ROBERT KIYOSAKI’S CASH FLOW QUADRANT

Robert Kiyosaki is undoubtedly one of this era’s best known authors on personal finance. His Rich Dad series have released the mental shackles most people were through. From Rich Dad, Poor Dad, Cash Flow Quadrants, Retire Young, Retire Rich etc. You find timeless wealth creation principles and information that would challenge your mindset. I gave my book, Retire Young ,Retire Rich to a friend last week and just two days ago, she called me and begun quoting some portions of the book to moi.Isn’t it impressive? Today, I share with you some of the many gems gleaned from this book, Cash flow Quadrant. Enjoy

• It does not take money nor a good formal education to achieve financial freedom Most of these wealthy men do not have college degrees or are perhaps college drop outs: Thomas Edison founder of General Electric, Henry Ford founder of Ford Motors, Bill Gate of Microsoft, Ted Turner of CNN, Michael Dell of Dell Computer, Steve Jobs founder of Apple and Ralph Lauren founder of polo. 

• It takes a dream a lot of determination, a willingness to learn quickly, and the ability to use your God-given assets properly and to know which sector of the cash flow quadrant to generate your income from.

• More than anything, it is the internal difference of our core values, strengths, weaknesses and interest that affect which quadrant we decide to generate our income from. Some people love being employees while others hate it. Certain people love investing, while others only see the risk of losing money. Most of us are a little of each of these characters being successful in the four quadrants often means redirection some internal core values.

• Money is important; yet do not spend your life working for it.

• Rich dad thought that it is foolish to spend your life working for money and to pretend that money was not important.

• Learn to have money and people work hard for you, and you can be free to do the things that are important.

• There is a difference between being rich and being wealthy. The definition of wealth is the number of day you can survive, without physically working and still maintain your standard of loving, wealth is measured it time not dollars or cedis.

• Ultimately it is not how much money you make that matters, but how much money you keep and how long that money works for you. Every day I meet many people who make a lot of money, but all of their money goes out the expense column.

• The idea of go to school and get a safe secure job was a good idea for people born before 1930 today everyone needs to go to school to learn to get a good job, but we also need to know how to invest ,and investing is not a subject taught in school.

• People who take risks change the world. Few people ever get rich without taking risks.

• Financial freedom might be free, but it does not come cheap. Freedom has a price; freedom’s price is measured in dreams, desires and the ability to overcome.

• Even if you do not have much money it is important to invest in your education for when the changes come, you will be better prepared for them. The game and rules are different for each of the quadrants … which is why I recommend education over ego.

• Knowledge is power all you have to do is wait for the opportunity to use the knowledge and then you will have the money.

WHAT NEXT?

Share with me any of the lessons you have picked out from Rich Dad's Book, would love to learn from you.

LIVING BELOW YOUR MEANS AND LOVING IT

Are you the kind of person that gets it and spend it all? Well, you may have it in abundance now but how do you live below your means today to prepare for the lean season?

Whiles others instinctively seem to know how to get what they want, even on a limited income, some need help in managing their finances to get what they need and want. Research shows that people worry more about money than any other problem.The joy of having coins dancing in ones pocket brings much fulfillment and  greatly desired to be spent on instant gratification.However, it is very important to learn how to live below your means to fulfill some desires in later years. In this post, I intend sharing with you some great techniques to help you live below your means whilst loving it. If you are a spendthrift, then this post was created with you in mind. Read on to find out. If you desire to cultivate the habit of living below your means, then do the following:

• ·         Create a financial Plan

You would have difficulties living below your means if you don’t have a financial plan. A financial plan is a written record of your goals, how you intend to fulfill them, as well as which are more important to you and which are less important to you. Establish a plan for earning, saving, and spending money

• ·         Estimate your monthly Expenditure

Write down an estimate of your basic expenses using your previous experience. Begin by listing your fixed expenses such as rent/ mortgage, loan payments etc.Then take notice of your flexible expenses like food, transportation, cell phone charges ( one of the major drain of finances) and the like.This would give you a rough idea of  how much you spend each month.

• ·         Track your cash flow

 You will have a hard time living below your means if you don’t know what you are spending your money on. Question where every penny in your pocket goes. It may be obvious that you are spending money on what does not really fit into your financial plan. Do you buy stuffs on impulse or you buy what you really need? Your tracking method doesn’t have to be fancy – just make sure the method you choose is something you’ll use consistently, a small note pad and pen is just right.

WHAT NEXT?

Everybody can live below their means, and even save 10% of their income, make sure you understand the difference between what you need to live and what you want to have to be comfortable. What do you think

Lesson 3:MIND YOUR OWN BUSINESS

My third lesson from Rich Dad, reminds me of a comment that was making waves in the political environment in Ghana some months ago. The well like " Di wu fie asem" by Prez.Atta Mills,which translated literally means "Mind your own business". Well, Rich Dad also tells us to mind our own business!So what that this mean?

“The secret is: "Mind your own business” Financial struggle is often directly the result of people

working all their life for someone else. Many people will have nothing at the end of their working

days.”- Robert Kiyosaki

 

“There is a big difference between your profession and your business. Often I ask people, "What is your business?" And they will say, "Oh I'm a banker." Then I ask them if they own the bank? And they usually respond. "No, I work there."  In that instance, they have confused their profession with their business. Their profession may be a banker, but they still need their own business.”- Robert Kiyosaki

MIND YOUR OWN BUSINESS!

