Chapter 3 : Why teach financial literacy By Kowsar, Prya, Juan and Paulina Rich dad, poor dad
Antiquated school system • The rich becomes richer and the poor becomes poorer because of our antiquated school system fails to provide young people with basic financial skills rich people use to grow their wealth. • The system trains people to be good employees, and not employers.
We need financial literacy to get out of the “Rat Race”!! • If you want to be rich, you need to be financially literate, in words as well as numbers. • People can be highly educated and professionally successful , but financially illiterate. Such people often work harder than they need to because they learned how to work hard, but not how to have their money work for them. • In an age of instant millionaires it really isn’t about how much money you make, it’s about how much you keep, and how many generations you can keep it.
Difference between assets and liabilities • Assets: . An asset is something that puts money in my pocket. • Liabilities: . A liability is something that takes money out of my pocket.
Rules for becoming “Rich” You must know the difference between an asset and a liability to get rich. • Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets. • If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities.
Rules for becoming “Rich” Concentrate your efforts on buying income-earning assets. • The assets generate more than enough income to cover all the expenses, and with the balance reinvested into the assets it continues to grow. Meaning you get richer!! • Income > Assets > More Income. Which in turn results in low expenses and therefore in low liabilities. Focus on keeping liabilities and expenses at a minimum.