Just like everything else in life, our taste and preferences evolve with time. From the world of fiction, books of Jeffrey Archer, my reading taste transitioned to non-fiction books and money management books. The first book that helped me see the world and money management in a different light is the ‘Rich Dad Poor Dad’ by Robert Kiyosaki. This book is a must-read for someone who is new to the world of personal finance and wants to understand the ABCs of money management. After I read this book, there was no turning back. I gifted this book to my sister and my best friend on their birthdays. And they loved it too.
This is not exactly a book review. I will jot down some of the key takeaways from this book that I found useful. You can buy this book from Amazon using this link.
Pay yourself first
Before I read this book, I used to think that people invest their surplus money, i.e. the money left after paying for their necessities, etc. I was so wrong. Before paying others, such as the landowner or the telephone company, we have to pay ourselves or invest in ourselves.
To do that, it is important to earmark a certain percentage of our income to pay ourselves.
So before you pay the bills or buy that shoe that you have been dying to buy, set aside a certain portion of your income for your future self. It can be as low as 10% to as high as 99%. The trick here is to think like that amount of value is not ours to spend.
If you think you don’t earn enough, start by saving 5%. While assets here mean financial assets, an investment can also be in ourselves that can help in increasing our net worth, career acceleration, or promotion.
Assets and Liabilities
One of the important lessons that I learnt from this book was the concept of assets and liabilities. Although most of us know about assets and liabilities, the book explains the real crux of these concepts and how we need to approach it and use it to our advantage.
The book showed me how most of us use our hard-earned money to buy liabilities such as a fancy car while rich use the appreciated money to buy luxury items.
Have multiple sources of income
The book taught me that if the job is the only source of income, then we are just one step away from being broke. According to Robert Kiyosaki, you don’t have to quit your full-time job to have multiple sources of income. The key is to build these sources of income while working full time and sharpening our business skills and other related activities. And if the full-time work helps to develop skills to create multiple sources of income, then there is nothing like that. In this age of digitisation, you don’t have to do manual work to earn extra money. There are online sources that can help you earn extra cash on the side from the comfort of your home.
While employed people have only one source of income, businesses have multiple revenue-generating sources. Why? I guess you know why.
If you recently started working or want to know more about the basics of money management, then this book can act as a primer or as a base. The book helps to see various aspects in a different light.