Difference Between Assets and Liabilities

• Robert Kiyosaki, the American investor, businessman, author and financial commentator with an estimated net worth of 80 million dollars, was born in Hilo, Hawaii in 1947.
• Robert noticed rich kids at school had the newest toys and bikes that he did not have access to.
• One day Robert asked his father how to get rich, to which his father responded to use his head and stay in school to get a good job.
• Robert’s father this Rich Dad had a different set of views focused on building wealth – he thought Robert should learn the difference between an asset and a liability, and invest in assets not liabilities.
• An asset is something that puts money in your pocket, while a liability takes money out of your pocket.
• Poor Dad earned a good amount of money from his job, but his expenses were so high his liabilities such as mortgages and credit cards kept growing – this ultimately lead to his financial failure.
• Rich Dad’s cash flow patterns were the opposite – he invested in assets that generate passive income and his income was greater than the expense. His asset column continued to grow, therefore his income was continually increasing.
• Rich dad encouraged taking risks and learning how to manage risks, while Poor Dad preferred safety and avoiding taking risks.

The Power of Fear and Greed

• People are often stuck in a pattern of getting up, going to work, and paying bills out of fear.
• This fear stems from not having enough money and leads to people reacting emotionally, rather than thinking logically.
• On the flipside, there is also the desire – or some call it greed – to earn money in order to buy the joy they think it will bring.
• However, this joy is short-lived, and more money then needs to be earned to chase after the pleasure, comfort, and security it will supposedly provide.
• To confront this fear, people should learn the power of money, instead of being afraid of it.
• Unfortunately, this skill is not taught in school, thus trapping people into working continually to earn money.
• Rich Dad advises people to use emotions to think, rather than think with emotions, for example questioning if there is something you could be missing in a situation.
• People should strive to make assets their income, instead of relying solely on their profession for their wealth.
• Ask yourselves: if you stopped working today, how long could you survive?