially. You’ll most likely just end up in someone else’s leverage. Think about this, if you are working hard physically, how long do you think it would take you to save $1 million? Compare it to someone borrowing $1million at 10% interest, receiving 25% returns per year. Who do you think will get richer in the long run? This is what financial leverage is all about.

Already feeling quite an expert after that crash course, right? Kiyosaki’s books are just the beginning of your exciting journey about money. We invite you to start reading up and starting thinking rich because we want nothing more than to see all of us retiring rich and retiring young.