Increasing Your Wealth by Increasing Your Financial Literacy

Perhaps the primary message of Rich Dad, Poor Dad is increasing basic financial literacy. Perhaps I should say financial literacy for the common man and woman. The reason I say this is because the principles taught in the book are very simple--the fundamental personal finance. Some people may even say the what Kiyosaki teaches is dangerously simplistic.

I think those people are missing the point. While it is true that if you want to build significant wealth, you will need to study finance and business in greater depth, what I think that "Rich Dad, Poor Dad" and "Cash Flow Quadrant" teaches well is a high level view of how cash flows through your life. And one of the first things you must do in order to begin accumulating wealth is to understand and take charge of your cash flow.

Once you understand how you create cash and understand the flow, you can begin to make simple to complex changes to accumulate more and more cashflows. And just like water that flows into a glass begins to accumulate, your wealth will rise and eventually overflow with abundance.

Here are some of the key points about financial literacy in the "Rich Dad" book:

1) Your greatest "wealth" is not money. It is your state of mind, your thinking and understanding--proper (not necessarily conventional) education. Once you learn how to make a lot of money, even if someone takes it all away, you still have the knowledge to re-create it and more. Even more important, if you have profound financial knowledge, there is much less chance that you will ever lose it once you create it. The lesson: invest your time and your money studying how to create positive streams of passive cash flow.

2) It's not only how much money you make, it's how much you keep. As cash flow comes in, you have to be watchful not to spend it as fast or faster than you make it. Track and control your finances.

3) Understand the difference between assets and liabilities. This is one of the most controversial points in the book. According to Kiyosaki, an asset puts cash in your pocket, a liability takes out cash from your pocket. These are not academically correct definitions, but they are very helpful in getting control of your cash flow.

4) In order to be rich, accumulate assets. Most people get into financial trouble by accumulating liabilities (especially credit card debt). The most common reason this happens is due to a lack of understanding, lack of intelligence of what is happening to their cash flow pattern.

5) If you accumulate a lot of money, but do not have the intelligence to understand how to effectively manage your cash flow, an increase in money can actually accelerate the problem. 6) Here is one point that I'm still wrestling with: your home is not an asset. It may be an asset on your balance sheet, but because it is taking money out of your pocket, it is a liability. He's not saying don't buy a home. He's saying don't call it an asset when it is really a liability.

7) When you are in the process of building your wealth, exercise financial discipline to maximize what you spend on cash producing assets and minimize what you spend on cash draining liabilities. Saving is not enough if you are not buying cash producing assets.

8) One point that is emphasized more in his game Cash Flow (highest recommendation) is his definition of a "doodad." I absolutely love this term, because it interrupts your buying pattern and helps you take control of your spending habits. Doodads are those material possessions that we spend our money on that are really liabilities. Like that luxury car that is really beyond your current means. Or that new television set that you just had to have. Or as simple as that new DVD. Buying dodads at the time you should be buying assets is the one of the primary causes of financial trouble.

9) He is not saying don't buy doodads. The point is to buy assets before you buy doodads. And then let the extra income that is generated by the assets pay for your doodads. Put first things first.

10) The poor, middle class, and wealthy all spend money. Where they eventually end up depends on the the intelligence and wisdom they develop and what they choose to accumulate. What you focus your thoughts on expands. If you focus on increasing your knowledge and assets, they will accumulate. If you focus on doodads and indiscriminate spending (even unconsciously), you will accumulate liabilities.

So, what are some Power Affirmations to help condition your mind to automatically act on these ideas? One thing I hope you will notice about these affirmations: many of these are very specific. They go way beyond such platitudes as "I love myself."

When I create and use affirmations, I'm interested in focusing on specific strategies and thought patterns I need to have in order to achieve my objective. When was the last time you saw an affirmation that included tax accountants and bankers? But the truth is you need these people on your team if you are going to build massive wealth. So you may as well condition your mind that they will be in your life, that you are comfortable in dealing with them, and that they work for you.

Here are the new affirmations:

1) My financial intelligence is now multiplying everyday.

2) I am the master of my money. I track and manage my cash flows.

3) I carefully accumulate cash producing assets.

4) I pay myself first. And I use the cash I save to buy more and more assets.

5) I now surround myself with expert financial advisors: tax accountants, real estate brokers, bankers, attorneys, and investors. Outstanding advisors now work for me.

6) I study and fully understand financial statements. When I study financial statements, I rapidly understand the cash flow patterns behind the numbers.

7) I now have an outstanding balance sheet rich with cash producing assets.

8) When I spend money, I minimize doodads and maximize assets.

9) I clearly understand the difference between assets and liabilities.

10) When I make a purchase, I ask myself "am I turning cash into trash, or into cash producing assets?" I choose assets.

11) My cash producing assets now exceed my personal expenses and buy more cash creating assets. I am now on the fast track of life.

One last point. As good as the "Rich Dad, Poor Dad" book is, Robert Kiyosaki's game "Cashflow" really helped clarify the most important concepts. I use the computer version. Given my time constraints with my business, I find it easier to set aside time to play it periodically. Even though it is a simplistic view of how the world works, and is heavily biased towards real estate, I found it extremely educational. As a side note, I majored in business in college, but there is very little I learned from my courses that I feel increased my financial intelligence. That has come primarily from studying books like "Rich Dad, Poor Dad," and "Think and Grow Rich." Do not underestimate the power of self education!!!

Copyright (c) 2005 Bill Marshall - All rights reserved. Feel free to republish this article provided you include the copyright information and the weblinks where possible.

