Rich Dad Poor Dad

Rich Dad Poor Dad by Robert T. Kiyosaki

I thought I knew it all until I read "Rich Dad Poor Dad's Guide to Investing" by Robert T. Kiyosaki. Since the initial book, I've read almost all of Robert's books.

This first book really changed my life! It changed my reality. And that's always the first step.

In the book he describes the differences between what the Rich teach their children that the Poor & Middle Class do not. I had seen this book sitting on many peoples bookshelves and avoided reading it for a long time. But ... I'm glad that I finally did!

Context vs. Content
One of the first things that he explains is the difference between "context" and "content". Picture an empty shot glass and a large pitcher of water sitting on a table. If I picked up the pitcher and poured it into the shot glass without stopping, what would happen? Exactly!

The shot glass (its size) is your context or your "reality" or your "paradigm". The water that's poured from the pitcher into it is content. If the container (e.g. shot glass) is not large enough ("context") then it only has the capacity to receive a small amount of content.

In order to move from one class to another, poor to middle class, or middle class to rich, you must increase your context so that you have the capacity for the content that the rich need to know.

In order for LaDonna and I to "choose to be RICH", we had to expand our context or our realities. Robert has helped us do this through several stories in many of his books and exposed us to a whole new world of possibilities.

Assets vs. Liabilities One of the major differences between the poor, the middle class and the rich is the poor and middle class do not understand the difference between assets and liabilities. The middle class simply misdefine liabilities as assets. For example, most people think their house is an asset.

Rich Dad defined assets simply as "things that put money in your pocket" and liabilities that "take money out of your pocket". Put even more simply, he says, "Whether you work or not, assets feed you and liabilities eat you."

This simple difference in understanding makes the largest lifetime difference.

In order for LaDonna and I to make a plan to be RICH, we had to make a plan to acquire or create assets and avoid or limit our liabilities.

3 Types of Income
To Rich Dad, everyone needs a financial education in this day and age. You must understand the different types of income:
Earned Income - money you receive from a job
Portfolio Income - money you receive from interest on savings, stocks, bonds and other paper assets
Passive Income (my personal favorite!) - money that you receive from your money working for you (e.g. business income, rental income, etc.

LaDonna and I focus on acquiring and creating assets that give us more and more passive income so that we can work less and less and our money works harder and harder for us.

3 Types of Investors
There are three types of investors in the world:
1. Those who don't invest.
2. Those who invest not to lose.
3. Those who invest to win.

#1 is obvious, but #2 is where the majority of investors find themselves. Investing in "safe and secure" investments and basically taking the "slow bus" to wealth.

LaDonna and I are focused on:
1. Increasing our financial intelligence
2. Acquiring or creating assets
3. Learning to evaluate and manage risk
4. Investing to WIN!

3 Classes of People (poor, m.c. and rich)
Rich Dad said that you can tell what socioeconomic class a person belongs to based on their conversations:
1. Poor people - talk about other people (e.g. Michael Jordan, Puff Daddy, Lil' Wayne, Bill Gates, Oprah, etc.)
2. Middle class people - talk about things (e.g. the latest sports car, jewelry, boats, houses, etc.)
3. Rich people - talk about ideas (e.g. how can I double my income next year? How can I better manage my employees? How can I solve this problem in my community?)

LaDonna and I constantly evaluate the content of our conversations and correct ourselves when we begin to fall into the familiar topic areas of the poor and middle class.

2 Types of Money Problems
Finally, Rich Dad said something that really has stuck with both of us. "Everyone has money problems: poor people, middle class people, rich people, schools, churches, cities, states, companies, governments, everyone!" There are only two types of money problems: the problem of not enough money and the problem of too much money.

Which do you want to have?

LaDonna and I decided that we want to have the problem of too much money!

Keep reading and growing. Become a life-long learner and expand your context and your financial intelligence!