The disparity between the rich and the poor is growing at a much faster pace today than at any other time in history. With the advent of the Internet, we can virtually become millionaires from anywhere in the world, even from the comfort of our home. The gap between the two is growing because of the opportunities that people see or don’t see.
Many people are given the same chances in today’s world… but the majority of us see no opportunities, while at the same time the financial savvy see innumerable ones. These opportunities are abundant and everywhere; we just have to be trained to see them for what they are and not worse than they are, like most do.
Robert Kiyosaki’s book, Rich Dad Poor Dad, offers insights on how to accrue money from any age and from any background, if, we would only change our thinking. We are what we think about, and if we think from the perspective of a poor or middle-class person, thinking we have no chances at attaining the ‘elusive’ concept of success, we are setting ourselves up for failure.
“The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant.” – Robert Kiyosaki
The Power of Finding Assets
The first aspect every rich person understands is the difference between an asset and a liability. If you look up those words in the dictionary, you will most likely find a long-worded definition. But here at Become The Lion, we keep things simple.
An asset: something that puts money in your pocket.
A liability: something that takes money out of your pocket.
Understand this, and your life will flourish. Do not believe that your house, car, clothes, or things of that nature are assets. They take money out of your pocket. To name a few, assets can come from book sales, rental properties, stocks, bonds, and affiliate marketing.
Assets make money when you are not directly working on them. But it is not enough to know this. You must understand how the rich use them versus how the poor and the middle class uses them. The poor and the middle class tend to spend their money on liabilities as soon as they are paid, or save their money, which is often not financially smart due to inflation.
The rich know that if they are going to buy a liability (car, house, clothes, etc.) they should buy it using the money gained from an asset. For example, they would buy a rental property and use that income from their rentals (passive income) to then buy a liability. The difference?
The poor use their money from their jobs to buy liabilities. The rich use their money for their jobs to buy assets that buy their liabilities.
The Three Incomes – Passive Income Will Change Your Life
Now that you understand the difference between an asset and a liability, you have to understand the different types of incomes.
Ordinary income: Paycheck money (often taxed 30-50%)
Portfolio income: Capital gains (taxed less than 20%)
Passive income: Residual income (often taxes less than 10%, a lot of times 0%)
Most people only know about the first type of income. They work hard for money, instead of having their money work hard for them; they trade their time for money. The more they work for ordinary income, the more they are taxed. Their expenses tend to increase in proportion to their salaries.
They are in the “Rat Race”. The day they stop working, is the day they will fail to make an income or a living. Unless they rely on the government, which is a foolish, sheep-thing to do.
That is why the rich work hard for ordinary income ONLY at first and then invest that money into portfolio and passive income.
By investing in the other types of income, you will be taxed less, and you will be able to follow your passion by making money regardless of what you do.
A quote for Rich Dad Poor Dad I believe to be in order:
“The key to becoming wealthy is the ability to convert ordinary income into passive income or portfolio income as quickly as possible.” – Robert Kiyosaki
Have The Right Mindset
The rich have a different mindset about money. They view it as an idea, not something tangible. They see the abundance of opportunities. They look at money as the medium to do what they want, instead of looking at it as elusive and hard-to-get.
The rich know their priorities. They don’t waste time. They are constantly reading and learning to expand their worldview and financial savviness. If you are brand new to financial education, do not worry. The fact that you want to learn makes you ahead of most people. These concepts will only get easier as you read more about them, but they will become especially clear once you implement them.
I encourage you to read more and then teach others. The best way to learn is by doing or teaching. And, as you probably know, the school system doesn’t teach this. I don’t blame them though, the rich own the system and why would they want to make more competition for themselves? They do not want people knowing that with a changed mindset, they will be able to make money easier than what conventional wisdom dictates.
Passive income is the key to a better life.