Be your own sugar daddy by making your cash work for you
Rich Dad, Poor Dad
Robert T. Kiyosaki with Sharon L. Lechter
I just finished reading Rich Dad Poor Dad and I highly recommend it for my fellow yuppies who are also just starting out in their professional lives and quickly trying to live the dream (or at least, appear to be living the dream). While the investment strategies in this book focus on real-estate, there are many simple lessons that changed the way I think about my “assets”. The bi-line of the book describes RDPD as “what the rich teach their kids about money – that the poor and middle class do not.” Kiyosaki shares the stories of his 2 dads: one who told him to work hard and the other who told him to have his money work hard for him.
The latter lesson is what separates the “rich dads” from the “poor” ones. The rich dads have the returns on their assets pay for their Porsche and fancy houses, while the poor dads work hard to get pay raises to buy the same things. The difference is that the rich dads are building portfolios of assets, while the poor dads have expenses.
Kiyosaki explains the trap that many Yuppies fall into and terms it the “Rat Race” : you get your first job, your first condo, furnish it, then fall in love, move in together, thinking you know have twice as much money available you buy a bigger house and a car only to discover your life is eating away at your cash flow so you work harder to get a promotion, only to see half your earnings go to taxes and then at the end of the day, you’re stressing over payments… but hey, at least you’re living the dream.
This book helped to remind me of the basic accounting principles I learned in year 1 university: assets = I own them vs. liabilities = I owe someone else. I was reading this book at the same time that my Eye Candy and I drove away from the Mazda lot with our new CX7 and I was so proud to have “purchased” my first car. Only, I haven’t really purchased it – it’s an expense that I’m paying for over the next 4 years and from the second we drove it off the lot, our vehicle lots its value.
My real “assets” are my RRSPs and my investments and I should use these assets as revenue generators. Kiyosaki encourages readers to think of their assets as the “business that you’re in” and your day-to-day jobs as profession. It’s the success of your business that will get you out of the Rat Race… not your day job.
My key take-aways from this book:
To pro-actively manage my assets: pay myself first
Build my financially literacy: take time to learn how to invest
Instead of thinking, “I can’t afford that”, ask myself, “How can I afford it”?
To recognized my expenses as a cost of life… not part of my net worth