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The Consumer Economy and �“Rich Dad. Poor Dad.”

What The Wealthy Teach Their Kids

About Money

That The Poor And Middle Class Don’t.

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The Consumer Economy�

  • Continuous growth through continuous consumption.
  • Most of us define ourselves in terms of:
    • How much and what we consume.
    • Our role in the making of what we consume.
    • Our ability to persuade others to consume.
  • Its philosophy is spreading throughout the world.
  • Is it truly satisfying?
  • “If your reason for becoming rich is to look rich, you will never become rich.”

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The Consumer Economy

  • We are a free country, not necessarily a fair country. We are all free to fail.
  • We’re being taught to be “Good Employees.”
    • Go to school
    • Get good grades
    • Get a good “JOB”
    • Work hard
    • Maintain good credit
    • So we can consume lots of stuff.
  • “JOB” for most means “Just Over Broke.”
  • Should we be taught how to become “Wealthy?”

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Most of the following ideas about money and wealth creation

are From Robert Kiyosaki and his partner and co-author,

Sharon Lechter. I highly recommend that study their writings

more deeply on your own.

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Financial Intelligence

  • It is not your boss’ job to make you wealthy or secure. It’s her job to give you a paycheck . . . nothing more.
  • Making more money will not solve your problem if money management is your problem.
  • Money is a drug.

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Financial Intelligence

  • Money pushes you around. You will obey money.
    • Employers/Bosses
    • Landlords
    • Bill collectors
    • Tax collectors
    • Family and friends
  • Can you push back?
  • Are you smarter than your money?
  • Answer: Do you work for money, or does money work for you?

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Financial Intelligence

  • When money works for you, every dollar is an employee. Each dollar works to bring you even more dollars while you’re asleep.
    • Passive Income: Interest, dividends, real estate income, royalties, residuals, annuities
  • Your money can work for you or it most certainly will work for someone else.
  • “What do you do?” versus “What do you own?”
    • The key is “What investments do you own that will bring you passive income?”

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Financial Intelligence

  • “Being Rich” versus “Being Wealthy”
  • Being Rich is about how much money you possess in a specific moment in time.
  • Being Wealthy is about . . .
    • how much money you keep
    • how hard it works for you
    • how much is left for future generations (who know what to do with it)
  • Being Wealthy is about exploding your Passive Income. (How long you can survive without ever having to go to work?)

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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 and financial statements.
  • Two key personal and business financial statements 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 what you own and what you owe.

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Financial Literacy (continued)

Income

Statement

Balance

Sheet

Income

Expenses (Payments)

Assets (Own)

Liabilities (Debts)

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Financial Literacy (continued)

Income

Statement

Balance

Sheet

Income

Expenses (Payments)

Assets (Own)

Liabilities (Debts)

Paycheck, dividends, interest,

rents, royalties, profits, advances

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Financial Literacy (continued)

Income

Statement

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

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Financial Literacy (continued)

Income

Statement

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

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Financial Literacy (continued)

Income

Statement

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

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How The Poor Live� They only have small incomes and small expenses

Income

Statement

Balance

Sheet

Income

Expenses

Assets = Zero

Liabilities = Zero

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How The Poor Live� They only have small incomes and small expenses

Income

Statement

Balance

Sheet

Income

Expenses

Assets = Zero

Liabilities = Zero

$

The

Wealthy

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How The Middle Class Live�They buy expenses and liabilities they think are assets

Income

Statement

Balance

Sheet

Income

Expenses

Assets

Liabilities

Assets

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How The Middle Class Live� They buy expenses and liabilities they think are assets

Income

Statement

Balance

Sheet

Income

Expenses

Assets

Liabilities

Assets

$

The

Wealthy

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How The Wealthy Live� They take the income of the poor and middle class, and buy assets that produce more income

Income

Statement

Balance

Sheet

Income

Expenses

Assets

Liabilities

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How The Wealthy Live�They take the income of the poor and middle class, and buy assets that produce more income

Income

Statement

Balance

Sheet

Income

Expenses

Assets

Liabilities

$

Poor and

middle class

income

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Rich Dad’s �Cash Flow Quadrant (modified)

Note: Kiyosaki calls the D

Quadrant the “Big Business

Owner” Quadrant.

