Mind Your Own Business (Rich Dad, Poor Dad Book Club)

in #finance6 years ago

Chapter Three: Mind Your Own Business

344A030F-485C-4F81-9EB9-F43361415B86.jpeg

At first glance, the title of this chapter, “Mind Your Own Business”, seems to mean Don’t pay attention to me. Don’t pay attention to other people. Don’t pay attention to rumors and hearsay. Just keep your nose down and pay attention to yourself. And in some ways, it does, but it also means much more than that.

In this chapter Kiyosaki delivers a very succinct lesson to us.

He tells us that if we want to build wealth, we must have, in addition to our profession, a business of our own, which doesn’t mean that we need to become business owners. Rather, it means that we need to be involved in activities that produce income for us. These activities are what Kiyosaki considers a person’s business. Said in another way, Kiyosaki advises us to have moneymaking plans, schemes, and strategies to supplement our salaried or wage-based incomes. He isn’t telling us to quit our day jobs, but rather to supplement them with other income producing activities.

In this chapter, Kiyosaki makes a distinction between having a profession and having a business. After doing so, he urges us to carefully mind the revenue creating activities that we have (our business). Instead of spending all of our time and energy making money for our bosses, banks (through transaction fees and interest payments), and governments (through taxes), Kiyosaki wants us to focus on making money for ourselves.

To distinguish the difference between having a profession and having a business, Kiyosaki shares a story with us about the owner of McDonald’s. According to Kiyosaki, the owner of McDonald’s once asked a group of students what his business was. All of the students thought that the owner of McDonald’s was in the hamburger business, and one student told him just that. However, the owner of McDonald’s corrected the student by saying that he wasn’t in the hamburger business, he was in the real estate business. Being the owner of McDonald’s was merely his profession. Wheeling and dealing in real estate, specifically the real estate that his restaurants were built on, was his business. That is where he really made his money.

So, what is your business? If you were asked this question by Robert Kiyosaki today, he wouldn’t be asking you what you do for work, he would be asking you how you are making money outside of your day job? Are you a house flipper? Are you a landlord? Are you a day trader? Are you a freelance artist making extra money on copyrights and royalties? How are you making money for your business, which is really another way of saying how are you making money for the business of you?

Study Session for Chapter Three, Part One of Two

The following quotes have been taken from the third chapter of Rich Dad, Poor Dad and form the foundation of the discussion points for this chapter. These quotes are not meant to be debated, which means that you are not supposed to agree or disagree with them. Rather, their meaning is supposed to be explored. What does Robert Kiyosaki mean by these statements.

I have written my thoughts about each quote below. If you would like, please look at the following statements first and formulate your own thoughts/responses to them before reading the ones I have written. Feel free to either leave your thoughts in the comments below, or turn your reactions into a post and share the link to your post with me here.

Quotations

1 To become financially secure, a person needs to mind their own business.
2 The rich focus on their asset columns while everyone else focuses on their income statements.
3 Financial struggle is often directly the result of people working all their lives for someone else. Many people will simply have nothing at the end of their working days to show for their efforts.
4 One of the main reasons net worth is not accurate is simply because, the moment you begin selling your assets, you are taxed for any gains.
5 Once a dollar goes into it [your asset column], never let it come out. Think of it this way: Once a dollar goes into your asset column, it becomes your employee. The best thing about money is that it works 24 hours a day and can work for generations.
6 An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.
7 The poor and middle class buy luxuries with their own sweat, blood, and children’s inheritance.

My Responses

1 To become financially secure, a person needs to mind their own business.

When Kiyosaki talks about having a business, he is advocating for everyone to find a way to make money beyond simply being paid wages at a job. He thinks that if you want to build wealth and become financially secure, you must have a finance stream that produces a flow of money independently of your day job. This is what he calls a person’s business, the revenue that a person’s assets produce. And he recommends that everyone minds his/her own business (assets), which is to say that everyone should pay attention to his/her assets, take good care of them, nurture them, and make them grow.

2 The rich focus on their asset columns while everyone else focuses on their income statements.

I think Kiyosaki is further pointing out a difference between the mentality of the financially literate and the financially illiterate with this statement. If a financially literate person were to win the lottery, he/she would think, Great! I’ve won a lot of money. Now I want to use that money to build wealth. While the financially illiterate person would merely think, Ya-hoo! I’m rich!

In this sense, the rich, or the financially literate, don’t focus so much on how much money they make a year through their salaries. They focus on the value and production of their assets instead. The reason why they do this is because that is the behavior that is going to ensure that their wealth grows and doesn’t disappear.

Financial illiterates who come into a large sum of money, on the other hand, are more likely to lose a lot of their money and become broke again when hard times hit because they don’t look beyond the number that is in front of them. When looking at income statements, the financially illiterate take comfort and find safety in the number that represents their salary/wages. They don’t realize how that number is dependent solely on their employer, rather than their assets, which are more dependent on the decisions and actions that they make.

3 Financial struggle is often directly the result of people working all their lives for someone else. Many people will simply have nothing at the end of their working days to show for their efforts.

This statement alludes to what Kiyosaki says a lot in this book. When you work for someone else and don’t have your own business, you make everyone but you rich. You make your boss rich. You make the bank rich. You make the government rich. This is because these other entities are constantly taking percentages of your labor through reduced wages, high interest rates, and taxes. Not only that, but when people don’t spend their money on assets, they often fall into a cycle where, as their wages increase, their spending and their taxes increase. As their spending and taxes increase, they find themselves falling into what Kiyosaki calls the Rat Race, which is a place where they never get ahead of their financial burdens. That is why Kiyosaki says many people work hard all of their lives and, in the end, have nothing to show for their efforts. All of their work goes to paying taxes and paying off debt.

