Rich Dad Poor Dad

Why do we continue to fall for the rat race?

Like many other things, we choose our jobs to please others — mainly our parents. But what do we want for ourselves? Today, many people choose to be trapped in a race against themselves. The rat race idea is that you do tons of complex and often unnecessary work to make ends meet. You do everything it takes, and your employer, the government, and utility bills take away nearly everything you’ve earned, leaving you with little or nothing to save.

“The rat race is an endless quest where you must work hard to catch up with bills and taxes.”—Robert Kiyosaki.

Sadly, many individuals are aware of the rat race and hate to be part of it but are worried about backfiring from their social circle; they keep racing anyway.

We’ve all heard conventional advice: “Go to school, study hard, get a good job, and everything will be alright.” The truth is, this advice indicates how the poor and middle class see financial security. The rich don’t see things that way. This is no longer the recipe for a life free of economic struggles. Good education and high grades no longer guarantee success.

“Financial education is robust, while money is where this power manifests.” —Robert Kiyosaki.

You can go to college, graduate with a summa cum laude, get a white-collar job, and never have financial growth. You need to realize that no matter how hard you work, you will never be the one who benefits from your endeavors. You may have it all one day and lose it the next. However, you can gain power over money and start building wealth from scratch with financial literacy.

Many people still follow the “go to school” advice. While they may avoid becoming poor, they never become wealthy. Societal disapproval prevents us from quitting the rat race and building wealth.

“One of the reasons the rich get richer, the poor get poorer, and the middle-class struggles in debt is that the subject of money is taught at home, not in school.” —Robert Kiyosaki.

The adjectives “broke” and “poor” have different connotations. The first refers to a temporary state, while the second refers to an eternal quality.

Fear and greed drive us to make irrational decisions

Many individuals live in perpetual fear about their financial condition. They are afraid to blunder when paying their bills, get fired, or not have enough money, which would force them to start over. Let’s be honest; many of us fear not meeting other people’s expectations, whether family or society.

Then, there is greed. Most individuals have a price; once offered a high enough loan, most can’t resist the thought of that “safe” paycheck at the end of the month and all the things they could purchase with it.
These two factors trap these individuals in the pattern of getting up early, hurrying to work, stressing out daily, and working hard on something they often do not like.

Then, after a long month, they finally get the paycheck and bills. Each second, day, month, and year of their lives is run by a never-ending cycle of fear and greed. How does the latter manifest? Typically, we are afraid of losing our jobs. Greed shows when we can’t wait any longer to get that paycheck — saving only enough to go on vacations from time to time and forget about the endless, unhappy struggle. Nevertheless, even if we make money, our greed will try to persuade us that it’s still insufficient, forcing us to continue the rat race.

“To realize that we are stuck in the rat race, we need to look at our lives from a third-person perspective.”— Robert Kiyosaki.

A rat race is a tricky phenomenon. On the one hand, we know what to expect, and no one needs us to make onerous (or any) decisions. Conversely, this supposed lack of responsibility doesn’t make us happier. We rush to work, scared of being late and getting fired.

The more we give in to the rat race, the more our brains learn that running after something unattainable endlessly is natural. So, we get an education and pass all exams with flying colors. Then, we go for the job that should pay. However, this conventional path, passed down by our predecessors, doesn’t allow us to experience financial growth.

“Greed only dictates raising our living standards, but it doesn’t teach us how to do it.” –Robert Kiyosaki.

Financially ignorant people allow emotions to control their decision-making. They fear losing money, so they don’t invest in assets or stocks because of the risk involved. Greed encourages spending money to improve their lifestyle, which is safer than investing in assets. Fear and greed hinder people from becoming wealthy in the long run.

You have to gain financial knowledge to get out of this rat race. To buy assets, you must learn how they differ from liabilities.

Conventional education systems fail to provide essential financial knowledge; self-education is the key to achieving financial success

To build wealth, there must be more than talent and a college degree; the world is full of poor people with extraordinary talents. Financial education—investing, debt, risk, accounting, compound interest, stocks, and more—is the main factor creating the gap between the poor and the rich.

Sadly, our educational system and curriculum are not set up for financial literacy. The rate at which high schoolers max out their credit cards indicates how omitting investing, savings, debts, compound interest, and much more from school curriculums affects our mindset.

“If financial literacy was a school subject, not family wisdom, getting rich would not be an unattainable godsend but a real pursuit.” — Robert Kiyosaki.

Lack of financial literacy affects both the young and the old. Both sides of the divide make money decisions. Society has not equipped us with financial literacy, and it is up to you to educate yourself.
It is good whenever you start to work on your financial education, but the earlier, the better. Invest in yourself, as this is the most important thing.

