Rich Dad Poor Dad written by Robert Kiyosaki is a book which can actually make you rich. It opens for you the door to the world of financial intelligence. It advocates financial independence through investing, real estate, owning businesses, and increasing one’s financial intelligence. It tells you how to use your financial intelligence to get rich!

Rich dad Poor dad is Robert’s personal story.Robert writes about how he got his financial education from an early age only, along with a friend Mike,Robert talks about his 2 DADs, obviously- the rich one and the poor one. He compares their lives.

The poor dad is not actually poor that he can not even meet his day to day demands and run a family, Robert calls him poor because he is not financially intelligent. Poor dad earns an good enough to support his family, but so much that so as to fulfill all the opulent demands of his family. He lives a normal life, although he has a pile full of educational credentials including a PhD. Robert calls him poor because the poor dad is always caught in the rat race of making money. His income is only limited, he does not have assets which give him extra income, he is always suppressed by financial pressures, the numbers in his bank account can never thrive, but increase only once in a month when he gets paid and then decrease down, sapped by taxes, expenditures! His income also goes into pension plans, retirement plans!

The Rich dad- the the intelligent one, is a businessman. His earnings are nearly equal to the poor dad, but that, according to Robert is only temporary. Unlike poor dad, the rich dad pays less taxes, his income is sure to grow vigorously in future. He does not suffer financial tensions at all. He is focussed on building assets, which in future generate income, automatically and continuously so that he does not have to rely on a small pensions , he is building his perpetual money making machines. So, he does not saves money in retirement plans, instead, invest his money into making assets.(now you obviously know which dad is better, and which dad is the role model of Robert since his childhood!)

Robert writes about the one and only secret of becoming rich, which according to his Rich dad, is, understanding the difference between assets and liabilities. IF you understand this, you will become rich. This is the only rule.

I’ll be explaining assets and liabilities like Robert has explained in his book.

asset

The above box is an Income Statement, often called a Profit and Loss Statement. It measures income and expenses. Money in and money out. The bottom diagram is the Balance Sheet. It is called that because it is supposed to balance assets against liabilities.

The arrows in the diagrams represent the flow of cash, or “cash flow.”

liability

An asset is something that puts money in my pocket.
A liability is something that takes money out of my pocket.

Since assets put money in your pocket, you should keep buying assets, or building assets. Do not buy liabilities, do away with liabilities.

CASH FLOW PATTERNS of

Poor

Job (provides income)-> Expenses(Taxes Food Rent Clothes Fun Transportation)
Asset (none)
Liability (none)

Middle Class

Job (provides income)-> Expenses(Taxes Food Mortgage Clothes Fun Transportation)
Asset (none)
Liability (Mortgage Consumer loans Credit Cards)

Rich

Assets(stocks bonds notes real estate intellectual property)->income (dividends interest rental
income royalties)
Liabilities (none)

The diagrams show the flow of cash through a poor, middle class or wealthy person’s life. It is the cash flow that tells the story. It is the story of how a person handles their money, what they do after they get the money in their hand.

“The rich acquire assets and the poor and middle
class acquire liabilities.”- Robert Kiyosaki

So that’s all I have for you about assets vs liabilities, I’ll be posting more about Rich dad poor dad, stick around till then, and keep SHARING.

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