Traps in Life#
Rich Dad had Robert work at a store, paying him very little per hour. Later, Robert felt like he was being played and expressed to Rich Dad that he didn't want to work anymore. Rich Dad's response was:
I have kept my promise and showed you what your future life will be like. You are only nine years old, and you have already experienced working for money. If you repeat last month's life for 50 years, you will know how most people spend their lives.
Most people hope to have a stable job with a steady income. They fall into a cycle: wake up, go to work, pay bills, wake up again, go to work again, pay bills again. So they become a cog in someone else's business, where others make money work for them while they work for money.
Rich Dad let Robert experience this trap in advance. Those who fall into this trap are like mice running in a wheel, tired but unable to stop the cycle.
Tip: It's not about how much money you can earn, but how much money you can keep.
Assets and Liabilities#
Money can be used in two ways, to buy assets or to buy liabilities.
- Assets are things that can generate income for you, they are your employees, they are things that put money in your pocket. For example, real estate.
- Liabilities are things that take money out of your pocket. A car is a liability because you have to pay for gas every month.
The rich acquire wealth by buying assets, making money work for them, and money makes more money. The poor and middle class buy liabilities disguised as assets, becoming part of the assets of the rich.
Installment payments have made ordinary people sign a 30-year contract with themselves. In fact, what they are paying for is not just their monthly salary, but also their own dreams and aspirations. The biggest debt burden is carried by those struggling on the poverty line.
Rich Dad told Robert that he has one chance to go bankrupt before the age of 30. I think this is because after the age of 30, family will inevitably become an non-asset for you. I didn't say it's a liability, though.
Changing the Perception of Money#
The education we receive makes us feel that money is a vulgar thing, and not talking about money is a spiritual disease. But they educate us to work eight hours a day to earn money, which only shows that they haven't told the truth.
Working is just an attempt to solve long-term problems with short-term methods. The only way to overcome the fear of money is to achieve financial freedom. Education and work are both important, but they are not the key to solving problems.
The key is to understand how to survive in this world, to know that money is not evil, but a guarantee of survival. The essence of education and work is to solve the problem of survival, but they do not think and cultivate the ability to earn money, which is closer to the truth of "survival".
To gain wealth, the most important investment should be in your own mind, followed by assets. Knowledge is true power, whether you are receiving education or working, you should thirst for knowledge. Knowledge is power, it's as simple as that, don't take it lightly.
Controlling Fear and Desire#
The fear of money makes us eager to go out and work, thinking that money can eliminate this fear. Before taking any action, clarify your own feelings, don't let emotions replace your thoughts, once a person becomes emotional, problems that could have been solved become unsolvable.
Here are three stages, step by step.
- Accept fear and desire, existence is reasonable, it is because of emotions that we become human.
- Control fear and desire, if you don't control your own fear and desire, you will still be a slave to money and emotions, and you will never get close to the essence.
- Use fear and desire, emotions are the driving force behind our actions or inactions. Here is an example of using instincts to stimulate motivation and creativity.
First, use money to pay for your own business, you can invest in your mind (knowledge), or you can invest in assets, and then pay off liabilities (debts, taxes, etc.).
This is a motivation problem.
Rich Dad said, after I pay myself with the little money I have, the pressure to pay taxes and other creditors will become very high, forcing me to seek other forms of income. The pressure to pay becomes my motivation. I will do extra work, start other companies, invest in the stock market, and do anything that can make those people stop demanding from me. Pressure forces me to work hard, forces me to think, and most importantly, forces me to be smarter and more proactive in money matters.
Life#
Life is the best teacher, we can learn truly useful things from life.
Reasons for mediocrity and failure: fear of failure, cynicism (wrong understanding of the world), laziness, bad habits, arrogance.
Learning#
- Why do we need to learn knowledge?
Ignorance of money causes fear and greed. Life is actually a struggle between ignorance and awakening. The biggest debt burden is carried by those struggling on the poverty line. If you want to get rich, you need to learn financial knowledge, only knowledge can see through problems, solve them, and create wealth.
It is human nature to fear the unknown. Just like when you see a strange dog appearing in the middle of the road, you ask if you are afraid or not? If we broaden the concept of "learning" a bit, it means to understand something in this world. The more you understand, the fewer mistakes you make.
- Reasons for continuous learning
In the information age, information spreads at the speed of light, and the world is changing faster and faster. A certain idea or method that was an asset yesterday may be a liability today. Falling behind will make you a "tool person". Continuous learning is necessary to keep up with the times. In short, in this era, we have to continue learning.
Opportunities are everywhere, but there are too many influencing factors, the timing is not right, the conditions are not sufficient, even if you make more efforts, you will not succeed. And one of the rewards of continuous learning is the ability to identify timing and seize opportunities.
Be prepared for danger in times of peace. Thinking is preparation, preparation is prevention. Accumulate strength and wait for the right time, balabala...
- The best teacher
Reality is the best teacher, work is the best learning material, practice and simulation can make learning better. Learn in practice, only in practice can contradictions be discovered. The world in your mind is just an image, a model of the real world, not the real world itself. Only by truly entering the real world can you know what is the most important knowledge (ability).
Reading and lectures are the least effective ways of learning because you don't know which knowledge is useful.
Of course, there are also benefits to reading and lectures, they are not as bad as he said. It's just that for the question of "distinguishing useful knowledge", it may be the least effective way of learning.
- What to learn?
Why do capable people only earn low wages? A writer with great literary talent can only be a writer with great literary talent, but if she learns some sales knowledge, she may become a bestselling author. (Advertising/copywriting/sales)
Schools and workplaces encourage everyone to become specialized individuals, because that way you will be tamed into a complete part, only able to perform a specific job, and receive a fixed salary far below the actual labor value, becoming part of someone else's asset tool.
