Money Relative
By: Althafuddin Shaik
Tags: Investment, Entrepreneurship, Financial Freedom, Finance, Financial Literacy

I would like to start off and give a quick overview of a book which changed my entire fundamental thinking on money. I mean it. It literally transformed my perception towards the MONEY!!! I guess it would do the same to you.

According to the book mentioned above, The author Robert Kiyosaki has 2 dads.

His Real Dad and his friend’s Dad.

His Real Dad has a Ph.D. and a very stable career. But other dad did not even finish high school. His dad would say things like I can’t afford the other would say how can I afford it? However, they bother supported education but one focused on studying a career (Which most of all would do) and the other focused on studying Money. Eventually, His dad died struggling financially and the other dad as one of the richest men in Hawaii. One worked for money and the other made money to work for him. Kiyosaki decided to learn from his Rich Dad instead of his own Dad.

OK! Enough of intro titles…

Have you ever heard someone saying, Ahhh! My Job sucks this doesn’t pay well, I wish I had more Money. I need to take the second Job or side hustle to pay off that Student loan. All the above phrases are relatable to all of us.

So, it doesn’t matter how much money we make as long as we don’t understand the Money. Let’s say for example as of this moment your boss called you in and raised your pay to 10,000$. What is the first thing you would do ????

Would you buy that Lambo you are looking after?

Would you take a trip to Europe/ Hawaii? (I would prefer LV)

Or Would you like rather invest it?

Yes, Most of us would spend more money when we get more money

Know the Difference between Asset and Liabilities :

In simple words, Assets is something which puts money in your pocket.

And Liabilities are take away money from your pocket.

Simple, Right?

Most of the people would think their Car or Primary House would be a great investment and Asset of their lifetime. But in reality, it is a liability even if you are living in it.

To get rich, you need to build the assets and reduce the liabilities

Examples of Assets: Secondary houses, Condos for rentPaper StocksCommodities

Retirement Investments, Etc

More Money won’t solve the crisis, Financial IQ will :

More money would bring more spending to your account, But understanding the Money and cash flow would solve the real problem. Cash flow is the one thing you should look at when you streamline the finances.

What is Cash Flow?

Cash Flow is nothing but how much is coming in your account and how much money is going out in expenditures. it doesn’t make you rich if your income is 10K and you spend $9999 out of it. Basically, your cash flow is $1.

But if a person with an income of 1000$ and his expenses not more than 500$, then this person is richer and wealthier than you. Simple but effective

Keep Your Hard Earned Money :

What is the biggest expenditure on your account? I would’ve guessed it’s mortgage or a student loan.

No. It’s the TAX.

Even with the new Tax cuts that is the biggest expenditure on the single checking account.

Corporations, when we think of corporations it’s big buildings and suited folks working behind the glass doors. In reality, it’s just a bunch of papers. Corporations/Rich would be taxed on the amount remained after the expenses (That includes car payments, flight tickets, even corporation dinners).

Warren Buffet once said, he only pays 2.5% tax (Totally legal) which is lower than his secretary tax bracket (35%). So rich keep most of their money whereas poor/middle-class pay in taxes

Conclusion:

Take ways from Robert Kiyosaki,

Learn from the people who know this subject well like Robert and read or watch the videos on youtube or Social media.

Build or Buy the assets and limit the Liabilities

Learn how to keep most of your money

Do you want to learn How Debt Can Generate Income? Stay tuned for my next blog post…