Rich Grad Poor Grad

            The poor, the middle class and the rich all think differently regarding assets (things that put money in your pocket), liabilities (things that take money out of your pocket) and wealth ("the measure of cash flow from the asset column compared with the expense column"). Rich people buy assets, the poor only have expenses and the middle class buy liabilities they think are assets. This was one of the more fascinating facets of Rich Dad Poor Dad. Most people want to make more money because they think that it will make everything that much easier but in some cases, it makes things harder or, in extreme cases, worse. The key is to acquire assets like real estate, stocks, bonds or intellectual property (like royalties, scripts or patents) that generate a healthy income stream that works hard for us and to minimize liabilities like mortgages, credit card debt, loans and taxes.

            Wealth and being rich seem to be used interchangeably but the truth is that wealth is an important measurement but a measurement nonetheless. If you ask Robert Kiyosaki, he will tell you that you can be wealthy without being rich. Someone who is wealthy will achieve and maintain just enough cash flow from their assets to fully cover their monthly expenses. Someone who is financially independent, on the other hand, will be able to survive a long time without being dependent on his or her wages or professional position. Furthermore, those who don't "mind their own business" (or build and keep the asset column strong) will continue to be enslaved to the company, government and/or bank.

            Kiyosaki goes on to discuss two kinds of investors. The most common type of investor that you will come across is one who purchases a packaged investment. This type of investor purchases mutual funds, stocks, bonds or real estate investment trusts from a real estate company, stockbroker or financial planner because it is quick and easy. The second type of investor specializes in creating investments. This kind of investing is more complex and requires the development of three skills: Find an opportunity that everyone missed, raise money and organize smart people.

            In closing, this book reinforced certain ideals I already believe in but more importantly made me aware that financial freedom is well within reach for me. The most valuable lesson that I am going to take away from Rich Dad Poor Dad is that "the single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth." Many times, the rich invent money and don't need to spend a red cent to generate wealth. It is up to the right side of the brain to exercise its creativity in these endeavors.