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Rich Dad’s �Cash Flow Quadrant (modified)

Works with Body.

Loves to Do.

Works with Mind.

Loves to Deal.

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Rich Dad’s �Cash Flow Quadrant (modified)

You have a job.

Someone else is the boss.

Security before money.

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Exempt vs Non-Exempt Jobs

  • Management/Exempt
    • Considered a professional
    • At least 50% of time using intellect, directing, creativity
    • Has discretion with decisions
    • Sets own work schedule
    • Receives a salary
    • No overtime pay
  • Non-Exempt
    • Considered non-professional
    • Up to 100% doing routine, non-thinking tasks
    • Does only what is told to do
    • Has a pre-set schedule
    • Punches a time clock
    • Paid hourly
    • Receives overtime pay

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Rich Dad’s �Cash Flow Quadrant (modified)

You have a job.

Someone else is the boss.

Security before money.

You own a job. Loner/”boss.”

Perfectionists. Small bus.

owners: Drs. Restaurateurs.

Independence before money.

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Rich Dad’s �Cash Flow Quadrant (modified)

You have a job.

Someone else is the boss.

Security before money.

You own a job. Loner/”boss.”

Perfectionists. Small bus.

owners: Drs. Restaurateurs.

Independence before money.

You own a system that others operate.

Coordinator. Delegator. Franchiser.

Use other people's time and money.

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Rich Dad’s �Cash Flow Quadrant (modified)

You have a job.

Someone else is the boss.

Security before money.

You own a job. Loner/”boss.”

Perfectionists. Small bus.

Owners: Drs., restaurateurs.

Independence before money.

You own a system that others operate.

Coordinator. Delegator. Franchiser.

Use other people's time and money.

Your money works for you.

Make money with money.

Other’s liabilities are your assets.

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Rich Dad’s �Cash Flow Quadrant (modified)

Works with Body.

Loves to Do.

Works with Mind.

Loves to Deal.

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Rich Dad’s �Cash Flow Quadrant (modified)

Job Security

Financial Security

Financial Freedom

Ultimate Financial

Freedom

Wealth

Side

Rat

Race

Side

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Sample Paths To Financial Freedom

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​

Wealth

Side

Rat

Race

Side

Start

End

or

Start

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Sample Paths To Financial Freedom

​

​

Wealth

Side

Rat

Race

Side

Start

End

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Sample Paths To Financial Freedom

​

​

Wealth

Side

Rat

Race

Side

Start

End

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In Which Quadrant Are You Headed?

  • What are your financial goals?
  • Which would you choose?
    • Job security
    • Financial security
    • Financial freedom

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Systems and Discipline Are The Key�For All Quadrants

  • “Am I hauling buckets or building a pipeline?”
  • Can you make a better hamburger than McDonald’s? Can you build a better system for making hamburgers than McDonald’s?
  • There are tons of great ideas, but few great systems.
  • You must also have the discipline to diligently work the system.

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Some Final Thoughts

  • Risk
    • It’s risky not to build a business or not to invest.
    • 9 out of 10 business fail; so I need to fail 9 times.
  • Money
    • There are two problems associated with money: You can have too little or too much.
    • Money comes from inside out, not the outside in.
    • So, money is an idea, not a thing. Thus, your ideas can create money out of nothing.
    • You create money in your spare time. Creating ideas and searching for bargain assets.
    • It’s not how much money you make; it’s about how much you keep.

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Some Final Thoughts (continued)

  • Emotional Intelligence
    • Practice “delayed gratification.”
    • Buy assets first, luxuries last.
    • Ask “how can I afford it?” This stimulates your creativity.

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Some Books and Stuff by Robert Kiyosaki�and Sharon Lechter

  • Rich Dad. Poor Dad.
  • Cashflow Quadrant
  • Cashflow Game
  • Cashflow, The E-Game
  • Rich Dad’s Guide to Investing
  • Retire Young. Retire Rich.
  • Rich Kid. Smart Kid.

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