There are a million ways to make $1,000,000. And this is how Robert Kiyosaki does it. Robert Kiyosaki is a financial educator, entrepreneur and the author of Rich Dad, Poor Dad, one of the best selling personal finance books of all time. He's challenged and changed the way millions of people around the world think about money and investing. And in this video, we're diving into some of Kiyosaki, his key principles for achieving financial freedom and success. Welcome to a deluxe first step. Kiyosaki is all about assets over liabilities, the principle of prioritizing assets over liabilities is perhaps the cornerstone of Robert Kiyosaki financial philosophy popularized through his bestselling book Rich Dad, Poor Dad. At its core, the concept is strikingly simple but profoundly impactful. Kiyosaki defines an asset as something that puts money in your pocket, whereas a liability is something that takes money out of your pocket. Now, this definition disrupts the conventional understanding of assets and liabilities. Usually associated with accountancy and bookkeeping, where even your home could be considered an asset. In Kiyosaki is paradigm your home unless it's generating rental income, it's not really an asset. It's a liability. Why? Because it takes money out of your pocket every month in the form of mortgage payments, maintenance costs, property taxes, and so on. On the other hand, though, an investment property that you rent out for more than your monthly expenses now that would be an asset. The fundamental shift here is to view assets and liabilities in terms of cash flow, not just value. This approach forces you to think not just in terms of accumulation where more is better, but in terms of financial efficiency. What brings you income and what trains it? This distinction between assets and liabilities provides a practical roadmap for wealth accumulation. The goal isn't to merely save money, but to acquire assets that will generate ongoing income. It steers you toward investments that pay dividends. Rental properties that generate positive cash flow or businesses that can run without your day to day involvement. By doing this, you're not just storing value. You're actively increasing your income streams. And over time, these assets can compound to create substantial wealth and financial security. But perhaps the most transformative aspect of this principle is its mindset shift. Instead of pursuing the traditional markers of financial success like luxury cars, bigger homes, extravagant vacations, you focus on building a robust portfolio of income generating assets. This transition from a consumption mindset to an investment mindset is often the defining factor that sets financially free individuals apart from those who are trapped in the rat race, down to work for money, work to learn. For most people, the ultimate objective of finding a job or sticking with a career is the financial security that comes from a stable income. But Kiyosaki argues that this narrow focus often leads to a lack of financial literacy and ultimately a life confined to the rat race. After all, it's been said that one of the most dangerous addictions is a monthly paycheck. By contrast, working to learn changes the equation completely, turning each job and experience into an educational platform that equips you with skills, insights and knowledge that can later be leveraged to make money independently. The first thing to realize is that formal education is limited, especially in teaching practical skills that can be applied to real world financial problems. While a regular job teaches you how to do that specific job, it rarely teaches you how to manage, invest or grow your money. And the situation is even more bleak when it comes to learning how to leverage the money to create assets or learning how taxes work. By working to learn, you pick jobs, the roles or projects that allow you to acquire these very skills. The income is a secondary benefit. The primary goal is the acquisition of a skill set that can be used for future entrepreneurial or investment ventures. It's an investment in yourself, your most important asset. Just consider the example of taking a lower paying job at a startup versus a well-paying corporate job. The start up job might offer you the chance to wear multiple hats sales, marketing, product development and even a bit of financial planning. These skills are the tools that can equip you to start your own venture down the line or make more insightful investment choices. A well-paying corporate job might offer immediate financial gratification, but could pigeonhole you into a specialized role that doesn't offer any broad learning opportunities. In the long term, the concept of working to learn enriches you far beyond immediate financial compensation. It nurtures a mindset of continuous learning and adaptability, skills increasingly essential in rapidly changing economic landscapes like the one we live in today. It also better positions you for financial freedom because you're not accumulating just money, but also the know how to make that money work for you. Money could be lost, stolen or spent, but knowledge once gained can be applied repeatedly in various contexts. The investment in learning becomes a lifelong asset, providing returns so well into the future. The importance of cash flow. The concept is simple here, but profound. It's not about how much money you have, it's about how much money you have coming in regularly. Lottery winners, for example, they're not wealthy. They just happen to have a big amount of disposable cash at the given moment. This cash flow could be the difference between financial freedom and financial struggle, because accumulating assets that don't generate income can actually be a liability. They require more ongoing costs for maintenance. Not to mention their potential to depreciate over time. But assets that create a regular income stream offer both long term security and the freedom to invest in new opportunities as they arise. This is like your psyche advocates for investments like real estate properties or owning businesses because they provide a consistent cash flow even in the stock market. He leans toward dividend yielding stocks over those that only offer the possibility of capital gains. The advantage of this approach is it provides both a safety net and a means for growth. Your expenses are covered and any extra can be reinvested to create additional income streams. When Kiyosaki talks about the importance of cash flow, he's essentially talking about creating a self-sustaining financial ecosystem. Once set in motion, it's got the potential not only to maintain itself, but also to grow exponentially, creating avenues for more investments and therefore more cash