Most people must have read The book Rich Dad Poor Dad. If you haven’t, my website has a brief summary of The book Rich Dad Poor Dad and detailed descriptions of the various financial life lessons to be learned from it. If you want to understand this book in depth, you can also check out those articles. Why the rich are getting richer is one of the biggest questions people ask after reading this book, and Robert Kiyosaki provides practical answers.
If you’ve ever wondered why the rich are getting richer, the lessons in this book can completely change the way you think about money. Throughout this article, we will explore why the rich are getting richer and how you can apply the same principles to improve your own financial future.
“Rich people don’t work for money, money works for them.”
According to author Robert Kiyosaki:
An asset is an asset that brings money into your pocket.
A liability is an item or property that costs money out of your pocket.
For example, if the house you live in only costs money, it is a liability. But if you rent that house out and get regular income, it becomes an asset.
The main message of this book is to build as many assets as possible and reduce unnecessary liabilities. If you understand this, you have learned the most important lesson of financial education.
Now, let’s learn about four important strategies taught by Robert Kiyosaki. If you apply these strategies to your life, your current financial situation can become much better in the future, and you’ll clearly understand why the rich are getting richer.
1. Rich People Understand How Money Works
According to the author, the biggest reason why rich people get richer is their high Financial IQ. In fact, Financial IQ is one of the strongest answers to why the rich are getting richer.
Financial IQ is the ability to earn money, spend it in the right places, save it, and invest it wisely.
Many people do not give much importance to financial literacy. But Financial Literacy does not necessarily mean having a degree in finance. It means being able to manage your and your family’s finances well.
If you:
* Create a budget,
* Control your expenses,
* Save regularly,
* Invest in the right places, then you are financially literate.
Financially literate people can also easily avoid fraud and scams, because they have the ability to understand reality.
In addition, they are also aware of important issues such as children’s education, retirement, proper use of debt, business expansion.
To increase financial literacy, it is necessary to read financial books, study articles, listen to audio-videos, learn from experts and practice in practice.
Rich people have financial advisors and experts, who help them make good financial decisions. So if you want to become rich in the future, the first thing you should do is increase your Financial IQ.
2. Rich People Pay Less Tax
According to Robert Kiyosaki, rich people can legally pay less tax than the poor and middle class.
This is because they have a good knowledge of tax rules, business and investment.
Many rich people are business owners. They create jobs, build buildings, produce and contribute to the economy. Therefore, the government provides them with various tax exemptions.
According to the author, there are three main types of income—
Ordinary Income – Income received from a job or business.
Portfolio Income – Income received from the increase in the value of shares, mutual funds, dividends or investments.
Passive Income – Income that comes without direct work, such as the amount received from renting a house or flat.
According to the author, it is difficult to build a large fortune based on ordinary income alone, because the tax burden is high.
To become rich, it is necessary to build portfolio income and passive income. This is another reason why the rich are getting richer over time.
3. Create Assets Using Debt
Robert Kiyosaki believes that debt should be used in the right way to create assets.
Rich people are not afraid of debt. They use debt to buy businesses, real estate, and other income-generating assets.
The author especially prefers investing in real estate, because it is relatively easy to get a loan for it.
He has a famous saying—
“Savings are taxed, while debt is tax-free.”
That is, income from savings may be taxed, but you do not have to pay taxes when you take out a loan.
But debt is like a double-edged sword. If used correctly, it can make you rich, but if you make the wrong decision, it can also make you financially weak.
Many poor or middle-class people take out loans to buy houses, cars, expensive mobile phones, or luxury items.
But rich people use debt to expand their businesses, buy income-generating assets, and earn more money in the future. This financial mindset clearly explains why the rich are getting richer.
Therefore, instead of being afraid of debt, you should learn to use it only for assets that increase income by making proper calculations and planning.
4. Create Passive Income
Robert Kiyosaki’s main principle is to create passive income as much as possible.
For example, suppose a house that can be rented is worth 10 million and a down payment of 20 percent, or 10 million, is required for that.
If you have the entire 10 million rupees in cash, you can buy only one house.
But Robert Kiyosaki’s strategy is different.
Instead of buying a single house in cash, he suggests buying three houses with a down payment of 10 million each and taking a loan from the bank for the remaining amount.
Like this:
* Rent comes from all three houses
* The loan can be paid from that rent
* The value of the property increases over time
* Some tax benefits can also be obtained
In this way, income from property is generated continuously without direct effort. This is the real power of Passive Income. This is the real power of Passive Income and another important reason why the rich are getting richer.
Conclusion
Friends, many people are likely to face financial challenges in the coming time. Therefore, it is very important to focus on Financial Literacy from now on, no matter what your age.
Along with that, you should continuously develop your skills, so that you can become financially independent in the future.
These are four important lessons that can be learned from Robert Kiyosaki’s book. If you understand these principles and put them into practice, your financial future can become more secure and prosperous.
Most importantly, you will understand why the rich are getting richer, and by following these principles, you can build lasting wealth yourself. Once you truly understand why the rich are getting richer, you can begin applying the same financial habits in your own life.