As the author Robert Kiyosaki, an investor and entrepreneur with an estimated net worth of over $80 million, put it in his famous Ted Talk (most see), “What can I do?, I’m just a little guy”. The answer: “Change your words, change your life”. Don’t say “I can’t afford it”, say “HOW CAN I AFFORD IT”‘.
Rich Dad, Poor Dad: What the rich teach their kids about money that the poor and middle class do not, is by FAR the NUMBER ONE book you should read as a young Quebec Entrepreneur.
1. Watch 2 Youtube animated videos summary about the book (15 min)
Here’s my highlights from the 10 blinks of this book.
1 – Fear of society’s disapproval prevents us from leaving the “rat race” and growing wealthy.
– rat race = the endless routine of working for everyone but yourself
– Go to school, study hard, get a job : we still believe in and follow this mantra out of fear of violating the expectations that have been drilled into us since birth. The result? We may be avoiding poverty, but we’re certainly not growing any wealthier.
2 – Fear and greed can drive financially ignorant people to make irrational decisions
Let’s say you just received a promotion and a hefty pay raise:
– The fear of losing money is so powerful it prevents you from investing in stocks or other assets because of the perceived risks, even though such investments would bring you wealth in the long-term
– Greed inspires you to spend your increased salary on a better lifestyle, for example by buying a bigger house, which seems a much more real and safer option than buying shares in a company.
3 – Despite being vital for both personal and societal prosperity, we receive no training in financial intelligence.
Children aren’t taught about subjects like saving or investing, and as a consequence are clueless about topics like compound interest – as clearly evidenced by the fact that, today, even high schoolers often max out their credit cards.
4 – Financial self-education and a realistic appraisal of your finances are the building blocks of growing wealthy.
Consider this an investment into the greatest asset available to you: your mind. Work for what you learn, not what you earn.
5 – To become wealthy, you must learn to take risks.
All financially successful people have taken risks to get where they are, and they are successful because they manage rather than fear these risks.
6 – The road to wealth is long, so you must keep yourself motivated.
One method to boost motivation is to create a list of “wants” and “don’t wants” for your personal reference.
Another good way to stay motivated is to spend money on yourself before paying your bills.
7 – Laziness and arrogance can drive even financially knowledgeable people to poverty.
We often think of laziness as slouching around and doing nothing, but in fact laziness does not necessarily mean inactivity; it can also be avoiding things that should be done.
Similarly, arrogance can be a devastating weakness. Contrary to the usual definition, in the case of financial ruin it can be defined as “ignorance plus ego”; a combination of poor financial knowledge and an ego too proud to admit it.
8 – Only invest in assets, which put money in your pocket; and avoid liabilities, which take money out.
Quite simply, an asset is something that makes you money, while a liability costs you money.
A house is often considered an asset, but it’s actually one of the biggest liabilities you can have.
9 – Your profession pays the bills, but your business is what will make you wealthy.
Your profession is whatever you do 40 hours a week to pay the bills, buy groceries, and cover other living costs. Usually, it gives you a specific title such as “restaurant owner ”or “salesman.”
Your business, on the other hand, is what you invest time and money in to help grow your assets.
10 – Understand the tax code to help you minimize your taxes.
One way to reduce taxation is to invest your money through the coverage of a corporation. If you invest through your own corporation, the money you make is taxed much more leniently than if you invest in your own name.
When you’re an employee, you earn, get taxed, and then try to live on what’s left. When you’re protected by a corporation, you earn, invest or spend as much as you can, and then get taxed on what’s left.
3. Read 2 articles insights about the book (15 min)
4. Take hand written notes on a special notebook (15 min)
Make sure to have a notebook or google drive folder with notes of everything you learned that you can go back on it and refresh your mind every few months.
Here’s my top things i kept from this book:
1 – Always pay yourself first
Which is also a concept from “The Richest man in Babylon” and Tony Robbin’s best advice from his new book “Unshakeable“. This concept state that we should always deposit 5-10% of our business incomes and personal incomes into an investment account. The goal is to grow this account to an amount you’ll be able to use to invest in something that will bring you 15-20% of annual interest. This investment should be made regarding your skills, knowledge and network: real estate, stock exchange, angel investing, creating a new company, etc.
2 – It’s mandatory to analyse your personal financial statement monthly. (I use the Mint mobile app to track my personal expenses and incomes)
The goal is to analyse all your expenses and ask yourself, is this making me grow as a person or is this bringing me revenues? if not, you need to stop these expenses because they are liabilities. So by thinking this way, you cut on alcohol, food that doesn’t make you healthier, utilities that eat your precious time like a data package. This is how you spend your money: you don’t spend more then 30% of your income on rent, 20% on food, 20% on social activities and the other 30% is to invest on your mind and putting it into your investment account.
10 main rules from the book
Robert Kiyosaki about his life and creations