flow. In a volatile economy where job security is increasingly becoming a thing of the past, the ability to generate a consistent cash flow could be the lifeline that not only keeps you afloat, but allows you to thrive. Understand taxes and corporations. Robert Kiyosaki often discusses the vital role that understanding taxes and corporations plays in achieving financial independence. Contrary to the mainstream approach of paying taxes first and then spending what's left. Kiyosaki suggests using the legal framework of corporations to minimize tax burdens, thus maximizing income and investment opportunities. This is a strategic shift from what he calls the employee mindset to an investor entrepreneur mindset changing how you earn your money, how you spend it, and critically how you shield it from unnecessary taxes. By the way, this is exceptionally valuable to freelancers that get incorporated corporations, according to Kiyosaki, are like secret money boxes that the rich have mastered using. One of the reasons the rich get richer is not just because they make more money, but because they keep more of it. A corporation allows you to do things like deducting expenses before paying taxes, which can significantly reduce your tax liabilities. This is in contrast to individuals who have to pay taxes first and then manage their lives with what remains a corporation's ability to write off expenses and use pretax dollars for investment and take advantage of various tax breaks can be the difference between a modest nest egg and substantial wealth. Kiyosaki points out that the tax laws are essentially a series of incentives for investors and business owners by understanding how to navigate these incentives. You can not only reduce your tax liability, but also encourage yourself to engage in the kinds of economic activities that the government wants to promote, such as investing in real estate or starting a business. Thus, the savvy use of corporations and understanding tax laws are not about evading taxes, but about being smart and strategic in how you generate and retain wealth. The takeaway here is crystal clear. Learning how to leverage the advantages of corporations and tax laws is not just for the wealthy elite, but for anyone seeking to attain financial freedom. In a world where the rules of money are not taught in standard education. Acquire Sharing this knowledge is both a revolutionary act and a vital one. How to use Debt. Robert Kiyosaki Perspective on debt diverges significantly from traditional finance wisdom. While most people see debt as something to be avoided, Kiyosaki advocates for using good debt as a tool to accelerate wealth accumulation. The key, according to him, is understanding the difference between good debt and bad debt. Now, bad debt is what most people are familiar with. It's the credit card debt incurred from buying things that lose value over time. Liabilities like luxury items, vacations or cars. This kind of debt saps your financial resources and leaves you poorer in the long run. But on the other hand, good debt is used to acquire assets that generate income or appreciate in value over time, such as rental properties, businesses or investments. The income or appreciation from these assets can not only cover the cost of debt like interest payments, but can also generate additional income, creating a positive cash flow. This is leveraging debt in a way that allows you to grow your wealth. Kiyosaki asserts that knowing how to leverage good debt smartly can amplify your returns, allowing you to benefit from capital growth, income and tax advantages. However, this strategy comes with its own set of risks and requires a sound understanding of the market conditions, interest rates and your own financial situation. Therefore, education and financial literacy are critical. Before employing any kind of advanced strategies, the takeaway here is that not all debt is created equal. By understanding and using good debt wisely, you can take advantage of leverage to multiply your investment returns, acquire more assets and accelerate your journey toward financial freedom. Income streams in the world of Robert Kiyosaki, depending solely on a single income stream such as a 9 to 5 job, is not just limiting, but also risky. His philosophy encourages people to diversify their income streams to include not just earned income, but also passive and portfolio income. According to Kiyosaki, relying on just one source, particularly one over which you have little control like a job leaves you vulnerable to financial instability. Diversifying income streams is akin to not putting all of your eggs in one basket when you've got multiple avenues of income, you're more insulated against the ebbs and flows of the economy. The job market or individual investments. If one income stream dries up or slows down, well, you've got others to fall back on How to generate diversified income streams. Kiyosaki suggests investing in real estate, starting or acquiring businesses and investing in the stock market. Real estate can provide a steady cash flow through rental income, and its value often appreciates over time. Businesses can provide both immediate income and long term value creation. Investments like stocks or bonds can provide dividends or interest payments, as well as potential capital gains. And it's not just about having multiple streams of income, but also having diverse types of income. Your earned income, like from your job, is taxed most heavily and requires the most time investment. Passive income, like real estate, is often taxed at a much lower rate and requires less ongoing effort. Portfolio income, like your stocks and bonds can also be more tax efficient and often managed with the least time commitment of the three. The key takeaway here is that diversifying your income doesn't just make good financial sense. It's a safety net. It's a strategy that can provide both immediate benefits and long term security while simultaneously offering various tax advantages. Don't keep money idle in the bank. Wow. There's nothing inherently wrong with saving. Kiyosaki argues that it's an outdated model that doesn't account for the diminishing purchasing power of money due to inflation. Essentially, the money you save today will be likely worth less in the future because the cost of goods and services typically rises over time. Kiyosaki point here is that merely saving your money doesn't give it the opportunity to grow and work for you. In fact, given low interest rates and the effects of inflation, your saved money might actually decrease in value in real terms. And this is why he advocates for investing instead, investments in the right channels can significantly outperform any interest you would earn from a savings