Rich dad Poor dad

What is the "Rat Race"?

The trap of working harder to pay for a more expensive lifestyle. Visual: A hamster running frantically on a wheel but never moving forward.

What are the two emotions that drive the Rat Race?

Fear (of no money) and Greed (desire for nice things). Visual: A donkey chasing a carrot on a stick held by a boss.

What is the definition of an Asset?

Something that puts money IN your pocket whether you work or not. Visual: A water pipe feeding a tank.

What is the definition of a Liability?

Something that takes money OUT of your pocket. Visual: A bucket with a hole in the bottom.

Why is your primary residence usually a Liability?

It takes money out of your pocket (Mortgage, Taxes, Insurance, Repairs). It eats cash; it doesn't feed you.

What is the "Poor Dad" mindset regarding money?

"I can't afford it." This shuts down the brain. Visual: A heavy steel door slamming shut.

What is the "Rich Dad" mindset regarding money?

"How can I afford it?" This forces the brain to work. Visual: Doing mental pushups to open a heavy door.

What is the "Golden Rule" of financial literacy?

Know the difference between an Asset and a Liability, and buy Assets.

What is the Cash Flow pattern of the Poor?

Income (Job) -> Expenses (Rent/Food). Visual: Water flowing straight down the drain.

What is the Cash Flow pattern of the Middle Class?

Income (Job) -> Liabilities (Car/House) -> Expenses. Visual: Water diverting into a leaky bucket before the drain.

What is the Cash Flow pattern of the Rich?

Assets (Stocks/Real Estate) -> Income. Visual: A perpetual motion machine feeding itself.

What does "Mind Your Own Business" mean?

Keep your day job, but focus entirely on building your Asset Column. Visual: Planting a tree that eventually provides shade without watering.

What is the difference between your Profession and your Business?

Profession is what you do for others (Employee). Business is what your money does for you (Investor).

What is a Corporation?

A legal file folder that protects wealth and lowers taxes. Visual: A medieval shield blocking tax arrows.

How do the Rich use corporations to pay fewer taxes?

Earn -> Spend (Expenses) -> Pay Taxes on what is left. Visual: Eating dinner and paying the bill with pre-tax dollars.

How do Employees pay taxes?

Earn -> Pay Taxes -> Spend what is left. Visual: The government taking a bite out of your apple before you can eat it.

What are the 4 pillars of Financial IQ?

Accounting, Investing, Understanding Markets, and The Law.

What does "The Rich Invent Money" mean?

They create opportunities rather than waiting for them. Visual: Assembling scattered puzzle pieces into a valuable picture.

What are the two types of investors?

1. Package Buyers (Retail). 2. Professional Investors (Creators who assemble the deal).

What is the most important skill to learn for wealth?

Sales and Marketing. If you can't sell, you can't eat.

What is the main trap of high-education professions?

Specialization. You become a cog in a machine. Visual: A hamster becoming a very efficient wheel-runner.

Why does Kiyosaki say "Work to Learn, Don't Work for Money"?

A job is a paid internship to acquire skills (Sales, Systems) for your own business.

What are the 5 major obstacles to wealth?

Fear, Cynicism, Laziness, Bad Habits, Arrogance.

How do you overcome "Cynicism"?

Stop listening to "Chicken Littles." Analysis opens your eyes; criticism blinds you.

What is the cure for "Laziness"?

A little bit of Greed. Ask "WIIFM?" (What's In It For Me?) to trigger motivation.

What is the principle of "Pay Yourself First"?

Allocate money to your Asset Column BEFORE paying bills. Visual: Feed the golden goose before you pay the farmer.

What should you do when you are short on cash?

Let the pressure of creditors force you to invent new income. Do not dip into savings. Visual: Use the pressure to turn coal into a diamond.

Why should you "Pay your brokers well"?

If they are pros, they make you money. Their services are free if the returns cover the cost.

What is the first step when you feel stuck?

Stop digging. Assess what isn't working and look for new ideas.

How do you find good real estate deals?

Jog, walk, or drive through neighborhoods. Deals don't come to your living room.

What is the "Texas Hold 'Em" lesson for investing?

You must be in the game to win. Make offers with escape clauses. Visual: You can't win the pot if you don't fold or bet.