According to Deepstash, the rich stay rich and the poor stay poor for a number of reasons, including:

• The rich create their own lives 
• The rich play the money game to win 
• The rich are committed to being rich 
• The rich think big, while the poor think small 
• The rich have mindsets that are bigger than their problems According to Become Wealth, the rich adopt a growth mindset, while the poor view financial constraints as insurmountable barriers. The rich ask themselves “How can I afford that?” and explore creative solutions to increase their income. According to a YouTube video, the rich have multiple passive incomes, are more financially educated, and surround themselves with other rich people. The poor, however, have limited time, resources, and energy to invest for the future. According to LinkedIn, the rich operate in abundance mode, while the poor operate in scarcity mode. The rich give more because they are already in a better position, which in turn attracts more returns. 

Poor People Buy Liabilities, Rich People Buy AssetsPoor people tend to spend their money on liabilities — items that depreciate over time — such as luxury goods, excessive entertainment, or expensive cars. In contrast, the rich focus on acquiring assets — investments that generate passive income or appreciate

Rich people buy assets, middle-class people buy liabilities that they think are assets, and poor people only have expenses. If you want to be rich, stock up on assets that will generate a good cash flow for you

It’s rightly said in the book, “Most people went to school and never learned how money works, so they spend their lives working for money.”

If you have not yet read this book believe me you are missing a lot to learn about the financial literacy in your life. This post is for people who either have not read this book and need to peak inside what all can they learn, or for the people who have already read this book but who wants to refresh their learning from this book.

Lesson 1: The Rich Don’t Work For Money

As quoted in the book,

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

Always remember, More money won’t solve your problems. There are people who earn hell lot and yet can’t pay their bills. Most people, given more money, only get into more debt. That’s because most people don’t know how to make money work for them. It’s fear that keeps most people work for money: the fear of not paying bills, loans, EMI, the fear of being fired, the fear of not having money. Most people become slave to money — and then get angry at their boss.

“The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets. The poor and the middle class work for money. The rich have money work for them.”

— Robert T. Kiyosaki

Your future is created by what you do today, not tomorrow.”

— Robert T. Kiyosaki

Losers quit when they fail. Winners fail until they succeed.”

— Robert T. Kiyosaki

FOCUS – Follow One Course Until Successful.”

— Robert T. Kiyosaki

Sometimes you win, sometimes you learn.”

— Robert T. Kiyosaki

Financial freedom is freedom from fear.”

— Robert T. Kiyosaki

Two fishermen wake up early in the morning to go to work. Both of them work the same number of hours — from 5:00AM to 1:00PM.

Both of them have the same physical strength.

Both of them go fishing to the same location.

Both of them use a very similar boat.

One of them is rich — the other is poor.

Why?

The difference is how they fish.

The rich fisherman uses LEVERAGE. His nets catch hundreds of fish each day.

The poor fisherman uses NO leverage. His fishing lines catch just enough fish to make a living

The more fish the rich man catches using his abundant business leverage, the cheaper the fish get, making it harder and harder to make a living, for the poor fisherman

Three primary things that keep poor people poor because of lack of financial education.

1. Thinking a home is an asset or investment. If you have a mortgage, a home is an asset for the bank, that is why banks promote a home as your greatest asset. It is actually their greatest asset. The wealthy see a home as a place to live. The only home that is an asset is one in which other people are paying you to live there,
2. Formal education. As the cost of students loans has long passed $1 Trillion in the United States, it is a major factor in stopping poor and middle class families from building wealth. Most of the wealthy follow the principle that Napoleon Hill wrote about almost 100 years ago. Rather than formal education, they seek out specific education that they can apply to making money. There may be other reasons to get a formal education, but if you do the mathematical calculations, it is almost never justified from a financial investment standpoint.
3. Vehicles. One of the top rules in building wealth is to never borrow money to buy something which decreases in value. The least expensive vehicle that gets you where you need to go can be an asset. The latest model with the fanciest cup holders is a liability. Wealthy tend to buy vehicles that are 3–5 years old after they have taken the depreciation hit. They tend to pay cash. The wealthiest tend to not own a home or a vehicle. Their business owns their homes and vehicles and they just use there.

