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Chapter 4
Getting
STARTED
y now youre getting the gist of Rich Dads thinking and no doubt youre anxious to get started. Getting started requires two actions. First, you have to decide what your general financial goal is. Do you want to be secure? Comfortable? Or rich? The answer to this question is important because it will determine which quadrant you stay in or enter, and how you go about making money inside that quadrant. Second, you have to become financially literate so that you learn to think like the rich.
TAKE NOTE
A goal is different from a wish. You may wish to be rich, but that doesnt mean youve ever taken any practical steps to make this wish come true.
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rich on one lucky investment, but all too frequently the money they amass is later lost.
Comfortable
Rich
Depending on how the pros weigh against the cons, you may actually find yourself re-ordering your goals. This can be a priceless exercise, for it suggests possibilities that you might not have previously imagined.
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Nothing is more tragic than to see people who have sold themselves short on whats possible for their lives. Take the time to discover possibilities, and the lesson will be priceless.
Nothing is more tragic than to see people who have sold themselves short on whats possible for their lives, Rich Dad taught me. They try to live frugally, scrimping and saving, and they think theyre being financially smart. In truth, theyre limiting themselves. Most people spend their lives imprisoned by financial ignorance. It shows up in their faces and in their attitudes as they get older. They begin to look like wild lions trapped in their cages, pacing back and forth while they mull over what happened to the life they once knew.
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you plan for security, youre planning for a world of not enough. One of the points of this step is to motivate you to reach beyond a goal that will only curb your potential. Next, write up a financial plan for lifetime comfort. What does comfort mean to you? A big house and two cars? A house, a vacation cottage, and three cars? How can you go about achieving your level of comfort? Obviously, this plan will be a little more aggressive than the first one. And it will be less boring because when you plan for a world of enough, there are more choices open to you. Your challenge will be to choose. Finally, write up a financial plan for becoming rich. This will be your most aggressive plan and your most exciting, for now youre anticipating a world of more than enough. Youll be faced with a myriad of choices, for although you may not be aware of it yet, opportunities to make money are all around you. As with the previous plan, your challenge will be coping with the abundance of possibilities. You dont want to wander through life like a child in a candy store, so distracted by choice that you never make one. Think this plan through carefully and thoroughly. The point of the exercise is to show you that you have choices, more than you may have ever imaginedand that you need to make decisions about those choices. Too many people go from job to job or business to business without getting where they want to be financially. They wander through life without a plan, and all the while their most precious asset, time, is dwindling away. This doesnt have to happen to you.
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FEAR:
I cant set a goal to get rich. People only get rich through luck.
FACT:
Getting rich is more a matter of determination than of luck. Great financial opportunities lie all around you. If you learn to seize those opportunities, youre more likely to amass money than if you play the lottery.
FREEDOM:
By making a plan to get rich, youre taking the first real step in that direction.
You may believe that money is the root of all evil. Youve probably been taught to work for money rather than to have money work for youand not to worry about your financial future because some company or the government will take care of you when your working days are over. If your plan is to be rich, then its time to wean yourself from such risky thinking. What follows are nine points that I learned through the years that can help you get started. As you proceed through this work/study program, youll start thinking like the rich and no doubt develop ideas of your own.
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TAKE NOTE
To stay on the road to riches, you must have deepseated reasons compelling you forward.
DONT WANT
1 1
WANT
Can you identify your own reasons for wanting to be rich? Are your reasons deep-seated enough that youll be able to endure the risks of the road ahead?
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money, they say, or Ill never be rich, or I dont have to worry, Im still young. Indeed, people who think that making money is too much of a hassle never will make it. Theyre sealing their own fate by robbing themselves of their two most precious assets: time, and a mind open to learning. Each day you choose what to do with your time, and each day you choose what information you put in your head. You can watch TV all day, play golf, read decorating magazinesor take a course on financial planning. Ive talked about the importance of financial literacy. The issue to ponder here is the amount of time it takes to become literate. What you do with your time now will shape what you do with your time when your working days are over. When you retire, will you be pursuing your interestsor sitting at home fretting over medical bills that Medicare hasnt covered?
