5 Money Lessons To Change Your Life

The Rich Dad and Poor Dad. This book changed my financial life forever. In this article, I'm sharing the five most important lessons that I learned about money from Robert Kiyosaki which made me financially secure and changed my life for financial success. This article is for informational purposes only.

#1. Lesson 

Lesson one, the big secret. Robert Kiyosaki realizes the biggest secret between those who can build wealth and those who can't boil down to this one scenario in which of the two choices that you make. You're stranded in the wilderness, you're cold and you need to start a fire to survive. 

You have two choices. One, you go out into the forest for hours to gather wood and kindling when you return, you focus on building the fire and constantly feed it to keep it burning for the next few days or two, and you pull out an instant firecracker for immediate heat and relief. After finishes burning for a few minutes, you're left with a useless empty husk. 

These choices aren't about working hard or spending hours doing labor, not chilling. Robert Kiyosaki believed that the fundamental difference between the rich and the poor is how you think and how you structure your life over the long and short term. In fact, it was this distinction that made Warren Buffett one of the richest men in history, who patiently built his empire over several decades. 

Did you know that 99% of Warren Buffett's wealth was earned after his 50th birthday? Compare this to NFL players who earn their wealth in just a few years and play a couple of games. I bet you didn't know that 78% of them NFL players, they go bankrupt or fall into severe financial distress within two years of retirement. 

Robert Kiyosaki believes this happened because the poor middle class and the rich have a completely different understanding of the three most important aspects of money, assets, liabilities, and cash flow. An asset is something that puts money into your pocket. Whether you work or not. 

A liability is something that takes money out of your pocket, like credit card debt, or car loans. And cashflow is equal to income minus expenses. If your income is higher than your expenses, then you have positive cash flow. If your expenses are higher, then you have negative cash flow. And it's this diagram that explains how the poor stays poor and how the rich actually get rich. 

People who have poor have very little financial room to breathe, their main source of income comes from their job. And when they get their paycheck, all their money goes into paying their expenses like taxes, rent, food, transportation, clothes, etc. And they have very little money left over to make any significant investments regardless if their assets or liabilities. 

The middle class, on the other hand, is a little bit better off, they have a higher income, but they also have a lot more liabilities. They have to pay more for their mortgage to car insurance or taxes all on top of their typical expenses. But here's where it gets really interesting. 

And this is what makes the wealthy. The rich understand the perfect balance between assets and liabilities and cash flow. Here's what they do. The majority of the income of the rich doesn't come from their job. It comes from their assets, such as positively cash-flowing real estate, stocks, bonds, royalty, etc. 

The rich prioritizes assets above all else because they know that assets will increase their income, which they can use to purchase even more assets, thereby creating a wealth-generating engine with virtually nothing to stop it. But unfortunately, a sizable portion of American adults can't won't or don't know how to start building these assets. 

For example, the wealthy know that investing in stocks and bonds are one of the easiest ways to build up their assets and wealth. But unfortunately, only a little over 50% of American adults are invested in the stock market. When I was in middle school in high school, I was what you would call a loser. 

I really want nice clothes and nice things. So my classmates would think that was cool and had lunch. But there's just one problem that was broke, and my parents didn't have much either. And like every struggling first-generation kid, I hustled hard, and I sold my old clothes, my old electronics and I sold candy in bulk. I did other people's homework for money. 

And when I actually got my hands on some cash, I immediately bought a pair of black and white Jordans to replace my shoes from Payless. And I kept doing this when I got paid, upgrading my wardrobe accessories, etc. With the sold dream of getting one of those super cars that make those really loud room noises.

Until one day when everything changed, I realized that this cycle of spending money to try to fit in will never end you always want to buy new things to keep up with the trends to feel like you belong and the deeper you fall into this cycle, the harder it will be to get out. 

When I understood this I changed my entire outlook. I continued my hustle mentality but instead of spending my money on material things, I reinvested it into more side hustles like buying and selling phones and writing ebooks because for the very first time, I truly understood the power of assets over liabilities.

#2. Lesson 

But nothing supercharged my financial wealth until I learned the next lesson to stop working for money. I don't mean work for free. Of course, we all got to pay our bills. What I mean is don't take a job just for the money. Here's why. Robert had two dads his biological father who we called his poor dad had a Ph.D. with a great stable government job.

and then his biological father's friend who he called his rich dad. He dropped out of eighth grade and became one of the richest men in all of Hawaii. Although both dads were hardworking, never charismatic, and influential, there was only a rich dad who knew a key lesson that the poor dad never truly understood. 

