On this blog post, you will learn about the difference of assets vs liabilities and why your house is not an asset. Read these separate blog posts about Rich Dad Poor Dad summary, the concept of cashflow quadrant, and types of investors by Robert Kiyosaki.
Rich people acquire assets. On the other hand, the reason why the poor and middle class do not become rich is because they acquire liabilities that they think are assets. They miss out on buying income-generating assets because first and foremost, they don’t know the difference of assets vs liabilities.
But what exactly is the difference of assets vs liabilities? According to Rich Dad, it is the direction of cash flow that determines if something is an asset or a liability at that moment.
What’s the difference of assets vs liabilities?
Asset: “An asset puts money in your pocket.”
Liability: “A liability takes money out of your pocket.”
In a nutshell, assets are income-generating items that increase in value over time. The only way a house can be an asset is if it generates income after all expenses are paid. On the other hand, liabilities are items that decrease in value over time, which will cost you more in the long-run.
Now you know the difference of assets vs liabilities and the reason why your house is not an asset. In order to help you better understand your finances, here is a basic financial statement template that you can fill up!
Rich Dad Poor Dad Summary. “The main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money… but never learn to have money work for them.” –Robert Kiyosaki
Rich Dad Poor Dad played a key role in my life. That being said, I’m taking this opportunity to share the lessons I’ve learned from Rich Dad Poor Dad – for it has changed my life forever. I summarized the cashflow quadrant concept from Rich Dad Poor Dad series in a separate blog post.
Here is an overview of rich dad’s lessons:
Rich dad’s lessons can be applied by following a series of steps that are integral to each other.
The end result of these steps is freedom—and when I say freedom, it is freedom in every way possible. Are you now ready to make your money work for you through investing in real estate?
One of my favorite quotations by Robert Kiyosaki is ‘Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.’ Let me leave it at that.
I know that the philosophies of Rich Dad series served me well. Rich Dad Poor Dad Summary is financial education at its best. Please also take a quick peek at the cashflow quadrant concept from Rich Dad Poor Dad series.
Have you read this book already? I’d love to know what you think about it!
“The only reason I built businesses was so I could invest in the investments of the rich. The only reason you build a business is so that your business can buy your assets. Without my businesses, I could not afford to invest in the investments of the rich.” –Rich Dad
The cashflow quadrant by Robert Kiyosaki is such an eye-opener. I have applied the lessons that I learned from this concept in my life. While this blog post focuses on the cashflow quadrant topic from Rich Dad Poor Dad, the complete overview of the general concepts from Rich Dad Poor Dad summary are included in another blog post!
The Components of the Cashflow Quadrant by Robert Kiyosaki
Different Quadrants, Different Paths
Poor Dad’s Advice: “Go to school, get good grades, and then find a safe secure job with benefits.” Poor dad values job security and he holds on to the retirement plan offered by the government.
Rich Dad’s Advice: “Learn to build businesses and invest through your businesses.” Rich dad believes in the power of businesses for it will buy your assets with tax benefits.
Emotional Differences of the Quadrants
People in different quadrants have different emotions. These differences are crucial for they are triggers/reasons as to why these people fall under their respective quadrants. For example, someone who values job security belongs in the E quadrant, and so on.
Difference in Investment Capabilities
There is a big difference between an employee buying an investment and an affluent business owner buying an investment. Not all investments are available for employees. Meanwhile, there are investments that are available only for affluent business owners—investments that have the least risk with the highest returns. That’s why rich dad says that there’s such thing as ‘investments for the rich’—these people are also known as accredited investors.
Hence, the ultimate goal is to move from the left side of the quadrant to the right.
Take a few minutes and ask yourself these questions:
Did you like this concept from Rich Dad Poor Dad series? Please also take a quick peek at the summary of lessons from Rich Dad Poor Dad!
Here at PhysicianEstate, we welcome all physician entrepreneurs to learn about commercial real estate investments, rental property investments, and wealth generation. We encourage all physicians to eventually become real estate physician investors. We know a great deal about Who – What – Why – How.
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