Building wealth typically entails undergoing a huge mindset shift. More than anything, creating financial freedom means thinking of money as a manifestation. It also means unlearning and reevaluating all of the widely-held beliefs about what it means to save for retirement.
Did you know that the average 401k at retirement is only around $90,000? I don’t know about you, but that doesn’t sound like enough to sustain my lifestyle for multiple years. Do you plan to radically minimize your expenses at retirement? Not I. With that being said, placing all your eggs in one 401k basket is not the best way to build your retirement fund.
At this point, I hope you’re thinking, “there has to be a better way.” I have good news for you, friend: there is. It entails purchasing performing assets that deposit recurring cash flow into your bank account on a monthly basis.
Ask anyone who has built lasting wealth through real estate, there’s one book you need to read in order to grow your portfolio and become financially free: Rich Dad Poor Dad by Robert Kiyosaki. If you’ve read the book, this should come as no surprise. In fact, Rich Dad Poor Dad is often publicized as the #1 personal finance book of all time.
As a quick overview, Kiyosaki was raised by two very different fathers—one rich, and one poor. Because of this, he grew up seeing differing viewpoints about money and wealth building. He then gained an interesting and thoughtful perspective about how to make your money work for you, how to wisely invest, and the significance of gaining control of your finances. In Rich Dad Poor Dad, there are six major principles that you need to understand in order to build wealth.
The rich don’t work for money. Have you ever noticed that many wealthy people don’t actually have jobs? The story you’ve been told about saving a little money from your paycheck isn’t doing you any favors. Your 9-5 isn’t going to make you wealthy. Truly successful people understand how to make their money work for them, and not the other way around. Say hello to the power of passive income! Rich people buy performing assets that build wealth.
Why teach financial literacy? Many of us are not taught about how to make and manage money. We don’t learn financial skills in school, and many parents pass down their own limiting beliefs and fear-based ideals about money. Most of us simply don’t know any better. It is our duty to teach ourselves financial literacy, and then relay the message to our children. In our family, don’t just want our children to think of money as something that mommy and daddy have. We want them to be empowered in their wealth building and think of money as something that they have the ability to create.
Mind your own business. In this particular section of the book, Kiyosaki writes about the importance of building your assets, and emphasizes that you should own businesses. That’s exactly what we do with rental real estate; it’s our business that allows us to build our net worth. And even if real estate is not your thing, there are plenty of ways you can build assets. For instance, you could invest in a small business, precious metals, buy a business, or use your funds in private notes. This is a fundamental paradigm shift you have to understand if you want to build wealth.
The history of taxes and the power of corporations. The majority of people hate taxes. Why is that? Because they don’t understand how the tax law works, or how to make it work in their favor. Tax time doesn’t have to be dreadful if you Wealthy and successful people take the time to gain an understanding of the tax law, and then reap the benefits. The US Tax Code favors entrepreneurs and real estate investors. There are incredible tax implications for owning rental real estate. Want to start learning more about how you can legally benefit from the 2018 tax code? Check out Rich Dad CPA., Tom Wheelwright’s, book Tax-Free Wealth.
The rich invent money. Most people are of the mindset that they should work hard at their paycheck-based job, and try to save a little bit every month. The problem with this is that it takes forever, and the return on investment is low. But rich people build their financial intelligence, and gain a deep understanding of investments in order to create more money. That’s why at Morris Invest we’re all about ROI!
Work to learn—don’t work for money. For most people, job security is everything. I too have been in this boat. I was devastated when I lost my job, but this experience actually inspired me to ensure that I would never solely rely on an employer again. When you own performing assets (like cash-flowing rental real estate properties), you don’t necessarily need your job to pay your bills.
The point of Rich Dad Poor Dad is that if you want to build wealth, you must unlearn some of the ideals you’ve been taught. Forget about the nest egg. Your 401k is likely not doing you any favors (unless you’re using it to buy performing assets). Quit working for money.
Changing the way you think can be uncomfortable. It’s disheartening to think that everything you’ve been led to believe is untrue. You probably thought that everything would be fine if you squirreled funds away into traditional retirement accounts. The reality is, that doesn’t work out for most people.
Do your due diligence. Be your own wealth building advocate. And if you haven’t yet, read Rich Dad Poor Dad!