The rich don't work for money, the rich work to gain experience to make connections, and to learn about different business models. Robert Kiyosaki is a poor dad who worked for a paycheck his entire life. While his rich dad actually went weeks without making any money. 

Robert believes the poor remain poor because they're trapped by two emotions that feed off each other. First, fear you're afraid of losing your job losing your home, and going hungry. And this convinces you to work long hours to get home exhausted and do it all over again the very next day.

And when you get your paycheck, the second emotion comes out of greed. Once you have some money in the bank, you think of all the things you can buy a better car and extra TV, fancier clothes. And when you run out of money, fear kicks back in and you get trapped in the all-familiar rat race.

Rich Dad taught Robert Kiyosaki that to be successful. You need to detach these two emotions from money and understand that money is just a piece of paper. You shouldn't be scared of it or excited about it, and said, look at money as just a tool to create more money.

There's a difference between being poor and being broke. Broke is temporary, poor is eternal. It was 1956 Robert Kiyosaki was young, he was working for Rich Dad, but there was just one problem. He was only getting paid 10 cents an hour. And one day Robert was fed up and a rich dad for a rates.

But instead, which could have been Robert to work for free for a few more weeks to learn a very valuable lesson. A few weeks later, rich dad offered Robert 25 cents an hour, which was a lot of money for a kid in 1956. But before Robert could agree, we're sure I kept offering more and more money $1 An hour $2 $5.

Which by the way, most adults don't even make that kind of money back then Rich Dad was trying to prove a point by offering Robert in a ridiculous amount of money to trap him into the rat race in the illusion of job security. But Robert saw how arbitrary the connection between time and money was, and realize that if you only focus on time in exchange for money.

He would be financially trapped just like his poor dad. So instead, Robert focuses on building his experience. He joined the Marines to learn about leadership, he worked in the oil industry to learn the ins and outs of the business. He did all these things all in an attempt to learn as much as possible to prepare him for a $100 million empire that he was about to build. 

The single most powerful asset we all have is our money. If it is trained well, it can create enormous wealth. Coming from an immigrant family, I was raised to be the perfect employee. I got good grades, I followed the rules. And I always stayed in between the lines with one thing in focus, get a good job at a college. 

But after reading this book, I changed, I began to ask questions, and I began to challenge conventional wisdom. I began studying and learning things at school. Unfortunately, they didn't teach me like about investing in personal finance and financial freedom. The school system doesn't teach you how to go beyond the confined spaces of their version of success. 

The system wants you to just be a worker and employee after you graduate, so you can be a stable contributor to the economic engine. But here's the truth. Just joining the rat race and being another statistic in a sea of hundreds of millions of other workers won't make you wealthy. 

#3. Lesson

The third lesson is to be a seeker not like in Harry Potter failure defeats losers, but it also inspires winners, every failure you face should be turned into an opportunity. But there's just one problem. You're too scared to look for these opportunities because the fear of losing money is far greater than the joy of finding money. Don't beat yourself over it. It's human nature. It's a psychological phenomenon called loss aversion.

But hold on. Before you go all Indiana Jones looking for opportunities, there's actually a wrong way to do it. Robert believes that if you don't have a lot of money, but you still want to be wealthy, you should be focused and not balanced. Here's what I mean. If you only have $100 to invest in the stock market might not be your best opportunity to gain wealth.

If you're lucky, and you see a return of 20% Then you'll have 20 extra dollars in your pocket. Now $20 is nothing to laugh at. You can buy 20 Delicious $1 cheeseburgers, but that's a lot of luck and effort required for $20. What if instead, you took that $100 And you invested in yourself? 

What if you took a class to learn a new skill, hire a mentor to expand your knowledge, or even start a side hustle to get some hands-on experience, these new learnings could return you 100 times more later on in life. In fact, Robert learned a key skill from one of the very first side hustles that empowered him to grow his net worth to well over $100 million. 

And it all started when he was just a little kid. And he asked a lady who was throwing out all of her comic books if you could keep them and she said yes under one condition. Do not under any circumstance. We sell them. Of course, Robert happily agreed and carried all these comic books home. 

