THE WORST AND THE BEST ADVICE

Written by the authors of the best seller Rich Dad Poor Dad, Rich Dad’s Cashflow Quadrant remains captivating because its precepts are a radical departure from the conventional methods of teaching money and investing. The book maintains that the educational system is fraught with a lot of flaws that make it incapacitated to prepare young people for the future.  

People are categorised into four groups (quadrants) depending on their sources of income. Each quadrant requires different mindset, attitude and skills. According to the author, the left side harps on security which in actuality is risky and may lead to financial insecurity in the future. On the contrary, the right side is for people who understand the game of money and want to be on the fast track to financial freedom.

Anyone who wants to be successful needs to absorb the following vital lessons:

The Worst and the Best Advice

“Go to school, get good grades, and get a good safe job” is the worst advice in the world. The statement has lost its flavour in this information age because times are changing. “To break even”, you have to work harder, assume more responsibility and spend less time with your family. Ironically, this makes you go deeper in debt, pay more taxes and reluctant to quit. Obviously, this is the path to financial ruin.

“Go to school, get good grades and start your own company” is the bedrock of financial intelligence which is not judged by how much money one makes but how much is kept, how hard it works and for how many generations it is kept. This advice leads to the right side where knowledge is a key success factor.

Building a Business System   

Building a lasting business system is a herculean task that may not be fruitful until several attempts. It requires sheer determination to nurture an idea to fruition. Do not quit because “failing is part of the process of success”. Being a successful business owner requires leadership qualities and understanding of the mechanics of a system.

Ways of becoming a business owner include:

• Developing your own system;
• Buying an existing system (franchise);
• Buying into and becoming part of an existing system (network marketing).

Financial Literacy

Investing without the requisite financial education is absolute folly. Good secular education does not tantamount to financial literacy. So, spending quality time to read financial magazines, financial statements, and attend seminars is a sine qua non to successful investing. You must learn to take control of your financial future because your financial advisers will only advise you based on level of financial understanding. Consequently, low financial education will mar financial future through loss of valuable opportunities.

Market upswing and downswing create abundant wealth for the erudite investor,

Call for Attitudinal/ Mental Change

Do not be ruined by “fear of losing money” for it makes you lose money most times. If you must be rich, you have to do things not as others do. Refrain from being overwhelmed by emotions.

However, a wise investor is not a dogmatic follower who does not know when to quit.

Take Baby Steps

It is not enough to write down your plans; you have to take a “bold step of faith”. No matter how grave your financial problems are, avoid “taking a great leap forward” for it may touch off financial calamity. Taking a baby step helps you learn from your mistakes.

Fast Track to Financial Prosperity  

• Mind your own business and devise a long-term goal, broken into short-term goals;
• Take control of your cashflow by reducing your debts and building your assets;
• Know the difference between risk and risky ( investing is not risky; lack of financial training is);
• Decide on what kind of investor you want to be ( whether you take advice from professionals or try to solve financial problems);
• Seek mentors – those who have experienced similar things not mere advisers;
• Make disappointment your strength;
• Believe you can succeed.

Staying Rich  

The ways to make money that can be bequeathed to many generations are:

• Maintaining long-term vision and plan;
• Delaying gratification;
• Using the power of compounding to your advantage.

In conclusion, anyone who imbibes the instructions contained in this book will be placed on the path of quick financial transformation.