This means that in modern society, the best writers and the best marketers are not as good as someone who has a little bit of both. Individual skills should develop in a multidimensional way.
Rich Dad encourages doing the opposite, although it carries great risks. For many knowledge, you only need to know a little bit, you will understand some jargon, know what is more important, and what is not.
Grasp the main contradictions.
Important reminder: It is important who your teacher is, choose those who have actually done what you want to do as your teacher.
Abilities#
Three abilities needed to acquire wealth
- Financial management ability
- Leadership ability
- Self-management ability (mainly emotions)
Financial intelligence
- Financial statements
- Investment strategies
- Understanding the market
- Understanding the law
emmm...nothing much to say.
Failure#
Life pushes us forward, most people give in, a few people struggle, they welcome failure, and their excitement for success outweighs the fear of failure. They make progress from this course.
I have never seen a baseball player who never missed a shot, I have never seen a lover who has never been heartbroken. Increasing the number of failures actually increases the possibility of success. Success is hidden in failure, the premise is that you can learn from reflection.
Fear of failure is giving up the possibility of success. The least likely way to fail, the most stable way, is also the lowest way to earn returns. Passive defense will only lead to a mediocre life, rewards and risks are proportional.
Most people cannot win because they are afraid of losing what they already have. When you fail, sometimes you win, sometimes you realize that you need to continue learning. Failure is part of success. With more experience, you will find that it is also a kind of pleasure, and there are more pleasures waiting for you to discover.
Make mistakes, correct them; make mistakes again, correct them again...just like a tennis match.
Don't be afraid, just do it. Failure is part of success, no one has ever succeeded without failure.
Concentrate Your Efforts in One Direction#
When you have little money, if you want to get rich, you must first focus on one thing, instead of pursuing balance. Those who pursue balance will only stay in place.
The initial goal is to establish a solid foundation, so that you dare to take bigger risks and buy bigger investments for greater returns.
Excerpt
- Edison did not pursue balance, he focused on one thing; Bill Gates did not pursue balance either; George Patton did not deploy tanks along a long front, but concentrated them to attack the weakest part of the German defense line.
- In contrast, the French built a long Maginot Line, and the outcome is well known.
There is a saying, "Jack of all trades, master of none."
Courage#
Once you have chosen your own direction, doubt is the most powerful enemy, most people are ordinary because they think like most people.
- Several years ago, when riots broke out in Los Angeles, national gun sales increased.
- In Washington state, a person died after eating raw meat in a hamburger, so the Arizona Department of Health ordered restaurants to fully cook the beef.
- A pharmaceutical company aired an advertisement on a national television station, saying that people were getting the flu, and as a result, the number of people with colds and the sales of cold medicine increased.
Don't be influenced by the emotions of the crowd, use your knowledge-filled brain to think.
The worst times are actually the best opportunities to make money because most people are afraid. We need the courage to be different from others, don't let doubt intensify our fear and doubts.
Still, that sentence, just do it. After determining the goal, the fear in your mind is there to remind you to be cautious, to consider potential possibilities, don't take it too seriously, don't lose your composure. Sometimes the brain is just a fool kidnapped by emotions.
Opportunities#
Good opportunities are seen with the brain, not with the eyes.
- Create your own opportunities
Look for opportunities that others cannot see with their hearts, "assemble parts together" to create something new, something that others cannot see.
- Increase your own funds
Try to increase funds without buying liabilities (such as bank loans), but by creating funds yourself. The rule is "create value-buy assets-create again-buy again..." Accumulate your own funds, and more opportunities will come.
- Increase your own opportunities
Smart people will organize people who are smarter than themselves in a certain aspect, so that they are more likely to achieve results. And 1+1>2, the wisdom of two people is greater than that of one person.
Networking is potential opportunities. Know how to leverage. When you need certain information or advice, choose someone who is stronger than you in that area as your advisor, don't be stingy with your advisors (in terms of rewards), understand that the value of information is greater for you.
Wisdom in Seizing Opportunities#
In real life, people often rely on courage rather than wisdom to gain a leading position. In fact, wisdom is courage, excessive fear and self-doubt are the biggest factors that destroy our abilities. Wisdom requires time and experience, experience needs time to accumulate, you need to increase the quantity of practice, and leave the rest to time.
In fact, from another perspective, just like what we talked about failure earlier, it is precisely because we have failed many times that we have eliminated the wrong paths, and among the remaining choices, the possibility of choosing the right path will be greater.
Excerpt
- It is said that for many people, speaking in public is scarier than death.
- In psychiatry, the fear of speaking in public is because of the fear of rejection, the fear of standing out, the fear of being criticized, the fear of being laughed at, the fear of not being accepted by others. In short, it is the fear of being different from others. This psychological barrier prevents people from thinking of new ways to solve problems.
People need to understand themselves, ask themselves why. Only when people look in the mirror can they discover the truth, being content with the status quo is not because they are keen on stability, but out of fear.
Afterthoughts#
Most people despise money, despise the rich, and believe that money is evil. So naturally, money will not come near them.
Improve financial intelligence
- Work cannot achieve financial freedom, the rich do not work for money.
- Cherish your time and energy, focus on your own business.
- Differentiate between assets and liabilities, distinguish liabilities disguised as assets.
In general, when reading this book, there were many questions I wanted to ask, so the afterthoughts feel more like a Q&A session, such as what is failure? Why do we need to learn? What to learn? and so on... Most of the principles are understood by everyone, it's just that they don't think about that particular point.
Still, that sentence, don't fear, just do it!
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