- ROBERT KIYOSAKI BOOKS CASHFLOW QUADRANT PDF HOW TO
- ROBERT KIYOSAKI BOOKS CASHFLOW QUADRANT PDF DOWNLOAD
A liability, on the other hand, is something that takes money out of your pocket. Cash flow patternsĪn asset is something that puts money in your pocket. If you can understand the following diagrams, you have a better chance of acquiring great wealth. He still uses them to this day by completing his personal financial statement. It was one of his rules for investing-KISS, “keep it super simple.” He had a way of taking complicated financial subjects and making them easy enough for even a young boy to understand.įor example, rich dad used the following simple diagrams to teach a nine-year-old Robert Kiyosaki the relationship between the income statement and the balance sheet. One of Rich dad’s greatest skills was to take complex things and make them super simple. You may be asking the question, “How can low income and high expenses make you rich?” The answer is found in how the sophisticated investor utilizes the tax and corporate laws to bring those expenses back into the income column of their financial statement. If you do not understand money or how it works, it will seem like a strange statement that the ultra-rich position themselves to have low income and high expenses. These, of course, are the same 10% that Ocasio-Cortez thinks she can increase taxes on and fund her political plans. How do they do this? By positioning their income and expenses properly. 90 percent of people earn 10 percent of the money in the world. Not understanding this fundamental concept is why many rich people go broke. Once you understand the idea that low income and high expenses are good, you will understand one of the most pivotal realities of this idea called money. They may seem rich, but they think like the poor.Īs rich dad said, “Money is just an idea.” These are usually high paid employees like C-suite holders. In fact, it’s only the financially unintelligent who think that “making a lot of money” in the form of earned income is a good thing. For most people, the idea of low expenses is a good thing. “The reason people suffer financially is that they purchase liabilities and list them under the asset column.” It's not about what you make (income), but how much you keep (expenses)įor most people, the idea of a high income is a good thing. “Just because something is listed under the asset column does not make it an asset,” said rich dad. If something was making money, it was an asset. “How can you understand one without the other? How can you tell what an asset or liability really is without the income column or the expense column?” he asked.įor rich dad, understanding the relationship between the two allowed you to easily see the direction of your cash flow to easily determine if something was making you money or not.
Robert Kiyosaki’s rich dad, his best friend’s father, felt that the relationship between the two was critical. However, these classes don’t teach why one document is important to the other, or how they affect each other.
ROBERT KIYOSAKI BOOKS CASHFLOW QUADRANT PDF HOW TO
Many people who take accounting classes learn how to read an income statement and balance sheet separately. If you do not understand these concepts, the only way you’ll succeed in investing is by sheer luck, not skill.
ROBERT KIYOSAKI BOOKS CASHFLOW QUADRANT PDF DOWNLOAD
In the Rich Dad personal financial statement, which you can download here, you can see the relationship between these concepts. What is a personal financial statement, you ask? It tracks your income, expenses, assets, liabilities, and cash flow - each of these is crucial to not only understanding your personal financial standing, but they are also a barrier to entry when it comes to any investment opportunities. Give the same $100,000 to a person with a low financial IQ and a person with a high financial IQ, and you’ll see a vast difference in how that money is spent and grown.Ĭentral to the difference between those with low and high financial IQs is a simple but profound literacy: the ability to understand a financial statement. What makes you rich is your financial IQ. The reality is that money doesn’t make you rich. Financial literacy begins by understanding your personal financial statement
They think that if they can just make a little more each month, all their problems will be fixed. For most people, being rich means making a lot of money. This is perhaps the most important question you can ask and answer. The first step to understanding your personal financial statement, is comprehending the relationship between an income statement, and a balance sheet The rich have mastered the craft of reading their personal financial statements Understanding your personal financial statement doesn’t have to be difficult
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