He opened a makeshift library in his basement in charge kids 10 cents to read as much as they wanted for two hours. Robert started making $9 a week which will A lot of money back then. And so he hired a friend to run this library for just $1 a week, netting him $8 in profit. And because he built a team, this opened the door to explosive growth and unlimited possibilities.

Because now he had the time to look for more opportunities and do the same thing all over again. But it might be hard to look for opportunities if you're stuck with a lot of super high-interest debt. And just seeing the interest build up and up can feel like a never-ending cycle. 

#4. Lesson

Lesson Four Avoid laziness. Robert has such a unique take on what it means to be lazy that it completely changed the way that I looked at the world. When you think of a lazy person what usually comes to mind is someone laying on the couch watching Love is blind season 2. Robert believes that laziness is about being too busy. Most of the time when people are afraid to face the harsh reality. 

They neglect it as much as possible and choose to keep themselves busy, so don't need to think about it. For example, if a spouse is having marital issues and spend 16 hours at the office, can anyone call him or her lazy? Well, he is when it comes to his marriage. He's filling his plate with meaningless busy work that he doesn't actually need to do, but he's probably doing it as an excuse to avoid his real problems. 

One major reason people work so hard is because of the deep anxieties that they have outside of the work environment, which could probably explain why rich people are not necessarily happier than the rest of us. in the journal Nature of human behavior. They discovered that one's household income, which is around $105,000 a year in the United States,.

The correlation between happiness in money becomes less relevant studies also shows that children that come from affluent families are far more likely to suffer from depression, substance abuse, and anxiety. In some cases, children from upper-middle households were three times more likely to report significant levels of depression because they were very isolated.

Since there are parents who willingly worked more hours than those from lower-income households. Robert Kiyosaki said people often overlook the fact that the rich typically have very, very unorganized lives. And while they're great at making money, the unintentional consequences of their busy lifestyles are paid for by their immediate family members. 

Here's why this is important. And this is where it gets really interesting. At the center of this entire lesson is a question that you need to ask yourself, why are you doing what you're doing? Why do you want to be a millionaire status for validation for acceptance? everyone trying to flex on each other all in an attempt to build more and more clout. 

It's important to remember that if you aren't careful enough, there is a very, very dark side to making it to the top. While I do want all of you to go out there and make your financial dreams come true. You need to understand that being fulfilled in all aspects of life is much more important than just working hard to get rich and trying to show it off. 

Now, of course, everyone gets fulfillment differently, but please try your hardest to not get sucked into all of this to the point that you don't have any balance between your personal and your financial lives.

#5. Lesson

Lesson five is how to be rich. Robert Kiyosaki believes that anyone can build wealth if they understand these four things. One, being able to understand simple numbers will allow you to make better financial decisions. And I don't mean college-level multivariable calculus, just simple math will do like one plus one equals three.

And if you didn't know math was actually my worst subject in school. And look, I'm still here to you need to understand how to invest your money. And I'm not talking about gambling and losing everything on meme stocks either the idea of investing is way broader than just investing in stocks and bonds.

It's actually understanding the concept of how to make your money work for you. Now, whether that's in stocks, a side hustles your health, or even your mind in education, understanding the market basically knowing the fundamental mechanics of this graph, supply, and demand, which explains the interaction between a seller and a buyer of a good, essentially be hired as pies are good.

The lower the price, and the higher the demand of the good, the higher the price, and mastering this market mechanic and more will help you see where the money is flowing or help you make better financial choices. In the long run for taxes, there are plenty of ways to legally avoid taxes, if you know your tax laws and how to work around them.

If you do, you're automatically at a huge advantage against those who just signed a check away to the IRS without a second thought like Did you know that you can actually get a deduction on your rent, if you're working from home, the more money that you can personally keep in your pockets, the more opportunities you'll have that you can invest in.

Look, people that actually know the ins and outs of the tax law like Warren Buffett, they're actually able to pay a lower tax rate than his secretary. After you understand these four things. Here's what Robert believes are really great assets to look into. Which is looking into businesses that don't require your presence. 

Think back to Roberts's comic book library, he hired his friend to manage it and he was able to make money without lifting a finger to is investing in the stock market for the long term.