Saturday, June 13, 2009

The book that made me rich


I was brought up by parents who taught me how to live an honest and productive life. They taught me the value of hard work, the necessity of integrity, and the importance of setting God as the center of my life. They taught me to be ambitious; to set high goals and work hard to reach them and not to give in to obstacles despite how heart breaking they could be. My parents taught me how to combine goodness and intelligence to succeed in life; and they did not prove wrong. As early as nineteen years old I earned my Bachelors degree with flying colors. Two months after graduation I got my first job with a competitive salary which made me totally independent for two years before I went abroad. All those were because of what my parents taught me. But there was one thing my parents failed to teach me, something very important, and that’s how to save my money.

I used to live in a check to check basis. I lived with my salary for a month and was always looking forward to the next end of the month. I shopped here and there and was carefree with my expenses because I was thinking, I worked hard for it and I was simply giving what was due to me; until one day, when I stumbled upon the book which completely changed my perspective towards money and taught me how to be rich, the Rich Dad Poor Dad: What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not! by Robert Kiyosaki.

Some of the topics discussed in the book include: 1) the value of financial intelligence, 2) the corporations spend first, then pay taxes, while individuals must pay taxes first, 3) that corporations are special entities that anyone can use, but the poor don’t know how.

Kiyosaki used both the terms “rich” and “poor” to refer to a mind set. He discusses the difference of perspective between the rich and the poor people. His book tells about his own father [a well-educated with a very competitive job but poor] and his friend’s multi-millionaire dad [a non-educated but wise in terms of money managing]. These two men provided Kiyosaki a comparison that enabled him to figure out how to break free from a rat race [refers to an imaginary cage that a simple employee with a poor mind set is trapped].

Kiyosaki mostly used the real estate business to provide examples on the points that he was making even providing some advices that I would say, are not all for everyone to understand without fully understanding how corporations, taxes and real estate business works, but he provided key points that are worth taking and applying to real life for simple people like me.

1.The difference of how the poor and the rich think.

For example, at the end of the month I will receive a 30,000baht salary from my full-time job. Having a poor mind set, I would go to the mall to check for the latest gadget that would fancy me thinking “I worked hard my *** for this money for a whole month so I must get a gift for myself.” However, someone with a rich mind set would think “I worked hard my *** for this money for a whole month so I should not spend this. I must invest and make profit out of this.” The poor spends his 30,000baht money but the rich will only spend the profit of his 30,000baht.

Another good example for this is the housing. A poor mind set would use all his income to buy a house even resolving to credits but a rich mind would content himself with a small and not fancy house and instead, use his money to put up a grocery store or any income generating investment.

2.The poor works for money but the rich makes money work for him.

The book has a little more analogy for this but I would simplify it based on how it applies to me. This concept must refer to how the poor is so afraid to lose his job because he lives in a check to check basis while a rich man is confident that he has some source of income other than his full-time job. In other words, the rich man is not in a rat race and has money working for him.

There are still many things discussed in the book but these two things are the most significant learning that made a powerful impact on me. It changed me from a financial carefree into a thrifty and investment adept person. I would say that I am working to break free from the rat race.

3 comments:

  1. My daughter is a carbon copy of you and I am going to send her that book:)

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  2. Lol, really? That's great D!

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  3. It's true that the rich make their money work for them but keep in mind it's almost impossible for a member of the working class (or even middle class) to accumulate so much money that you can solely live from the profits. The real money is inherited and inaccessible to lower classes. That's why the gap between rich and poor becomes wider and wider.

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Thank you for your time. I'll get back to you soon. :)