Mind your own business,or better still put a business on your mind: There is nothing wrong being an employee, everybody needs to  work for someone one way or the other,but whiles excelling in your current profession seeks out other avenues to accumulate wealth. You can  keep your day job and work all night to develop a business that would pour in money whilst  on your day job.It’s your boss duty to pay you for a month, you need to pay yourself for life.At the end of the day,when you are retired you cannot carry the company along!.It’s not your business.

Your business revolve around your assets column,invest time there.As young  Ghanaians, we need time to build an asset column, before we leave home, get married,make babies  and get trapped in the same financial situations as our parents.We need to build a business that do not require our presence, we own them but they are managed by others. We also need to invest in stocks,bonds, mutual funds and royalties  from intellectual property such a music, script and books.

I now have two investment account with leading financial service industries in Ghana,and working hard to start  a business by the end of much 2012. Watch out I would keep you posted(lol)

“When I say mind your own business, 1 mean to build and keep your asset column strong. Once a dollar goes into it, never let it come out. Think of it this way, once a dollar goes into your asset column, it becomes your employee. The best thing about money is that it works 24 hours a day and can work for generations. Keep your daytime job, be a great hard-working employee, but keep building that asset column.”-Robert Kiyosaki

Lesson Two:MASTER FINANCIAL LITERACY

Lets me start the next lessons from the excerpts of his book "Rich Dad Poor Dad"

“I am concerned that too many people are focused too much on money and not their greatest wealth, which is their education. If people are prepared to be flexible, keep an open mind and learn, they will grow richer and richer through the changes. If they think money will solve problems, I am afraid those people will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.”

What is Financial Literacy?

Financial literacy is conscious education on the issues of money an d how to personal finance.Our educational system does not teach us about money but aspects us to go out there and make money.Because financial literacy is not thought in school, you need to search for avenues where you can learn about the issue of money i.e How to make money, how to invest money and how to protect the investment. Financial literacy teaches that it doesn’t matter how much money you make,but how much you keep and how many years you keep it. It also teaches that whatever your current state of earning investment can be made on each income.You need to start learning how to save the pennies  before  you can master how to save the millionaires.

ASSETS Vrs Liabilities

One vital lesson you learn from financial literacy is knowing the difference between an asset and a liability and investing in assets. In a lay man’s view, an Asset is anything that put money into your pocket. Liabilities on the other hand is something that takes money out of your pocket. Assets generates income whiles liabilities generate expenses. A car, can  be an asset to someone and liability to the next. The underlining difference is whether it put money into your pocket or takes money out.A GSM phone can be an  liability to a senior high school student but a great asset to a business owner.

There is the need.You need to be financial literate to survive these evolving world of financial crisis every single year

“Most people fail to realize that in life, it's not how much money you make, it's how much money you

keep. We have all heard stories of lottery winners who are poor, then suddenly rich, then poor again.

They win millions and are soon back to where they started. Or stories of professional athletes, who,

at the age of 24, are earning millions of dollars a year, and are sleeping under a bridge by age 34. In

the paper this morning, as I write this, there is a story of a young basketball player who a year ago

had millions. Today, he claims his friends, attorney and accountant took his money, and now he

works at a car wash for minimum wage.” -Robert Kiyosaki

 

LESSONS FROM RICH DAD

Were you ever thought anything about money at school? Was there ever a time that your teacher jumped into the class to teach you a topic called “Savings 101” or “How to Make Money in ten easy steps”? Certainly not, why? Because school does not teach us about money. Isn’t it funny? After spending so many years schooling the expected output is to apply the knowledge to make a living. So how do you learn about issues of money? Or better still where do you learn them from?

From the home, I guess! Or may be through the trial and error  means.

Today I would like to share with you some vital lessons on personal finance from one of the best selling personal finance books “Rich Dad poor Dad”. Ever heard of the title? I bet you, if you have never read this book I’m afraid you are leaving your financial life to chance. Rich Dad, Poor Dad contains timeless lessons for anyone who is seeking for the road of financial independence. It is not a theoretical book, Rich Dad, Poor Dad is a must read.I bought my personal copy of Rich Dad Poor Dad four years ago and today I just thought I  should share some of its lessons to my lovely readers.

So let’s begin

Lesson One: The Rich Don’t Work For Money

"The poor and the middle class work for money." "The rich have money work for them."

One of the keys to financial success is learning to make money work for you. What that means is, you develop a system that brings in money whether you are present or not. Can you mention a rich man in your county who works for someone? Certainly not, if you can, then, that person is definitely not rich .All rich people are business owners. A business   owner in the initial state  puts in all the effort to start and grow his business, the waiting period is hard and you sometimes feel like quitting.However, if the business stands on its feet, they don’t  necessary have to be present.They can be globetrotting from Ghana to Libya  and the money would be pouring into their bank account 24/7. The poor and the middle class work for money, they work for the owners’  of the businesses  who pays them monthly salaries which would not be enough to meet their expenses.To solve this problem, they work hard to earn money, ironically the more they earn the more their expenses increases to meet their income. They never make progress.

 The key is: don’t work for money. Don’t depend on your boss to make you rich.Use your mind the most powerful computer in the world to create a business for yourself

It only starts with a thought, an idea and a burning desire to take control of your life.Seek to be a business owner,investor rather than an employee.