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George Soros, and Jim Rogers. I know their stats through and through, that is, their successes and their style of investing. For example, I follow what Warren Buffett invests in and read about his point of view on the market, and I follow Donald Trumps business deals, trying to discover how he negotiates and puts them together. When I first started negotiating real estate deals, I subconsciously acted with the bravado of Trump. When I was analyzing a trend in the stock market, I would recall Beating the Street by Peter Lynch and look at the trend as if through his eyes. If you find heroes to emulate, youll tap into a tremendous reservoir of power that will help give you strength.
PERSONAL HERO
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LESSONS LEARNED
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Look over your life so far. Think of the activities and subjects that have most inspired you. Were there any personal heroes who sparked these interests and kept them alive? What lessons did you learn from them? If youre as committed to financial freedom now as you were to your passions of the past, then seek heroes who will help light the way.
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services of top-notch professionals made him money. Sure, professionals will charge you for their services. But if theyre smart and competent, the more money they make, the more money youll make. When youre considering advisors to accompany you on your journey toward financial freedom, be they brokers, real estate agents, lawyers, tax planners, or others, choose people who have experience and your best interests at heart. They may wind up being your best assets. When you meet difficulties in implementing your plan, theyll be there to protect and assist you.
TAKE NOTE
In todays fastchanging world, its not so much what you learn that counts, but how fast you learn it.
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yourself firsteven before you pay your bills. Why? Because when you pay everyone else first, there is often nothing left for you. Im not saying you should pay yourself first so you can run out and spend your money on ego toys like a new car, a new outfit, or a cruise. Paying yourself first means using the money for investments in the B or I quadrant. Dont you want your money to start earning you more money? Then go ahead: Pay yourself first, invest the money, and let your creditors yelling spur you to find new ways to expand your income.
FEAR:
FACT:
If youre disciplined, you can pay yourself first without ruining your credit. The trick is to keep your personal expenses low. If youre under pressure from creditors, the pressure will actually inspire you to come up with new ways of making money.
FREEDOM:
Start paying yourself first today, and youll get into a lifelong habit of building assets.
Dont get me wrong. Im not suggesting that you avoid paying your bills. You should just know that its not financially intelligent to cave in to creditor pressure and dip into your investments in order to pay them. How can you pay yourself first without getting into a credit rut? First, keep your personal expenses low. Dont buy yourself toys until the habit of paying yourself first has built up enough assets for you to afford them. Second, when you come up short, dont dip into your investments to pay off your creditors. Look at the pressure theyre applying as a source of inspiration; it will force your financial genius to come up with new ways of making money. When your genius pulls through, then pay your bills. As you start to build assets, youll see that the income from your assets will allow you to
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pay for your personal expenses and you will have expanded your means so you can live the lifestyle you desire.
TAKE NOTE
With every one of your investments, whether its a paper security or a tangible asset, you should get something for free.
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practice doesnt mean you should. The earlier you train yourself to be a master of money, the better. Before you ever buy luxuries, use what money you have to make more money. Lets say 100 people were given $10,000 at the start of the year. Heres my opinion of what those 100 people would do with their money by the end of the year: Eighty would have nothing left. In fact, many would have created debt by making down payments on luxury items such as sports cars and home entertainment systems. Sixteen would have increased that $10,000 by 5 to 10 percent. Four would have increased it to $20,000 or more. Which group would you be in? If its either of the first two, then read on, and dont forget this point: Use the desire to consume not to buy, but rather to inspire your financial genius to invest. Later, when youve built enough assets, you can use the income from those assets to buy the luxuries you crave. In this way, instead of being a slave to money, youll be the master of it.
YOUR SUPERMENTOR
It is my hope that in the preceding pages Ive managed to jumpstart your thinking about financial matters. Much has been said of mentors. In the next two sections Rich Dad is going to serve as your guide while you learn the fundamentals of financial literacy and then act on what youve learned.
RICH DADS TIP
Borrowing is easier in the short term but harder in the long term. Dont buy luxuries until youve built the assets to afford them.
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