Robert Kiyosaki 
Today,
because of the multitude of choices we all have, it is easy
to get distracted from where we want to go in life. I offer
you a few suggestions on how to find your path and stay on your
path to great wealth, if you should choose to do so.
One night in 1975, I sat in my little apartment and began to
choose the path I was now to take. I had to again decide which
dad’s path I would follow, my rich dad’s or my poor
dad’s. I had been off track for 10 years and it was now
time to get back on track.
These are some of the decisions I made and have continued to
make over the years.
Step One: Decide to Be Rich
That
night in 1975, I had to stop feeling sorry for myself and decide
again to be rich. I went over some of the lessons my rich dad
had given me - lessons that were more important than money,
because they would ultimately create the financial empire I
wanted.
I sat quietly that night and my lessons began all over again.
I could hear my rich dad talking. “The only difference
between the rich, poor and middle class,” he said, “is
the kind of lifestyle they want. You don’t have to be
psychic to tell a person’s future. If you listen to the
words a person uses, they will tell you their future.”
Rich
Dad believed that words were a person’s most important
tool. He constantly reminded me to watch the words I spoke,
simply because he believed that the words you speak and the
words you think ultimately become the world you live in. He
often quoted the Old Testament: “And the word became flesh”.
So that night, I remembered Rich Dad reminding me to listen
to different people’s words. I noticed that poor people
often said:
“I just want enough money to pay the rent.”
“I need a few dollars to get to the next pay day.”
“After I pay my bills, I don't know how my family can
afford to eat.”
People
who used words such as these, often focused only on financial
survival. Rich Dad often referred to these people as “poor”
people, because they were poor managers of money. So a person
who thought or spoke words such as these was constantly fighting
for financial survival, regardless of how much money they made.
The middle class used different words because they had different
ideas about how to use their money:
“Our home is our most important asset and our largest
single investment.”
“We’re setting a few dollars aside every month,
so we can afford the down payment on our dream home.”
“We’re saving money for our children’s college
education and our retirement.”
I noticed that the middle class focused on comfort. That is
why so many of them say, “I don’t want to be rich.
I just want to be comfortable.”
That
night, I recalled the words my rich dad’s rich friends
used:
“How did you finance your shopping center? Did you syndicate
it with a joint venture partnership or did you go to a hard
money lender for the interim money?”
“My underwriter has a new private placement, pre-IPO offering.
Do you want a position in it?”
“I bought the shares through my corporation because the
long-term tax consequences are better.”
The
rich used the vocabulary found in the asset column. Rich Dad
said, “The rich are rich because they are not focused
on day-to-day short-term survival, or the expense column as
the poor are. Nor are the rich focused on comfort and the acquisition
of liabilities using credit, as the middle class is.
The rich are rich because they focus on the long-term acquisition
of assets... assets such as stocks, bonds, businesses and income
producing real estate. Many times the rich will forsake meals,
a steady pay check, a vacation, or the comfort of a nice home,
to build or acquire real assets.”
So
decide to be rich, even if you are broke and penniless today.
In Rich
Dad Poor Dad, I wrote of the difference between being poor
and being broke. Poor is a state of mind where thoughts such
as “I can’t afford it” or “Live below
your means” come from. Being poor is eternal but being
broke is temporary.
The opening chapter of The CASHFLOW Quadrant is called, “Why
Don’t You Get a Job?” It begins with my wife Kim
and I being homeless for about 3 weeks. Even though we were
virtually out of money, we continued to strive to become rich,
to build a business and invest through that business.
Today, even though we have plenty of money and several businesses,
nothing much has changed. We continue to build businesses, reinvest
in our businesses and invest through those businesses.
In
The CASHFLOW Quadrant, I wrote about Be-Do-Have. “Be”
is the most important part of the three word formula. Most people
want to “Have” what the rich have, but they often
are not willing to do what the rich “Do” to have
what the rich “Have”.
So whether you have money or not, it is important to “Be”
rich if you decide to do so, which means being willing to make
being rich more important than merely surviving financially
or being comfortable.
Step Two: Decide What Kind of Money Problems You Want
There are only two kinds of money
problems: not enough money or too much money. Unfortunately,
the kind of money problem most people know is not enough money.