“Start by investing in your mind. Enroll in seminars and finance classes, and read as many books as possible.” –Robert Kiyosaki.

Humans often learn best by example, so you must get a mentor. Your mentor could be a person who has already achieved what you want. Then, could you ask them to guide you?

You don’t need a lot of free time to become financially literate. Instead, you can just take advantage of your job and gather the essential skills there, which will serve you in your own business when the time comes.

For instance, you could overcome timidity by working in the sales department of any product company. You will get the appropriate training with specialized people. And when you start cold calling total strangers, you will forget what being shy is.

To build wealth, you must embrace risk

You need to start doing things differently to change your financial situation. And knowing how to handle risks is the most significant change you need to make. Financially successful people are risk-takers. They don’t fear risks but have developed an uncanny ability to manage and get the best of them.

Taking a risk isn’t about keeping your money in the bank. It means investing in stocks and bonds. Although these investments are riskier than your usual bank savings, they generate more income quickly.

“Investing in stocks and bonds generates more income in a short amount of time.” — Robert Kiyosaki.

The truth is that the wealthy are distinguished by their predisposition to take risks. While the rich are predisposed to take risks, the poor and middle class tend to “play it safe.” They hold on to their jobs with their last breath because they fear what could befall them if they lose their paychecks.

When the fear of losing overshadows the excitement of winning, people tend to play safe instead of investing in something huge. They say, “I don’t want to lose,” but losing is inevitable.

As you progress to victory, losing is inevitable. You cannot win without losing sometimes. It is a natural way of things, which doesn’t make you a loser or a failure. It means you’ve been given a chance to learn from a new situation and grow. To build wealth, you must be more than willing to take risks. We struggle to make ends meet when we choose to work for someone our whole lives.

Wealth doesn’t come overnight; it’s essential to harness and fuel your motivation

The path to building wealth is long and challenging, and it’s easy to become demotivated when you hit a hurdle. For instance, the price of the stock you invested in might dip. You need to remain committed and motivated during difficult times.

One way to stay motivated is to list “wants” and “don’t wants” for reference. It can include things like “I want to be free of my debts within three years ” and “I do not want to end up like my parents.” This list will keep you motivated in the face of adversity.

Another way to stay motivated is to spend money on yourself before settling your bills. Although this may seem counterintuitive, you will know precisely how much monthly money you need to meet your goals.

“Working hard for a paycheck and spending the most of it out of greed is the wrong kind of motivation.”— Robert Kiyosaki.

Don’t see this as an opportunity to max out your credit card and plunge yourself into debt to your eyeballs. Paying yourself first will create extra pressure, driving you to find creative ways to make more money. This will also help you develop financial discipline, a quality familiar to all financially successful people.

Now, let’s discuss what an asset is and how it will help you earn more. An asset makes more money for you. Liability gets you no profits but costs you money. Your house is not an asset; it costs high property taxes and a lifelong mortgage without generating income.
Remember these tips to maximize your wealth:

• The fundamentally applied knowledge that differentiates the rich from the poor and middle class is that they buy assets.

• While an asset generates more money for you, a liability is something you pay for.

• Examples of assets are bonds, mutual funds, businesses, stocks, and anything else, generating income that is appreciated over time and can be readily sold.

• Investing in assets makes your money work by passively generating income.

• Assets generate more money for you: as your assets cover your expenses, you reinvest the money into new assets, thus generating a compound growth effect.

Unfortunately, most people categorize liabilities as assets. Many fancy buying a house, thinking it is an asset, while it is one of the most money-consuming liabilities you can get. With houses come high property taxes and a lifelong mortgage, and they don’t generate income.

Your profession holds far less importance in wealth creation compared to your business

Business and profession are different things. Your profession is whatever you do, as your day job pays your bills, buys groceries, and generally covers your cost of living. On the other hand, investing your time and money into a business will grow your assets.

Building wealth just with your profession is nearly impossible, as it mainly covers necessary expenses. To create wealth, you must make a business while you work at your job.

“You need cash flow, people, and personal time to start your own business.” — Robert Kiyosaki.

The profession of a chef involves cooking. It pays the bills but will likely not make them rich in the long run. Instead, chefs invest in real estate and use whatever extra cash they earn each month to acquire income-producing assets. Similarly, tire salespeople invest their leftover income in stock trading.

These two instances show that professions cater to monthly bills. However, by committing extra income to businesses, they grow their businesses and increase their wealth. Your work will initially fund your business; wait to quit your day job until your business shows sustainable growth. At this point, your asset, not your profession, becomes your primary source of income. And that is financial independence.

