Epitomizing the first three chapters of Rich Dad and Poor Dad

Rich Dad and Poor Dad:

Financial literacy is not taught in schools . The old philosophy with which we are still adhering to is get a degree and land yourself in a safe and a secure job. As years passed by toil hard to gain scholastic skills earn more money only to pay more taxes, purchase a palace only to pay more real estate taxes. Financial literacy is all about identifying the power vested in investments which will help money work for you rather than you working for money. Rich and Poor is in the context of the financial wisdom possessed by two dads. The context hovers around your ability to manage your finances. Rich becomes more richer and poor becomes more poorer as they struggle to take judicious decisions when it come to wealth management. An analogy works well here if you sit on the couch you are compromising the physical health , on the contrary if you forbade the understanding of financial literacy and don’t exercise your brain to deal with finances at an early age you are compromising your wealth. The author since childhood has always faced contradictions in terms of recommendations and suggestions provided by his two dads. He also analysed how the thoughts of the person influences the risk taking ability of an individual. I cant afford it , this statements hooks you off and you will be convinced there is no way out. On the contrary asking yourself a question why cant I afford it?? challenges your brain and will give you the kick start to make it a reality . Also instead of complaining I don’t have money because I have you kids needs to be substituted with I have money because I have you kids. Rather than gaining skills to prepare a resume to get a job learn to draft impressive business and financial plans to offer jobs. The book is a summary of 6 principles or guidelines which was dictated by the author’s Rich Dad. The very first principle being the Rich do not work for money. The curiosity of Mike and Robert to be rich and make more money sort of died when the very first day of the business turned out the be the last one. Robert’s dad advised to meet Mike’s dad to get few lessons on how to be rich?? Both the boys chose the offer to work for 10 pence an hour during Saturdays. For three consecutive weeks they hold the patience and lastly they thought they are being exploited as per the labor laws the minimum wage which they deserve is 25 cents. Robert was frustrated as three weeks lapsed and he did not receive any lessons from Mikes Father which can help him grow rich. He thought he was exploiting him and went on to confront his father by stating he is an insensitive crooked man. His father tested them by agreeing to pay $2 per hour .Their hearts pounded with a rapid pace and they could imagine how they could be the richest kids in Hawaiie by earning this much. When the Rich dad offered $5 the greed penetrated in their souls calm down . Rich dad explained the difference between poor people and Rich people. Poor People think money can eliminate all their fears and hence they quit the job and find better paying job , however this does not end their fear. The greed and desire provokes them to work more hard and get the raise in the salary to enjoy all the comforts of life. The vicious cycle of fear and greed seems never ending. In fact at times the more rich you get you are grappled with more fear , now the fear is of loosing all the money you have earned. The rich dad explained how his employees behave out of fear and greed. Fear makes them run to get the job and greed makes them beg to increase the pay. He gave an example of a Donkey and his owner. The owner flash dangling carrot in front of donkey’s nose. Donkey does what his master commands with an illusion of having this carrot. If donkey might have sensed a real picture he might not have chosen to chase the carrot. The self inflicted emotions of fear and greed make us chase for money . We become slaves of money , however the real power resides in being the Master of Money and not letting your money control your desires and fears and consecutively your thinking.The rich dad  want to help them see what others cant . Money is an illusion and not a reality. Getting tremors in the middle of the night just in the worry of earning money and paying the bills is the horrible way of living life. Before rushing to work and working hard one needs to ask question will this short term efforts alleviate  the long term pain?? One day Robert was gazing a book store and was lamenting about not even having 30 cents for comic books. He saw Mrs Martin discarding the comic books in large cardboard box. They asked the comic book store owners can they use this comic books to which he replied yes they can but they cant resell them . One room of Mike’s house was turned into a Comic Book Library and Mikes sister was assigned the position of a librarian. Children need to pay 10 cents for 2 hours and can read as many books as they want. In over three months they earn $9.50. They realized how opening their own business Comic Book Library helped them take charge of their finances even in their absence. This was a perfect example of how they made money work for them. The second principle lay emphasis on financial literacy : Lack of financial literacy will incapacitate a person to handle his own finances. After earning money the biggest question is how to manage money so that it is not taken away from you. The biggest question to ask before incurring any expense is will this be an asset or a liability ?sounds pretty simple , however it is the profound way of improving one ‘s cash flow. Raise in an income will provoke people to purchase new big home which will drive them to pay more property tax resulting in blowing of money from the expense column. The cash flow of middle class people does not have any scope of investing in asset as their income is equal to their expenses. They consider their house as the biggest investment , however they don’t have any asset which could pour more money for them . On the contray the rich man’s financial statement has Assets greater than liability and their income is greater than their expenses . The balance is again reinvested and this is how rich gets riches and poor gets poorer. Thinking wisely how to spend money is considered as Financial Aptitude.Rich buy assets , Poor have more expenses and middle class buy liabilities which they think are assets. How much rich you are is in the eyes of the beholder. According to Buckminster Fuller calculate how many days you can survive without your pay check and that will speak volumes regarding the financial independence and financial survivability of an individual. A financially illiterate person will earn an income for the employer , will have to shed the major chunk of their income to the government in the form of taxes and will pay banks in terms of liabilities. The share of your greater efforts are distributed amongst the above mentioned key stakeholders leaving you struggling with expenses and liabilities and this is what they refer  to as being in the rat race.