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Rich Dad, Poor Dad written by Robert Kiyosaki and Sharon Lechter advocates financial literacy and financial independence. Here in this excerpt from the book, they throw light on steps to awaken your financial genius. Read more such insightful details on building wealth and investments from Insights from Rich Dad Poor Dad by Robert Kiyosaki 


Chapter Eight

Getting Started

I offer you the following 10 steps to awaken your financial genius.

  1. Find a reason greater than reality: the power of spirit

When people ask me what my reason for wanting to be rich is, I tell them that it is a combination of deep emotional ‘wants’ and ‘don’t wants.’

I will list a few: first, the ‘don’t want.’

I don’t want to work all my life. I don’t want what my parents aspired for, which was job security and a house in the suburbs. I don’t like being an employee.

Now the ‘wants.’ I want to be free to travel the world and live in the lifestyle I love. I want to be young when I do this. I want to simply be free. I want control over my time and my life. I want money to work for me.

Those are my deep-seated emotional reasons. What are yours? If they are not strong enough, then the reality of the road ahead may be greater than your reasons.

  1. Make daily choices: the power of choice

Most people choose not to be rich.

The problem with that choice is that they rob the person of two things: One is time, which is your most precious asset. The second is learning. Having no money should not be an excuse to not learn. All of us have a choice. I just choose to be rich, and I make that choice every day.

Invest first in education. In reality, the only real asset you have is your mind, the most powerful tool we have dominion over. Most people simply buy investments rather than first investing in learning about investing.

I take a long view on my wealth. I am always shocked at people who buy stocks or real estate, but never invest in their greatest asset, their mind. Just because you bought a house or two does not make you an expert at real estate.

  1. Choose friends carefully: the power of association

I do not choose my friends by their financial statements. I have friends who have taken a vow of poverty as well as friends who earn millions every year. I learn from all of them.

The reason you want to have rich friends is because money is made on information. You want to hear about the next boom in the market, get in, and get out before the next bust. The sooner you know, the better your chances are for profits with minimal risk.

4. Master a formula and then learn a new one: the power of learning quickly

When it comes to money, the masses generally have one basic formula: Work for money.

If you’re tired of what you’re doing, or you’re not making enough, it’s simply a case of changing the formula.

I have attended classes designed for derivative traders, commodity option traders, and chaologists. There, I learned a lot that made my stock and real estate investing more meaningful and lucrative.

I always search for a faster formula. That is why, I make more in a day than many people will make in their lifetime.

  1. Pay yourself first: the power of self-discipline

The three most important management skills necessary to start your own business are management of:

  • Cash flow
  • People
  • Personal time

Each of these skills is enhanced by the mastery of self-discipline.

I do not take the saying, ‘Pay yourself first,’ lightly.

To successfully pay yourself first, keep the following in mind:

  • Don’t get into large debt positions that you have to pay for. Keep your expenses low. Build up assets first. Then buy the big house or nice car. Being stuck in the Rat Race is not intelligent.
  • When you come up short, let the pressure build and don’t dip into your savings or investments. Use the pressure to inspire your financial genius to come up with new ways of making more money, and then pay your bills.
  1. Pay your brokers well: the power of good advice

We live in the Information Age. Information is priceless. A good broker should provide you with information, as well as take the time to educate you. I have several brokers who do that for me.

What I pay a broker is tiny in comparison with what kind of money I can make because of the information they provide.

Find a broker who has your best interests at heart, and they could be the best asset you find. Just be fair, and most of them will be fair to you.

The real skill is to manage and reward the people who are smarter than you in some technical area.

  1. Be an Indian giver: the power of getting something for nothing

When the first European settlers came to America, they were taken aback by a cultural practice some American Indians had. For example, if a settler was cold, the Indian would give the person a blanket. Mistaking it for a gift, the settler was often offended when the Indian asked for it back. The Indians also got upset when they realized the settlers did not want to give it back. That is where the term ‘Indian giver’ came from, a simple cultural misunderstanding.

In the world of the asset column, being an Indian giver is vital to wealth. The sophisticated investor’s first question is: ‘How fast do I get my money back?’ They also want to know what they get for free, also called a ‘piece of the action.’ That is why the ROI, or return on investment, is so important.

Frequently, my broker calls and recommends I move a sizable amount of money into the stock of a company that he feels is just about to make a move that will add value to the stock, like announcing a new product. I will move my money in for a week to a month while the stock moves up. Then I pull my initial dollar amount out, and stop worrying about the fluctuations of the market, because my initial money is back and ready to work on another asset. So my money goes in, and then it comes out, and I own an asset that was technically free.

So wise investors must look at more than ROI. They look at the assets they get for free once they get their money back.

  1. Use assets to buy luxuries: the power of focus

If a person cannot master the power of self-discipline, it is best not to try to get rich. Although the process of developing cash flow from an asset column is easy, what’s hard is the mental fortitude to direct money to the correct use.

Too often today, we focus on borrowing money to get the things we want instead of focusing on creating money.

To be the master of money, you need to be smarter than it. Then money will do as it is told.

  1. Choose heroes: the power of myth

Having heroes is one of the most powerful ways we learn. But as adults, we often lose our heroes.

I follow what Warren Buffett invests in, and I read about his point of view on the market and how he chooses stocks. And I read about Donald Trump, trying to find out how he negotiates and puts deals together.

When I’m in the market or I’m negotiating a deal, I am subconsciously acting with the bravado of Trump. Or when analyzing a trend, I look at it as though Warren Buffet were doing it. By having heroes, we tap into a tremendous source of raw genius.

Heroes make things look easy and make us want to be just like them.

  1. Teach and you shall receive: the power of giving

Whenever you feel short or in need of something, give what you want first and it will come back in buckets.

So that’s why I say, ‘Teach, and you shall receive.’ If you want to learn about money, teach it to someone else. A torrent of new ideas and finer distinctions will come in.

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