Sound knowledge of taxes is also crucial.

The rich deeply understand and handle taxes differently than the poor and middle class. Wealthy people focus all their corporate activities on their assets. This allows them to hire professional accountants and lawyers who help them reduce taxes and protect them from lawsuits.

“An employee pays taxes first and then lives on what’s left of their salary until the next paycheck. A corporation spends all its profit and then pays taxes from what is left.” — Robert Kiyosaki.

You can learn how to cut down your taxes, too. To do that, you need to educate yourself on how the tax system works. The more you spend, the less there is left to tax. So, you can just ignore how much is taken from you.

No matter your level of financial literacy, obstacles can impede your path to wealth; it’s essential to confront and overcome them

When you educate yourself on finances, you can still face roadblocks to success. The five main reasons why financially literate people fail are:

• Fear
• Cynicism
• Laziness
• Bad habits
• Arrogance

Fear

Robert Greene explains that he has never met a wealthy person who hasn’t experienced losing money. Still, almost all the poor people he has met have never lost a cent. The lesson is clear: becoming rich is synonymous with learning to take risks and minimizing the fear of them.

Winners are inspired by failure, while losers are defeated by it. When faced with failure, winners will only work harder. Losers cannot handle losing, which is why they give up. Handling failures by learning from them is a secret all winners know, but losers don’t.

“Most people struggle financially because they play not to lose instead of playing to win.”— Robert Kiyosaki.

Cynicism

People’s doubts and uncertainties keep them poor. Technically, getting out of the rat race is very easy, but doubts keep rat racers paralyzed. Instead of analyzing as winners do, the cynics prefer to criticize. Their critique prevents them from seeing the opportunities.

“Many never get rich because the fear of losing money outweighs the joy of getting it.” — Robert Kiyosaki.

Laziness

Counterintuitively, staying busy is the most common form of laziness. Busying ourselves with numerous activities and errands is the way to avoid facing our fears. Deep down, we all anticipate this simple truth. We often get annoyed if someone reminds us of that fact. We lack time to cater to our wealth, health, and loved ones.

Bad habits

Education is not the only factor that defines success. Success also depends on certain habits. The rich always work on themselves, investing in themselves first. Start building habits that will bring you closer to your goals. Acquire the positive habit of reading every day. Exercise daily to strengthen your physical health. Find time for the things that matter.

Arrogance

Arrogant people often lose money due to their ignorance. They believe it is not essential if they don’t know something. When you start pursuing success, you must make humility a priority. If you are humble enough, you can learn something from everyone who crosses your path and every situation you encounter. The phrase “I can’t afford it” turns off your brain, whereas the question “What do I need to do to afford it?” opens up possibilities, excitement, and dreams.

Conclusion

Our education system needs to teach financial literacy. So, it’s totally up to you to develop yourself. Building wealth will become more manageable and achievable if you learn to think like the rich and understand how the financial world operates. Never hesitate to invest in developing your mind. Our mind is the most crucial asset. With its help, we can generate great wealth.

Many things hold us back in our pursuit of wealth, and the lack of money is not our worst enemy, unlike our false visions and misconceptions about becoming wealthy. The biggest one is that we must work ceaselessly for someone else. However, more challenging work only pays if we learn to work for ourselves. A valuable piece of advice Robert Kiyosaki gives is that we should understand the difference between liabilities and assets. The former requires regular investment, whereas the latter generates money for you. Moreover, we must learn how the taxation system works and follow big corporations’ example regarding their earning-spending-getting taxed cycle.
If we are determined to become rich, we must remember that fear, cynicism, laziness, arrogance, and bad habits will not get us anywhere, even if we learn to allocate our money wisely.

Give this a try

Take proactive steps to minimize your liabilities and cut unnecessary expenses. Focus on acquiring valuable assets that can contribute to your financial growth.

– Wealthy individuals prioritize building their asset columns—their valuable investments and resources—over merely analyzing income statements. Shift your mindset to think like the affluent and start concentrating on developing and expanding your asset base.

– Real estate investment is a powerful vehicle for achieving long-term financial independence. If you are presented with an opportunity to invest in real estate, embrace it wholeheartedly; it could be a pivotal step toward securing your financial future.

– Establish connections with booming industry or field professionals that interest you. Forge meaningful relationships and absorb as much knowledge as possible from their experiences and insights; learning from others can accelerate your path to success.

– Remember that money is often transient; it comes and goes. However, by educating yourself about financial principles and investment strategies, you can lay the groundwork for building lasting wealth and stability.