Wealthy people buy things that “appreciate” (go up in value).

That includes: (and my preferred ratio)

1. Private companies – 50%
2. Public companies (Stocks) – 20%
3. Real Estate (Homes/Rental) – 10%
4. Rare or Vintage Cars – 5%
5. Gold or Silver – 5%
6. Speculative (Cryptocurrency) – 5%
7. Art work – 5%

If you’ve ever searched “best personal finance books to read” on Google, you’ve most likely seen the title “Rich Dad, Poor Dad” appear at the very top. The book, written by Robert T. Kiyosaki and Sharon L. Lechter, has reportedly sold more than 32 million copies in 40 languages across 40 countries since it was published in 2002.

“Rich Dad, Poor Dad” is an allegorical story about Robert Kiyosaki and his two dads, and how growing up with them shaped his financial views. The “poor dad” is Kiyosaki’s biological father, a highly educated college professor. The “rich dad” is Kiyosaki’s best friend’s father, a wealthy entrepreneur who owns dozens of businesses. Both dads offer conflicting advice on money

What is the difference between a rich person and a poor person is what they do in their spare time?

The only difference between a rich person and a poor person is what they do in their spare time . . . When at work, work hard, but remember that what you do after work with your pay cheque and your spare time will determine your future

What is the rich get richer and the poor get poorer theory?

The folk saying, “the rich get richer, the poor get poorer”, implies that wealth flows from poorer to richer hands, a concentrating diffusion. Its academic statement is the Surplus Theory of Social Stratification

Why the rich stay rich?

A financial planner who works with millionaire clients says many have similar habits that keep them wealthy. His richest clients have a financial plan and stick to it, and they don’t try to time the market. They also tend to look for ways to reduce their taxes, and over-plan for retirement

What is a rich mindset?

Published Feb 25, 2023. Individuals with a rich mindset tend to have a positive attitude towards money and believe that there are plenty of resources and opportunities available to them. They are optimistic and view obstacles as opportunities to grow and learn, rather than as barriers to success

How wealthy is different from rich?

Being rich typically means having a lot of possessions and material wealth, while being wealthy is more about having sustainable and lasting wealth

How to be ultra rich?

Advisor to the ultra-rich offers 6 strategies you can steal to build wealth

1. Be optimistic. … 
2. Demonstrate confidence. … 
3. Become an expert. … 
4. Stay frugal. … 
5. Think orthogonally. … 
6. Seize opportunity

Know what an asset is, acquire them and become rich.”

A very important lesson that I learned throughout my self studies of personal finance was from the book Rich Dad Poor Dad by Robert Kiyosaki. Packed with financial advice – my biggest personal take away from the book was my perception towards the way I look at assets and liabilities and how these terms mean differently to me now. 

Like most people, I used to think assets meant anything that has a cash value. However, what I learned from this book is that is not the right way to look at it. If you want to become wealthy, you need to think of your household finance as a business. An asset is something that, in the future, can generate cash flow for you. Anything that takes money out of your pocket is a liability.

This was a revelation to me. I used to include our home, car, piano, and other personal belonging in the asset column. According to Kiyosaki, that’s the wrong way to look at it. All these things things are considered liabilities and they are taking away from my wealth.

What Are Assets?

The simple definition of an asset is anything that increases in value over time and puts money in your pocket. If it’s not putting money in your pocket, it’s not an asset.

There are many things that can be considered assets. These include things like investment real estate, a business, products like books or art, or dividends from stock and bond investments. Some of the most common assets are: 

1. Businesses that do not require your presence
2. Stocks
3. Bonds
4. Mutual funds
5. Products
6. Income-generating real estate
7. Royalties

Essentially, anything earning you money can be considered an asset

What Are Liabilities?

The simple definition of a liability is something that takes money out of your pocket. Some of the most purchased liabilities are: 

1. Cars
2. Homes
3. Furniture
4. Vacations
5. Clothes
6. Credit Card Debt
7. School Loans

If people took the money they spent on unneeded liabilities and purchased assets that will generate income, they could completely change their financial outlook

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