LESSONS FROM
The Rich Don’t Work for Money
People’s lives are forever controlled by two
emotions: fear and greed.
So many people say, “Oh, I’m not interested in money.”
Yet they’ll work at a job for eight hours a day. It’s not how much money you
make. It’s how much money you keep. Rich people acquire assets. The poor and middle
class acquire liabilities that they think are assets.
You must know the difference between an asset and a
liability, and buy assets. An asset puts money in my pocket. A liability takes
money out of my pocket. Cash flow tells the story of how a person handles
money.
• The rich buy assets.
• The poor only have expenses.
• The middle class buy liabilities they think are
assets.
The rich focus on their asset columns while everyone
else focuses on their income statements. Businesses that do not require my
presence I own them, but they are managed or run by other people. If I have to
work there, it’s not a business. It becomes my job.
Each dollar in my asset column was a great employee,
working hard to make more employees and buy the boss a new Porsche.
I remind people that financial IQ is made up of knowledge
from four broad areas of expertise:
1. Accounting
Accounting is financial literacy or the ability to
read numbers. This is a vital skill if you want to build an empire. The more
money you are responsible for, the more accuracy is required, or the house
comes tumbling down. This is the left-brain side, or the details. Financial
literacy is the ability to read and understand financial statements which
allows you to identify the strengths and weaknesses of any business.
2. Investing
Investing is the science of “money making money.” This
involves strategies and formulas which use the creative right-brain side.
3. Understanding markets
Understanding markets is the science of supply and demand.
You need to know the technical aspects of the market, which are emotion-driven,
in addition to the fundamental or economic aspects of an investment. Does an
investment make sense or does it not make sense based on current market
conditions?
4. The law
A corporation wrapped around the technical skills
of accounting, investing, and markets can contribute to explosive growth. A
person who understands the tax advantages and protections provided by a
corporation can get rich so much faster than someone who is an employee or a
small-business sole proprietor. It’s like the difference between someone
walking and someone flying. The difference is profound when it comes to
long-term wealth.
Often in the real world, it’s not the smart who get
ahead, but the bold.
The single most powerful asset we all have is our
mind. If it is trained well, it can create enormous wealth.
It is not gambling if you know what you’re doing.
It is gambling if you’re just throwing money into a deal and praying.
Great opportunities are not seen with your eyes.
They are seen with your mind.
There are two kinds of investors:
1. The first and most common type is a person who
buys a packaged investment. They call a retail outlet, such as a real estate
company, a stockbroker, or a financial planner, and they buy something. It
could be a mutual fund, a REIT, a stock or a bond. It is a clean and simple way
of investing. An analogy would be a shopper who goes to a computer store and
buys a computer right off the shelf.
2. The second type is an investor who creates
investments. This investor usually assembles a deal in the same way a person
who buys components builds a computer. I do not know the first thing about
putting components of a computer together, but I do know how to put pieces of
opportunities together, or know people who know how.
The main management skills needed for success are:
1. Management of cash flow
2. Management of systems
3. Management of people
The primary difference between a rich person and a
poor person is how they manage fear.
Failure inspires winners. Failure defeats losers.
Rich dad believed that the words “I can’t afford
it” shut down your brain. “How can I afford it?” opens up possibilities,
excitement, and dreams.
There is gold everywhere. Most people are not trained to see it.
10 steps process to Build wealth
1. Find a Great reason to work hard and build wealth.
2. Make daily choice based on your goal
3. Choose friends carefully
4. Choose learning material (books, videos) very wisely
5. Pay yourself first: Invest on yourself to build healthy mind and body
6. Pay well to your brokers to get good advice
7. Become an Indian giver
8. Use assets to buy luxuries
9. Choose heroes: heroes make things look easy
10.
Teach and you shall receive.
Time invested to extract value from the Book
Saleem Awan
msaleemawan@gmail.com
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