account. Whether it's the stock market, real estate, or any other form of investment, the key is to put your money into assets that can potentially provide a much higher rate of return. However, it's essential to note that investing is not without its risks, and it requires a sound understanding of the financial landscape. Kiyosaki promotes the idea of financial education to make informed decisions. You should know the basics of any asset class you're investing in. Understand its risk profile and be aware of market trends that could affect your investment by being informed and calculated in your investment decisions. You're not just stashing your money away. You're actively participating in your own financial growth. So the key takeaway here is that while saving is good, sure investing is often better if you're looking to grow your wealth significantly. Just make sure you're equipped with the proper knowledge and resources to invest wisely. Don't follow the herd. The herd mentality in investment or financial decisions often involves going along with what everyone else is doing, usually under the influence of fear or greed. For instance, during a stock market boom, people might rush to buy stocks because they see others making easy money. Conversely, though, when that market is down, the herd might panic and sell, fearing further loss following the herd can be incredibly risky because it usually means you are getting in too late or getting out too early, both of which could lead to significant financial loss. Kiyosaki advises against this instinctual behavior because it's often reactionary and not based on rational or informed decision making. Instead, he recommends doing your own research, understanding the market, and making financial choices that align with your personal goals and risk tolerance. Not following the herd means that you're not investing in something just because everyone else says you're investing because it makes sense for your financial future. Moreover, not following the herd often opens up opportunities that many may overlook. Now, these could be in the form of unpopular stocks, neglected real estate markets or investment and skills and industries that are yet to boom. By steering clear of the herd. You often buy assets at a lower price and sell them at a higher value as you're not competing with a rush of buyers and sellers. In other words, if your aunt is investing in it, well, it's probably too late. Surround yourself with smart people. Robert Kiyosaki often emphasizes the importance of surrounding yourself with smart, knowledgeable people when it comes to financial growth and independence. According to Kiyosaki, your social circle isn't just a reflection of your personal life, but it's also a crucial factor that affects your financial future. Surrounding yourself with smart people, particularly those who are experienced and savvy in areas that you wish to excel in, can provide you with invaluable insights, advice and opportunities you might not have encountered otherwise. Think of it as a form of investment in social capital. The idea is that by having a network of intelligent, financially savvy individuals, you're exposed to perspectives and strategies that you wouldn't have thought of on your own. It's not about networking for the sake of business opportunities. It's about learning through association, whether it's understanding the intricacies of real estate investment, navigating the stock market, or discussing the benefits of different tax structures. The people you choose to surround yourself with can either elevate your knowledge or hold you back. In Kiyosaki words, you are the average of the five people you spend most of your time with. If those people are financially uninformed, well, there's a good chance you'll inherit it. There are limitations, and possibly they're bad habits. But on the flip side, though, if you're engaging with people who are more financially educated and successful than you are, well, you're more likely to rise to their level. Their successes and failures become educational milestones for you. Guiding your financial decisions and helping you to avoid common pitfalls. The bottom line here is if all of your friends are broke, well, you're you're probably broke, too. And finally, you got to know the market. This is something Robert Kiyosaki and Warren Buffett have in common. They both avoid getting involved in things they don't fully understand, even if it seems like a great opportunity. Kiyosaki frequently emphasizes the need to know the market when it comes to investing and accumulating wealth. He says that one of the primary reasons people fail in their investments is a lack of understanding of market conditions, trends and rules. To him, investing isn't about throwing your money into stocks, real estate or other assets and hoping for the best. No, it's a calculated process that requires understanding of market dynamics, consumer behavior and economic indicators. Kiyosaki suggests you do your due diligence before jumping into any investment research. The market involves understanding the past, the present, and the projected future of the asset that you're interested in. Are you investing in a growing industry? What are the historical trends of this asset's price? What are the experts saying? Is the market flooded with similar investment options? These are just some of the questions Kiyosaki advises you to explore. One of the key aspects of knowing the market is recognizing market cycles, whether it's the real estate market or the stock market. Prices rise and fall due to various factors like supply and demand, economic conditions, even global politics. Understanding these cycles can help you to make more informed decisions on when to buy, hold or sell an asset. The right timing can be the difference between a lucrative investment and a financial catastrophe. By knowing the market, you can also identify underpriced assets and seize the opportunity for higher returns. Kiyosaki often talks about the value of financial education in identifying such opportunities. He argues the most profitable investments are those the average person will overlook or misunderstand due to a lack of market knowledge. So there you have it. A lesser Robert Hezekiah is more of an old school guy and his book Rich Dad, Poor Dad is one of the first books we ever read about money and the one that we generally recommend to anyone getting started with their financial education. If you need a solid foundation and some evergreen principles, this is it. Now a great follow up for this video is the Warren Buffett one that we started this series with. You can check it out right here by clicking the link in the description. We'll see you back here next time, Elixir. Take care.