Rich
Dad stressed that his son Mike and I know not only how to make
money but what to do with the money we made. Rich Dad said,
“Most people know how to work for money, but they do not
know how to have people and money work for them.” So he
taught us how to plan on having too much money.
He said, “If you want to be rich, you must make sure your
excess money creates more excess money. You must know what to
do with your excess money before it gets to you. Most people,
when they receive any excess money, spend it foolishly or just
park it in the bank.”
So decide what kind of money problems
you want.
Step Three: Write Your Plan and
Follow It
After choosing between being rich,
poor or middle class, and then choosing between too much money
or too little money, it’s time to write your plan.
If you have chosen to be rich,
even though you are broke today, and have decided to have the
problem of too much money, read on. If you do not plan to be
rich or to have too much money, then you need not read any further.
Rich Dad’s plan started with
a few basic goals:
1. Change the characteristic of your income. Start a part-time
business.
2. Change the characteristic of your expenses. Convert personal
expenses into business expenses.
3. Place your business inside a legal entity.
4. Have your business buy your assets.
5. Harness the power of reinvesting.
If you’re willing to be a
little uncomfortable to become very rich and retire early, develop
your plan — even though you may be broke, but not poor,
today. And if you are already rich, Rich Dad’s plan may
help you become richer and happier...even beyond your wildest
dreams.
Step Four: Decide on Where You
Want to do Your Banking
Rich Dad often said that you could
tell the difference between the rich, poor and middle class
simply by where they went to get their money or to do their
banking.
Rich
Dad said, “A poor man’s bank is a pawn shop.”
A pawn shop lends money on “assets” that a banker
would not loan money on. When a poor person is short of cash,
they will often go to the pawn shop and put their chainsaw,
microwave oven, jewelry, TV sets, tools, or watches up as security.
The pawn shop gives them cents on the dollar, because what the
poor spend their money on is not worth anything after they buy
it anyway. The pawn shop makes money by charging legal usurious
interest rates.
The
middle class has the creditworthiness to use banks, savings
and loans, or credit unions for their lines of credit. A popular
form of credit for this group is the credit card, which is easy
to obtain.
The rich also use banks. But they often use different banks.
They use the services of investment bankers, or find private
capital from wealthy individuals, or money from institutions
such as pension funds, insurance companies or the stock market.
The rich, if successful as business
people, have fewer problems raising large sums of money and
at better interest rates.
So decide where you will do your
banking.
Step Five: Choose Your Friends
and Partners Wisely
One
of the reasons the rich get richer is because they spend time
with other rich people. Most of my best investments come from
my rich friends, not from my stock brokers or real estate brokers.
It is important to know if a person’s aspirations are
to be rich, comfortable or simply survive.
Friends who merely want to be comfortable or survive will not
understand why you want to be rich and may unconsciously pull
you down. And besides, the investment tips I get from people
who only want to be comfortable are often tips on investments
that no one else wants.
How do you find people who are
rich or want to be rich? Rich Dad had a simple answer: “It’s
what you know that determines who you know. If you want to change
who you know, simply change what you know.” So the most
important investment you can make is in your financial education
and financial experience. Invest in that first and the people
you spend time with will change.
Step Six : Give Yourself Time
It takes time to build a business
as well as an investment portfolio. Building a business is not
the same as getting a job. With a job, you expect to be paid
soon after starting work. With a business, you may not be paid
for years, if you are paid at all. That is why I recommend keeping
your daytime job and starting a part-time business.
It is said that 90% of all businesses
fail in the first 5 years. In my opinion, there are two main
reasons for this sad statistic. One reason is lack of education
and experience. Business is not something you can learn in school.
Business is a combination of formal education, experience and
guts.
The
second reason is lack of money. We have heard the old cliche
“Killing the goose that lays the golden egg”. When
starting a business, many people kill the baby-goose before
it’s old enough to lay the golden egg.
In other words, most small businesses are undercapitalized,
which means the new business owner tries to support him or herself
and often a family on a business that is not yet up and running.
So the business is drained of cash when it needs it most to
grow.
