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Today,
because of the multitude of choices we all have, it is easy
to get distracted from where we want to go in life. I offer
you a few suggestions on how to find your path and stay on your
path to great wealth, if you should choose to do so. Step One: Decide to Be Rich That
night in 1975, I had to stop feeling sorry for myself and decide
again to be rich. I went over some of the lessons my rich dad
had given me - lessons that were more important than money,
because they would ultimately create the financial empire I
wanted. Rich
Dad believed that words were a person’s most important
tool. He constantly reminded me to watch the words I spoke,
simply because he believed that the words you speak and the
words you think ultimately become the world you live in. He
often quoted the Old Testament: “And the word became flesh”.
People
who used words such as these, often focused only on financial
survival. Rich Dad often referred to these people as “poor”
people, because they were poor managers of money. So a person
who thought or spoke words such as these was constantly fighting
for financial survival, regardless of how much money they made.
That
night, I recalled the words my rich dad’s rich friends
used: The
rich used the vocabulary found in the asset column. Rich Dad
said, “The rich are rich because they are not focused
on day-to-day short-term survival, or the expense column as
the poor are. Nor are the rich focused on comfort and the acquisition
of liabilities using credit, as the middle class is. So
decide to be rich, even if you are broke and penniless today.
In Rich
Dad Poor Dad, I wrote of the difference between being poor
and being broke. Poor is a state of mind where thoughts such
as “I can’t afford it” or “Live below
your means” come from. Being poor is eternal but being
broke is temporary. In
The CASHFLOW Quadrant, I wrote about Be-Do-Have. “Be”
is the most important part of the three word formula. Most people
want to “Have” what the rich have, but they often
are not willing to do what the rich “Do” to have
what the rich “Have”. Step Two: Decide What Kind of Money Problems You Want There are only two kinds of money problems: not enough money or too much money. Unfortunately, the kind of money problem most people know is not enough money. Rich
Dad stressed that his son Mike and I know not only how to make
money but what to do with the money we made. Rich Dad said,
“Most people know how to work for money, but they do not
know how to have people and money work for them.” So he
taught us how to plan on having too much money. So decide what kind of money problems you want. Step Three: Write Your Plan and Follow It After choosing between being rich, poor or middle class, and then choosing between too much money or too little money, it’s time to write your plan. If you have chosen to be rich, even though you are broke today, and have decided to have the problem of too much money, read on. If you do not plan to be rich or to have too much money, then you need not read any further. Rich Dad’s plan started with a few basic goals:
1. Change the characteristic of your income. Start a part-time
business. If you’re willing to be a little uncomfortable to become very rich and retire early, develop your plan — even though you may be broke, but not poor, today. And if you are already rich, Rich Dad’s plan may help you become richer and happier...even beyond your wildest dreams. Step Four: Decide on Where You Want to do Your Banking Rich Dad often said that you could tell the difference between the rich, poor and middle class simply by where they went to get their money or to do their banking. Rich
Dad said, “A poor man’s bank is a pawn shop.”
A pawn shop lends money on “assets” that a banker
would not loan money on. When a poor person is short of cash,
they will often go to the pawn shop and put their chainsaw,
microwave oven, jewelry, TV sets, tools, or watches up as security.
The
middle class has the creditworthiness to use banks, savings
and loans, or credit unions for their lines of credit. A popular
form of credit for this group is the credit card, which is easy
to obtain. The rich, if successful as business people, have fewer problems raising large sums of money and at better interest rates. So decide where you will do your banking. Step Five: Choose Your Friends and Partners Wisely One
of the reasons the rich get richer is because they spend time
with other rich people. Most of my best investments come from
my rich friends, not from my stock brokers or real estate brokers.
It is important to know if a person’s aspirations are
to be rich, comfortable or simply survive. How do you find people who are rich or want to be rich? Rich Dad had a simple answer: “It’s what you know that determines who you know. If you want to change who you know, simply change what you know.” So the most important investment you can make is in your financial education and financial experience. Invest in that first and the people you spend time with will change. Step Six : Give Yourself Time It takes time to build a business as well as an investment portfolio. Building a business is not the same as getting a job. With a job, you expect to be paid soon after starting work. With a business, you may not be paid for years, if you are paid at all. That is why I recommend keeping your daytime job and starting a part-time business. It is said that 90% of all businesses fail in the first 5 years. In my opinion, there are two main reasons for this sad statistic. One reason is lack of education and experience. Business is not something you can learn in school. Business is a combination of formal education, experience and guts. The
second reason is lack of money. We have heard the old cliche
“Killing the goose that lays the golden egg”. When
starting a business, many people kill the baby-goose before
it’s old enough to lay the golden egg. Step Seven : Start Small, Dream Big In
1975, I realized that my $700 in savings was not much when compared
to Mike’s hundreds of millions of dollars, which were
rapidly growing into a billion dollars. Initially, I felt like
giving up, saying to myself, “What’s the use. I’ll
never have more than Mike.” But then I realized that if
I continued with that thought process, not only would I never
have more than Mike, I would never have much of anything. Many people start small and stay small, simply because they have small dreams. In my opinion, big dreams are important because they possess ingredients vital for success: hope, desire, passion, energy, vitality, faith, drive, inspiration and creativity. These ingredients make life worth living. So dare to dream big. Dream of all the wonderful things this world and life have to offer. Write your plan on how you can have all your dreams come true and look at the plan every day. Talk to people about your dreams, even those who criticize them. Then use their criticism to make your desire even stronger. Step Eight: Before You Expand You Must Contract In
1975, I knew that if I was to achieve great wealth quickly,
I first needed to tighten up before I could expand. I was hurting
financially because I had been sloppy with my money during the
past 10 years. So, regardless of what you did yesterday, if you want to do better financially tomorrow, you may need to forgive your past, tighten up your activities today, so you can have a bright and prosperous tomorrow. To expand, you must first contract. Step Nine : Get Bigger Faster The
problem with a small business or small investments such as one
single family rental, is that you have to do all the work. You
do all the work because there is not enough money to support
paid management. So you own it and manage it. For
business or investing to work for you, in most cases you must
get big. Instead of buying only two rental properties, plan
on acquiring at least 20 properties as soon as possible. (But
make sure you know what you’re doing first.) With 20 properties
you can afford professional management, if the cash flow is
strong, or you can trade the 20 units into one larger apartment
house or office building. The people who dream small, think small, and work small, work the hardest and are paid the least. So that night in 1975, I vowed to focus, acquire education, gain experience, start small and get big as quickly as possible. I always remind myself of my rich dad’s words: “The bigger the asset you build, the less you work and the more money you make.” Step Ten : The More You Share, The Richer You Become In
1975, I knew that if I wanted to acquire great wealth quickly,
I had to be a person who shared. I had to be generous. If I
was greedy, stingy or tight, it would take me longer to attain
great wealth. So Step Ten is to be generous and share. If you do that, you will become far richer than those who work only for themselves. Every
day we are presented with multiple choices, so that we must
continually choose and re-choose our chosen path. If you choose
to be wealthy, use these ten steps to find your path and to
stay on track. -----------------------------
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Ten
Decisions You Need to Make to Get Rich