Like many, I often read financial books without acting on their advice. However, I recently decided to change this cycle — I’ve set out to both read and act upon what I have learned. Currently, my all-time favorite finance book is “Rich Dad Poor Dad,” which is known for being one of the best in its genre. Because it’s my top pick, I deemed it fitting that this would be the first book I try to practically apply.
If you haven’t read it, the book primarily emphasizes the perils of the 9-5 grind, often referred to as the ‘rat race.’ It posits that to escape this cycle, it’s crucial to use your capital in ways that makes it work for you, creating additional wealth without extra effort. This is achievable through investment, business ownership, or both.
So, how have I applied the lessons learned from reading “Rich Dad Poor Dad”?
1. First, I took stock of my financial situation!
The book stresses that ‘wealth’ is essentially having assets (savings, investments, businesses) that generate an income greater than the expenditure produced by your liabilities (household expenses, car, everyday living costs). Therefore, my first step was to create a straightforward spreadsheet to track and categorize my money into assets and liabilities. I update this spreadsheet at the end of each month, helping me to track the progress of my financial scenario. This systematic approach has not only provided me an in-depth understanding of my spending habits but was also an eye-opener in identifying unnecessary expenses.
2. I’ve ventured into starting a business…sort of!
“Rich Dad Poor Dad” enthusiastically advocates the advantages of owning a business, implying the possibility of generating passive income. Setting up a successful business is indeed a challenge requiring substantial resources and a great deal of time. However, I decided to take the plunge. I decided to start a blog, laying a foundation by developing fundamental skills like website creation, online marketing, and identifying niche markets. As the blog begins to pick up pace, I plan to apply these skills to initiate or acquire other online businesses.
3. I’ve invested my money
Instead of just spending what we earn, “Rich Dad Poor Dad” emphasizes making our money work harder for us, reminiscent of the core message from “The Richest Man in Babylon,” proposing saving at least 10% of your income, investing it, and enabling it to multiply. To implement this, we’ve established an investment account for investing in the stock market. In contrast to many investment books, we steer clear of investing in individual company stocks, opting instead for market funds to mitigate risk and manage costs.
In conclusion, I have embarked on my journey towards becoming a ‘Rich Dad.’ With my handy spreadsheet to track our progress, and my blog serving as a springboard for understanding and establishing a business, it’s a concrete step towards action.