The 10-Cent Lesson: Why Working for Peanuts Can Make You Rich 🤑
By Schuyler Cristopher
Hey everyone! 👋 I’m Schuyler Cristopher, your friendly neighborhood finance teacher. 👨🏫 Today, I’m going to share some life-changing wisdom from Robert Kiyosaki’s iconic book, Rich Dad Poor Dad. 📚 This book is a must-read for anyone who wants to understand how money works and build a strong financial foundation.
The Power of Thinking Differently
Kiyosaki’s story starts with a simple but profound observation: most people work for money. 💰 But the rich have money work for them! 🤯 This means they invest their money in assets, not liabilities.
But how do we learn this crucial distinction? Kiyosaki reveals a pivotal moment in his childhood where his rich dad taught him this lesson in a way that he’ll never forget. He was only nine years old when his rich dad made him work in his convenience store for a measly 10 cents an hour. Not only that, he was made to wait for hours before being hired and then again to receive a raise! 🤯
This experience, although seemingly cruel, was all part of his rich dad’s unique teaching method. He wanted to force Robert and his friend, Mike, to think differently about money and to break their ingrained “work for money” mindset. He wanted them to see the trap that most people fall into. The trap of fear and desire.
The “Rat Race” Trap 🪤
Think about it this way: a person who is afraid of not having enough money might immediately jump into a job to earn money, hoping to alleviate that fear. 😟 However, their rich dad taught them to ask this question: “Will a job be the best solution to this fear over the long run?” 🤔 He believed that this question, and the ability to think deeply about it, was the key to escaping what he called the “Rat Race.”
The “Rat Race,” as Robert describes it, is this:
- You get up, go to work, pay bills.
- You get up, go to work, pay bills.
- You get up, go to work, pay bills. 😩
It’s a cycle that’s fueled by fear and desire and driven by the belief that you need to work harder to make more money. But Robert says, that’s a lie! 🙅♀️
He argues that most people just become slaves to money, working their lives away, but never really understanding how it works. Instead, they seek job security, hoping a promotion or raise will fix their money problems. But it’s not about the money!
It’s about building a solid foundation and using your financial IQ to manage your money, not let it manage you!
The Power of Assets
So, what are assets? Robert’s rich dad explained that an asset is something that puts money in your pocket. 🤑 A liability takes money out of your pocket. 💸
Robert uses a simple diagram to explain the cash flow patterns of a poor, middle class and wealthy person.
- Poor Person: They work for someone else to get income and then pay expenses for food, rent, clothes, transportation, etc. They do not have assets and have minimal liabilities.
- Middle Class: They work for income and pay for their expenses and liabilities, which include mortgages, consumer loans and credit cards. They do not have assets.
- Wealthy Person: They receive income from assets (like stocks, bonds, real estate, notes) and have no liabilities.
It’s Not About Your Job, It’s About Your Business
This brings us to the next crucial lesson: mind your own business. 💼 You have to learn to build a business around assets that will generate income for you, rather than just relying on a paycheck.
Robert gives an example of Ray Kroc, the founder of McDonald’s. Kroc was asked what business he was in, and he replied, “I’m not in the hamburger business; my business is real estate.” 🍟🏡
Ray understood that real estate was the foundation of his business. He was not just selling hamburgers, he was acquiring assets that would generate income. And that’s the key. The rich mind their own businesses.
The Rich Invent Money
Another important lesson is that the rich invent money. 💵 They learn how to control money and use it to create more money. They are masters of the game, not slaves to it.
This is where Robert’s rich dad stressed the importance of financial education. He taught Robert how to understand financial statements and how to invest wisely.
Robert also shared how corporations have been used by the rich to protect their wealth. Corporations, he says, are just a legal vehicle that shields the rich from financial risk.
The Power of Being an “Indian Giver” 🎁
A truly wise investor, Robert’s rich dad, taught him to be an “Indian Giver.” That means they are all about getting something for nothing. 🤑
He explained that true investors always look for assets that generate cash flow. They want to get their initial investment back as quickly as possible, ideally for free. They want to own assets that will provide a piece of the action, or some return on their investment. This is all about the “return on and of investment” (ROI), which is so important.
When Robert bought a small condo for $50,000, he had his money back in three years. After that, it continued to generate passive income. 💰 He did the same with stocks. He would make short-term investments to take advantage of specific stock movements and then pull out his initial amount, letting his money grow on other investments.
The Importance of Self-Discipline
The key to success? Self-discipline. 💪 Robert’s rich dad taught him to pay himself first. Before paying any taxes, creditors, or even the government. The reason? It helps you get out of debt. You want to minimize your income tax and avoid being pushed around by bullies.
He also taught Robert to manage cash flow, systems and people. He always stressed, “Be smart and you won’t be pushed around as much.”
The Power of Learning 🧠
It’s not enough to just have a job. You need to learn new things, master new skills and continually grow. Robert stresses the importance of being a “groom,” rather than a specialist. The rich know that specialization can be great, but it can also create a kind of prison. The more specialized you become, the less marketable your skills are in other industries. You become dependent on your niche.
The rich, on the other hand, often have broad knowledge in different fields, allowing them to diversify and be more flexible. “If you’re not a good leader, you’ll get shot in the back, just like they do in business,” Robert’s rich dad said.
Teach and You Shall Receive 🏫
Finally, Robert’s rich dad stressed the importance of teaching and giving back to others. He believed that the more you give, the more you will receive. This is the power of reciprocity!
Robert found that teaching people about money helped him learn even more. If you want to become financially literate, teach someone else. You’ll be amazed at how much more you learn in the process. “God does not need to receive, but humans need to give.”
What to Do
Okay, that was a lot of information, but here’s the takeaway:
- Invest in education, not just a job. Learn how money works and how to have it work for you. This is financial intelligence, and it’s essential to building wealth.
- Pay yourself first. This is the cornerstone of self-discipline. Save and invest before you pay your bills or taxes.
- Mind your own business. Focus on building your asset column, which will generate income for you, rather than working for money.
- Be a little greedy, but not too greedy. You want to be motivated to reach your goals, but don’t let greed control your actions.
- Be willing to take risks and don’t be afraid to lose. Failure is a part of the process, but it doesn’t have to defeat you. It can inspire you to become stronger.
- Pay your brokers well. Find professionals who know their stuff and can make you money. It’s worth it to pay for expert advice.
- Be an “Indian Giver”. Get your money back and get something for free. Find assets that produce cash flow, and learn how to get your initial investment back as quickly as possible.
- Choose your friends wisely. Surround yourself with people who are smart, successful and financially intelligent. You are the average of the five people you spend the most time with, so choose wisely.
I hope this blog has inspired you to awaken your financial genius. If you’re ready to take action, check out the book Rich Dad Poor Dad to learn more! You’ll be glad you did.
Remember, you are the master of your own financial destiny. Make the right choices, and you can start building wealth and achieving your financial dreams today!