Cashflow
In the last couple of years I have found studying Robert Kiyosaki’s work quite profound. It is an area of life I really wish I had got more into when I was younger. It’s funny how Rich Dad poor Dad was released in 1997 when I was 17 and I only came across it a couple of years ago. I’d highly recommend reading it.
I’ve been really enjoying running a cashflow group in Greenlane for a period of time now also. Without going into the whole of his philosophy something to share here which he goes into in his books is just the importance of ‘minding your own business’ and being involved in the game of money consciously. We’re all in it anyway but often people are unconsciously playing which obviously doesn’t lead to the best results.
Mixed in with this too we have very socialist schooling and an almost quasi religious strange sentiment passed on around money. Financial intelligence is not really taught.
Anyway the big point he makes is recognising an asset as something that puts money in your pocket, plain and simple. A liability is something that takes money from you. The house you live in whether you have a mortgage on it or are a renter is a liability therefore. This is not to say that buying a house isn’t cool if you want one (in fact he says about his rich dad loving luxury and owning a lovely house on the beach). It’s just important not to call it an asset as it doesn’t give income.
So the basic principle therefore becomes to invest in assets and to live within your means and keep working to expand your means. Not live below your means as is commonly taught (where’s the fun in that?).
Also debt is not all bad. That 4 letter word. We can have bad debt eg a credit card debt we used to buy a new bike which we need to pay off but then this can be distinguished with good debt whereby we use to debt maybe to buy a rental property which then gets the mortgage (the debt) paid off with income coming in and also generates a cashflow. This then becomes an income producing asset.
I’d really recommend downloading a Robert Kiyosaki cashflow board game sheet. I really like just having one to use for my personal finances to see what is going where. The ultimate goal of the game ‘Cashflow’ is to work to make passive income higher than expenses. Then you are financially free !!
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