| (...Continued
From Get Rich Part 1)
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,
jewellery, TV sets, tools, or watches up as security. The
pawn shop gives them cents on the dollar, because what the
poor spend their money on is not worth anything after they
buy it anyway. The pawn shop makes money by charging legal
usurious interest rates.
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 also use
banks. But they often use different banks. They use the services
of investment bankers, or find private capital from wealthy
individuals, or money from institutions such as pension funds,
insurance companies or the stock market.
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. Friends who merely want to be comfortable
or survive will not understand why you want to be rich and
may unconsciously pull you down. And besides, the investment
tips I get from people who only want to be comfortable are
often tips on investments that no one else wants.
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. In other words, most small businesses
are undercapitalised, which means the new business owner tries
to support him or herself and often a family on a business
that is not yet up and running. So the business is drained
of cash when it needs it most to grow.
Step Seven : Start Small,
Dream Big
In 1975, I realised 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 realised that
if I continued with that thought process, not only would I
never have more than Mike, I would never have much of anything.
I was comparing myself with Mike and trying to compete with
him, rather than use him as inspiration and as a mentor. So
that night I decided to dream big and start small.
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 criticise 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.
In college, I’d spent a lot of money just having fun.
In Vietnam, I’d developed the attitude of living life
to the fullest because tomorrow I could be dead. If I was
going to get ahead, I first needed to pull back a little.
Instead of playing golf, rugby and tennis, I focused only
on rugby. Instead of spending every night in the clubs or
watching television, I needed to get back to studying. Instead
of trying to be everywhere and do everything, I decided to
focus. I began doing more — of fewer things.
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. Very often, a person begins to buy real
estate and soon quits because the work is hard and the pay
is low. They started with a small plan and stayed small.
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 same goes with businesses, especially
franchises etc. If you have only one franchise, you are the
chief cook, bottle washer, owner and manager. If you have
20 of them, you have a chance of finding freedom faster.
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, I decided to operate out of the B (Business Owner) quadrant,
rather than follow my poor dad’s ideas on labour unions
and protectionism. I knew that I needed to focus on doing
more for less money, for more people. I needed to focus on
sharing as much of my wealth with as many people as possible.
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.
| Authors Details: Robert Kiyosaki Web
Site |
More Articles On How To Get Rich
(Ten
Decisions You Need to Make to Get Rich Part 1)
(Ten
Decisions You Need to Make to Get Rich Part 2)
(Rich
Dad Poor Dad Pt 1)
(Rich
Dad Poor Dad Pt 2)
(How
To Get Rich) |
