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Rich Dad, Poor Dad
³Study hard, get good grades and find a high
paying job with good benefits´ is advice
from a previous era.
³Network Marketing is the Perfect
Business«
The richest people in the world look for
and build networks everyone else looks
for work´
Robert Kiyosaki,Author Rich Dad Poor
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Introduction
Robert Kiyosaki, is a multi billionaire by all standards
The book basically is about what people must learn and practice in order
to become financially independent. The book talks about two different points of view about attaining financial independence (Rich dad Vs. Poor dad)
His poor dad (his biological father), was a PhD holder who worked for Government, but never really attained financial independence, while hisrich dad (his friend¶s father) did not graduate from high school, but later
became a very rich man Parents¶ advice of getting good grades and jobs will not necessarily lead
to financial independence, because schools do not equip kids with theinformation needed to ensure financial independence
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Lesson 1 ± The rich don¶t work for
money
Don¶t work for money i.e. don¶t depend on your boss to make you rich
Learn how to make money work for you bycutting your expenses moderately, investingwisely and creating opportunities to earn passiveincomes outside of salaries
Seek to be a business owner and/or an investor,rather than an employee
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Lesson 1 ± The rich don¶t work for
money
Avoiding the trap
± fear and greed
± The rat race - work to spend and spend to have
± a job is a short term solution to a long term
problem
± The poor and middle class believe that moneyis real and that the company or government will
look after them.
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Lesson 1 ± The rich don¶t work for money
Job Security
Financial Security
Financial Freedom
Ultimate FinancialFreedom
Wealth
Side
Rat
Race
Side
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S ample Paths To Financial Freedom
Wealth
Side
Rat
Race
Side
Start
Endor Start
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S ample Paths To Financial Freedom
Wealth
Side
Rat
Race
Side
Start
End
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S ample Paths To Financial Freedom
Wealth
Side
Rat
Race
Side
Start
End
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Lesson 2 ± Master Financial Literacy
Financial intelligence equips you with the what isrequired to make money that will last for generations,while money without financial intelligence is soon gone
Financial literacy teaches that it does not matter howmuch money you make, but how much money you keep
It also teaches that Investments can be made at eachincome level and if you invest today you will guaranteeyour financial future
Differentiate between an asset and liability, and investin assetsAssets generate income, while liabilities generate
expenses; i.e. your GSM mobile phone could be anasset or liability depending on what it is used for
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Financial Intelligence Rich Dad. Poor Dad¶s Basic Philosophy
Know the difference between an ASSET and a
LIABILITY, and only buy assets. ± A True Asset gives a positive cash flow each and
every month.
Live below your means, while constantly
increasing your means. Make your PASSIVE INCOME cover your
Lifestyle Expenses forever.
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Financial Literacy
Sadly, most of us have been taught to read
words and books, but not numbers andfinancial statements.
Two key personal and business financialstatements we all must be able to read.
± The Income Statement shows the amount of money coming in and going out.
± The Balance Sheet shows the balance of whatyou own and what you owe.
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IncomeStatement
Balance
Sheet
Income
Expenses (Payments)
Assets (Own) Liabilities (Debts)
Financial Literacy (continued)
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IncomeStatement
Balance
Sheet
Income
Expenses (Payments)
Assets (Own) Liabilities (Debts)
Paycheck, dividends, interest,
rents, royalties, profits, advances
Financial Literacy (continued)
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IncomeStatement
Balance
Sheet
Income
Expenses (Payments)
Assets (Own) Liabilities (Debts)
Taxes, mortgage/rent, cards, car, food,
fun, rent, clothes, child care, insurance,
medical
Paycheck, dividends, interest,
rents, royalties, profits, advances
Financial Literacy (continued)
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IncomeStatement
Balance
Sheet
Income
Expenses (Payments)
Assets (Own) Liabilities (Debts)
Taxes, mortgage/rent, cards, car, food,
fun, rent, clothes, child care, insurance,
medical
Paycheck, dividends, interest,
rents, royalties, profits, advances
Mortgage, car loan,credit cards,school loans
Financial Literacy (continued)
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IncomeStatement
Balance
Sheet
Income
Expenses (Payments)
Assets (Own) Liabilities (Debt)
Taxes, mortgage/rent, cards, car, food,
fun, rent, clothes, child care, insurance,
medical
Paycheck, dividends, interest,
rents, royalties, profits, advances
Mortgage, car loan,credit cards,school loans
Stocks, bonds, notes,
real estate, business,
intellectual property
Financial Literacy (continued)
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Income
Statement
BalanceSheet
Income
Expenses
Assets = Zero Liabilities = Zero
H ow The Poor LiveThey only have small incomes and small expenses
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Income
Statement
Balance
Sheet
Income
Expenses
Assets = Zero Liabilities = Zero
H ow The Poor LiveThey only have small incomes and small expenses
$The
Wealthy
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Income
Statement
Balance
Sheet
Income
Expenses
Assets
Liabilities
H ow The Middle Class LiveThey buy expenses and liabilities they think are assets
Assets
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Income
Statement
Balance
Sheet
Income
Expenses
Assets
Liabilities
H ow The Middle Class LiveThey buy expenses and liabilities they think are assets
Assets
$The
Wealthy
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Income
Statement
Balance
Sheet
Income
Expenses
Assets
H ow The Wealthy LiveThey take the income of the poor and middle
class, and buy assets that produce more income
Liabilities
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Income
Statement
Balance
Sheet
Income
Expenses
Assets
H ow The Wealthy LiveThey take the income of the poor and middle class,
and buy assets that produce more income
Liabilities
$ Poor and
middle class
income
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Why Teach Financial L
iteracy?1. You must know the difference between an
asset and a liability and buy assets.
1. The rich buy assets but the poor and middleclass buy liabilities they think are assets.
2. The cash flow pattern of an asset is fromAssets to Income. (pg 60)
3. The cash flow pattern of a liability is fromLiabilities to Expense.
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Why Teach Financial L
iteracy?
2. The financial nightmare
1. hard working educated couple marries and begins their
careers.
2. decide to save for dream home, and so work hard to make
more money ± taxes go way up.
3. They buy their new house and furnish it, and now have
property taxes, mortgage and credit card debt.4. Kids come along who cost money and so the parents work
harder and up go the taxes.
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Why Teach Financial L
iteracy?3. As an employee who is a homeowner:
1. you work for someone else and are making
the owner(s) or shareholders rich.2. you work for the government, from Jan to
May to pay your taxes
3. You work for the bank, paying off your
mortgage, student loans and credit cards.
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Why Teach Financial L
iteracy?
Remember this simple observation:
± The rich buy assets
± The poor only have expenses
± The middle class buys liabilities they think are
assets
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S
o why not?
There are five reasons that people don¶t grow assetsand become financially independent.
± F ear ± of losing money
± Cynicism ± don¶t let doubts paralyze
± Laz iness ± busy people are often the most lazy
± Bad Habits ± our lives reflect our habits ± Arrogance ± arrogance + ego = ignorance
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Conclusion
The author concluded by stating that parents
should teach these lessons to their children
early enough, in order to guarantee their children¶s financial future
It is never too late to start building your
financial empire. You could start right now,
with your next pay check, or by looking around
you, to see which need you can fulfill