4 One of the main reasons net worth is not accurate is simply because, the moment you begin selling your assets, you are taxed for any gains.

Simply put, Kiyosaki is pointing out here that one will never receive the amount of money that he/she is worth on paper because as soon as the assets that have been evaluated on paper are liquidated, portions of them, sometimes large portions of them disappear to taxes.

5 Once a dollar goes into it [your asset column], never let it come out. Think of it this way: Once a dollar goes into your asset column, it becomes your employee. The best thing about money is that it works 24 hours a day and can work for generations.

The idea here is that assets are things that produce incoming revenue, so you should never liquidate your assets, not unless your plan is to upgrade or exchange your assets for something better. If you completely liquidate your assets, not only are you putting that money in a position where it can be used and can disappear, you are eliminating all of the revenue that your newly liquidated assets could have produced for you. So, in a sense, each one of your invested dollars is literally like an employee that is working to make you more money. If you have employees who are working for you and who are doing their jobs, you shouldn’t get rid of them. You should find more employees just like them to do more work for you. Likewise, when you have invested money that is making you more money, you should find ways to increase the amount of money that you have invested so that you can make more money from your investments.

6 An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.

What Kiyosaki means by saying that rich people buy luxuries last is that they use their wages to buy assets first. Then they wait. Once their assets have produced enough money for them to buy a luxury like a sports car, they use the profits that their investments have made for them and use those profits to buy luxuries instead of taking out loans to do so. Poor and middle class people, on the other hand, often buy luxuries like cars, houses, and TVs before they have bought any assets and before they actually have the money to buy these things. The luxuries that poor and middle class people buy often reduce their savings to zero or put them in debt.

If you find yourself in that situation, where the items you buy are reducing your savings or putting you into debt, according to Kiyosaki, you are buying luxury items first.

7 The poor and middle class buy luxuries with their own sweat, blood, and children’s inheritance.

In my mind, this quote is a real wake up call to anybody who doesn’t have assets. It means that if you are directly trading your time and labor (wages) for items like houses, these items are costing you every bit of your labor (the sweat and blood of it) and possibly more (your children’s inheritance). Many people don’t realize that there is a different way to purchase luxuries, but Kiyosaki wants us all to know that if we have assets, our assets will buy these items for us, all while giving us more time and more freedom to labor (sweat and bleed) as we like.


This concludes the first half of the study session for chapter three. Thank you for joining me.

If you would like to participate in this book club, buy or download a copy of Richard Kiyosaki’s book, Rich Dad, Poor Dad, and read it along with me. Each chapter is followed by a study session. I plan to read this book slowly, and to thoroughly explore each study session. I would love to do so in the company of others.


Good discussion promotes deeper understanding and helps to reveal new and original ideas.


I hope to write a post that explores the second half of the study session for Chapter 3 some time next week. If you would like to know when that post has been published, please let me know in the comments below and I will send you a link to the new post.

For those of you who missed the study sessions for chapter one and two, you can find them by following the links below.

Chapter One: Part 1/2 | Chapter One: Part 2/2


Chapter Two: Part1/2 | Chapter Two: Part 2/2

Sort:  

Such an amazing educational book to read. Highly recommended =)

I agree completely.

Yeah, Kiyosaki's books have helped me so much, they provide such valuable information and they promote a different mindset....

To listen to the audio version of this article click on the play image.

Brought to you by @tts. If you find it useful please consider upvote this reply.

I think passive incomes are so important, and with the internet it is so easy to compliment our normal day salaries. Informative article thanks.

How, besides Steemit, are you generating passive income on the Internet?

I write technical articles for a blog that pays me. There are plenty of places that will pay for good technical articles.
For example:
https://linode.com/docs/contribute/ they pay $300 per article.
Digitalocean pays too but I think you get paid in digitalocean credits.
How are you generating passive income?

I’m not really. I’m just using all my time and energy trading hours for wages and rewards. My SP brings in a little passive income. I’m looking to find other ways of bringing in more. That’s why I asked.

I had invested in a dividend producing coin for an exchange, but that went belly up. I thought I was really going to be making some impressive gains with that, but, like the feeling I had, it was too good to be true.

$300 an article sounds pretty good. I’ve never done any technical writing before so I don’t know what it entails. I’ll take a look at that website though. Thanks for the link.

Wow,great ,thanks for the inspirations you have created through your post.Yes friend ,it is our great opportunity that we belong to this beautiful community,which provide us extra income.We can take it as our business,where we can earn profit by our hard work and dedication.Lets unite together to make this beautiful community most develop and successful.Steem on,my friend.

Thanks, Maya. Actually, I think Kiyosaki might see Steemit as a bit of a trap. For some, it functions like his kind of business. If you have a lot of SP, you can put that to work for you, but if you don’t have enough SP to produce decent returns, you have to work your tail off, which is like jumping further into the Rat Race.

Yes,we have to work on steempower,

This is key:

"Assets are things that produce incoming revenue, so you should never liquidate your assets, not unless your plan is to upgrade or exchange your assets for something better."

Think about how you could apply this to Steemit! You get 50% of your post rewards paid in SBDs. Do you spend those? HODL those? Trade those?

Or do you convert those to STEEM POWER, which over time enables you to earn more SBDs, "rent" your STEEM POWER to bots, invest your STEEM POWER in other users or @minnowhelper or Steemit services that pay you SBDs without you actually having to work...

This is really no different than what @boxcarblue is saying. Treat your Steemit wallet as an asset -- your "business" -- and figure out how to grow it.

In a few years, if the platform is successful, you'll have a new source of income -- but only if you invest in it.

Coin Marketplace

STEEM 0.22
TRX 0.12
JST 0.029
BTC 65343.70
ETH 3384.20
USDT 1.00
SBD 3.18