This week’s lesson from Rich Dad Poor Dad is what Kiyosaki calls, “Mind Your Own Business.” I call it, “Get Yourself Out of the Way.”
Last week we looked at the importance of investing in assets that generate income. This lesson focuses on the steps folks need to take to put themselves in a position to do just that while holding a job. Many Americans have a mortgage and car payments optimized to their income. In other words, we tend to buy the biggest house we qualify for and a car to match. This is an income based philosophy.
With an asset accumulation based strategy, you might choose to live in a less expensive house and drive older cars because you prioritize investing a portion of your salary into assets that will generate future income, such as:
- Dividend yielding stocks
- Bonds
- Income generating real estate
- Businesses that don’t require your participation
- Promissory notes acquired from banks or other originators
If you own and work in your own business, prioritizing cash for yourself and an investing plan can be a challenge while juggling cashflow for payroll and vendors. Kiyosaki suggests a policy to “pay yourself first.” In no way is he suggesting you not pay your bills or compensate your staff fairly, even generously, but by paying yourself what you need for income–enough to live modestly and make investments–you can get our of your own way and zero in on building assets over income without constantly stressing over personal cash flow.
Rich Dad Poor Dad is an easy read. Pick up a copy! I will be reviewing other lessons from the book in more detail in the coming weeks, and I look forward to reading your comments. And as always, for more reading recommendations, or to discuss other entrepreneurial tips and tools, contact Harvard Grace Corporation at stewart.heath@harvardgrace.com.