Rich Dad Poor Dad Financial Literacy

Rich Dad Poor Dad Mark 4:26-29 King James Version (KJV) 26 And he said, So is the kingdom of God, as if a man should cast seed into the ground; 27 And should sleep, and rise night and day, and the seed should spring and grow up, he knoweth not how. 28 For the earth bringeth forth fruit of herself; first the blade, then the ear, after that the full corn in the ear. 29 But when the fruit is brought forth, immediately he putteth in the sickle, because the harvest is come. 10/07/13 LTAF 2

Rich Dad Poor Dad List 3 items of note from last week’s reading How do you define “FINANCIAL LITERACY”. Do you agree with Robert about Fear and Ignorance? How does Robert define “Emotional Intelligence” (Delay reaction and think!) Fear of not having money drives rich people. How have these items, the reading, other items affected your thinking about finances? 10/07/13 LTAF 3

Rich Dad Poor Dad Financial literacy      a. Rich people acquire assets. The poor and middle class acquire liabilities, but think they are assets. (Editor’s note: This is one of Kiyosaki’s more controversial statements. His definition of an asset is very different than the accounting definition of an asset. He would be better off substituting the terms “cash generator” for asset and “cash consumer” for liability.           i. A dividend-paying stock is a cash generator. A pleasure boat, while technically an asset, is most definitely a cash consumer. 10/07/13 LTAF 4

Rich Dad Poor Dad Financial literacy        b. Assets put money in your pocket. Liabilities take money out of your pocket.           i. For example, a house may be an asset, yet also be a cash consumer. A big house with a big mortgage and big property taxes will consume your cash, with no guarantee that capital appreciation will pay you back.           ii. And, because your capital is tied up in your home, you cannot deploy it to good use elsewhere.      c. To become rich, spend your life buying assets. To become poor or middle class, buy liabilities. Agree?      d. More money simply accelerates a person’s natural money cycle. If your pattern is to spend everything that you make, making more money will likely simply lead to more spending. 80% behavior 10/07/13 LTAF 5

Rich Dad Poor Dad Financial literacy           e. The Japanese parable of the sword, the jewel, and the mirror           i. The sword is the power of weapons           ii. The jewel is the power of money           iii. The mirror is the power of self-knowledge, which is the most treasured of the three.      10/07/13 LTAF 6

Rich Dad Poor Dad Financial literacy           f. In summary, the rich focus on acquiring cash generators that produce income, while minimizing cash consumers and other expenses.           i. After a certain point, the loop reinforces itself. Cash generating investments throw off enough free cash flow to pay all expenses and can be reinvested to generate more cash. This is analogous to the crossover point in “Your Money or Your Life.” Kiyosaki calls the state of investment income exceeding expenses being “wealthy.”           ii. Kiyosaki: “Keep your expenses low, reduce your liabilities, and diligently build a base of solid assets.”      10/07/13 LTAF 7

“If you want to be rich, you have to be financially literate.” Quote of the Week “If you want to be rich, you have to be financially literate.” Robert K. 10/07/13 LTAF 8

Introduction To Financial Literacy Income Statements Bank Reconciliation Balance Sheet Cash Flow 10/07/13 LTAF 9

The Storehouse Principle 10/07/13 LTAF 10

The Richest Man in Babylon Seven Cures for a Lean Purse