For practical self-improvement tips, visit http://www.poweraffirmations.com. Get my new free e-book, "Power Affirmations: Power Positive Conditioning for Your Subconscious Mind"

Batchtown Chicago prom limo .. Lockport Chicago limo O’Hare
In The News:

A virtual private network can help ensure your information remains security and your privacy remains intact. Kurt the CyberGuy explains.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Artificial intelligence-based cameras are giving air defense operators unprecedented capabilities in monitoring and protecting airspace.
Apple's iOS 18.1 Inactivity Reboot automatically reboots your iPhone if it hasn't been used or unlocked for more than three days, providing better data protection.
An inventor designed rooftop solar panels for a Tesla that draws solar energy while the car is parked, adding travel mileage without plugging in.
There are currently no laws governing what artificial intelligence can and cannot do with the information it gathers; here are 10 things to avoid telling AI chatbots to keep yourself safe.
A credit union with over 240,000 members recently revealed it was targeted by cybercriminals, resulting in a data breach that was part of a two-month attack by hackers.
Scammers have become skilled at creating convincing fake websites that can easily fool unsuspecting users. The CyberGuy offers tips to protect yourself.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
CAPTCHAs, which are used by websites to confirm whether users are people or bots, are harmless, but hackers are using them to infect PCs with malware.
Hackers recently leaked personal information of about 500,000 Americans and stole patient medical records that included lab results and insurance details.
The holiday season sees a rise in mobile shopping scams. Tech expert Kurt “CyberGuy" Knutsson helps you learn how to stay safe.
Tech expert Kurt “CyberGuy" Knutsson says a VPN enhances online banking security by encrypting data and protecting privacy.
Beware of these six sneaky holiday scams. Tech expert Kurt “CyberGuy" Knutsson gives you tips to avoid falling victim.
Tech expert Kurt “CyberGuy" Knutsson reveals how to securely back up and factory reset your Android to protect your privacy and data.
Artificial intelligence is making life easier for cybercriminals, allowing them to create elaborate scams to trick people. Kurt the Cyberguy explains how to protect yourself.
Cut through all the digital clutter and delete multiple emails from your Android simultaneously. Kurt the CyberGuy explains how it's done.
Tips to prevent your holiday decorations from being stolen
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Kurt "CyberGuy" Knutsson lays out the immediate steps you should take if your phone has been hacked and your personal information becomes vulnerable.
Fraudsters are sending people bogus invoices through PayPal as part of a sneaky scam that is going around; here's how to protect yourself from being fooled.
A former Colgate-Palmolive employee was shocked to discover $750,000 had been drained from her 401(k) account. "CyberGuy" offers tips on how to prevent identity theft.
Electric vehicle maker Harbinger recently showed its electric delivery truck can handle icy roads with agility and stability in winter.
To make the busiest time of year more manageable, here are some tricks for tracking your packages, taking quality family photos and curating the perfect Christmas playlist.
Kurt "CyberGuy" Knutsson explains how to keep your online Amazon gift purchases a secret from loved ones or friends this holiday season.

Trustee Fees: How Much is Enough and How Much is Too Much?

I am often amused by the ads and offers I... Read More

Could a Roth IRA be Better Than a 401(k)?

Very few people whom I know are familiar with the... Read More

Residual Income - 3 Ideas for Long Term Profits

A residual income is one that comes in no matter... Read More

Retirement Planning the Offshore Way

Retirement Planning the Offshore Way Why do so many of... Read More

The PDQ? Factor

It's the beginning of a brand new year: a time... Read More

WARNING: The Biggest Lie About Social Security

Like I said, If you are poor and on social... Read More

Finding Financial Freedom

Do you ever get this in your email box: Find... Read More

Getting An Offshore Bank Account Via The Internet

There is no need to use the many middleman websites... Read More

Budget Tips

To budget, to have a budget and to be on... Read More

Do You Want Money?

Let me ask you a very simple question. Do you... Read More

Understanding the Three Different Types of Income

Part of learning to become financially free is to begin... Read More

Have You Ever Had That Feeling?

Have you ever had that feeling where you could not... Read More

Generate Savings with Smart Use of Electricity!

No matter what income level you are currently at, generating... Read More

Who Wants To be A Millionaire?

How many people search Google, Yahoo and MSN each day... Read More

The 11 Best Money Saving Ideas of All Time - Part 3

At any time in history, no matter what the current... Read More

Clearing Blockages to Increase the Flow of Money into Your Life

Money is probably the most challenging thing for many people... Read More

Financial Freedom for Every Employee

You may think you have to be an entrepreneur to... Read More

You Can`t Cheat An Honest Man

Author: James Walsh ISBN: 1563431696: Publisher: Silver Lake PublishingIn... Read More

Asset Diversification Is NOT Boring?And Will Make You Money

OK, this article will start with the cheapest piece of... Read More

Who Will Become Wealthy in the Information Age?

As you know, we're now well and truly in theInformation... Read More

5 Simple Steps for Serious Saving and Financial Growth

1) Pay off your loan, credit and store card debt... Read More

A College Degree or an MBA is NOT NEEDED to be Financially Free

Look at Forbes' top 10 United States wealthiest people. Notice... Read More

Principles to Ensure a Fantastic Financial Finish

Most people want to get to the end of their... Read More

Saving Money By Spending Wisely

Why is it that the older and richer people become,... Read More

Financial Intelligence - Natural Marketing For Lone Rangers

"Ooooooh," you may say, "I could NEVER be good at... Read More

shuttle from Midway Munster are ..