Step Seven : Start Small, Dream
Big
In
1975, I realized that my $700 in savings was not much when compared
to Mike’s hundreds of millions of dollars, which were
rapidly growing into a billion dollars. Initially, I felt like
giving up, saying to myself, “What’s the use. I’ll
never have more than Mike.” But then I realized that if
I continued with that thought process, not only would I never
have more than Mike, I would never have much of anything.
I was comparing myself with Mike and trying to compete with
him, rather than use him as inspiration and as a mentor. So
that night I decided to dream big and start small.
Many people start small and stay
small, simply because they have small dreams. In my opinion,
big dreams are important because they possess ingredients vital
for success: hope, desire, passion, energy, vitality, faith,
drive, inspiration and creativity. These ingredients make life
worth living.
So
dare to dream big. Dream of all the wonderful things this world
and life have to offer. Write your plan on how you can have
all your dreams come true and look at the plan every day. Talk
to people about your dreams, even those who criticize them.
Then use their criticism to make your desire even stronger.
Step Eight: Before You Expand You
Must Contract
In
1975, I knew that if I was to achieve great wealth quickly,
I first needed to tighten up before I could expand. I was hurting
financially because I had been sloppy with my money during the
past 10 years.
In college, I’d spent a lot of money just having fun.
In Vietnam, I’d developed the attitude of living life
to the fullest because tomorrow I could be dead. If I was going
to get ahead, I first needed to pull back a little. Instead
of playing golf, rugby and tennis, I focused only on rugby.
Instead of spending every night in the clubs or watching television,
I needed to get back to studying. Instead of trying to be everywhere
and do everything, I decided to focus. I began doing more —
of fewer things.
So, regardless of what you did
yesterday, if you want to do better financially tomorrow, you
may need to forgive your past, tighten up your activities today,
so you can have a bright and prosperous tomorrow. To expand,
you must first contract.
Step Nine : Get Bigger Faster
The
problem with a small business or small investments such as one
single family rental, is that you have to do all the work. You
do all the work because there is not enough money to support
paid management. So you own it and manage it.
Very often, a person begins to buy real estate and soon quits
because the work is hard and the pay is low. They started with
a small plan and stayed small.
For
business or investing to work for you, in most cases you must
get big. Instead of buying only two rental properties, plan
on acquiring at least 20 properties as soon as possible. (But
make sure you know what you’re doing first.) With 20 properties
you can afford professional management, if the cash flow is
strong, or you can trade the 20 units into one larger apartment
house or office building.
The same goes with businesses, especially franchises etc. If
you have only one franchise, you are the chief cook, bottle
washer, owner and manager. If you have 20 of them, you have
a chance of finding freedom faster.
The people who dream small, think
small, and work small, work the hardest and are paid the least.
So that night in 1975, I vowed to focus, acquire education,
gain experience, start small and get big as quickly as possible.
I always remind myself of my rich
dad’s words: “The bigger the asset you build, the
less you work and the more money you make.”
Step Ten : The More You Share,
The Richer You Become
In
1975, I knew that if I wanted to acquire great wealth quickly,
I had to be a person who shared. I had to be generous. If I
was greedy, stingy or tight, it would take me longer to attain
great wealth.
So, I decided to operate out of the B (Business Owner) quadrant,
rather than follow my poor dad’s ideas on labor unions
and protectionism. I knew that I needed to focus on doing more
for less money, for more people. I needed to focus on sharing
as much of my wealth with as many people as possible.
So Step Ten is to be generous and
share. If you do that, you will become far richer than those
who work only for themselves.
Every
day we are presented with multiple choices, so that we must
continually choose and re-choose our chosen path. If you choose
to be wealthy, use these ten steps to find your path and to
stay on track.
**********************************
Born and raised in Hawaii, Robert Kiyosaki is fourth-generation
Japanese-American investor, businessman and best-selling author.
His book, Rich
Dad Poor Dad, the #1 New York Times bestseller, reveals
what the rich teach their kids about money that the poor and
middle class do not. Robert has appeared on Oprah and other
top national TV and radio shows. Robert has a profound message
for those wanting to improve their financial lives. That message
is: "With every dollar in your hand, you have the power
to choose to be rich, poor or middle class." For more information,
visit
his web site.
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