How can I get rich quick?
Robert Kiyosaki, the best-selling author of “Rich Dad, Poor Dad,” says he’s asked that a lot, and it’s the most disturbing question he gets.
“It’s the wrong question,” he explained in a post on the Daily Reckoning blog. “It tells me that they don’t have the foundation of financial intelligence required to use their money well if they do — somehow — become wealthy.”
It isn’t about the money you make, he wrote, it’s about the money you keep. From athletes to lottery winners, there are countless stories of big earnings going broke because they don’t know how to keep the money they make.
To avoid such pitfalls, Kiyosaki’s “rich dad” taught his son the number one rule — “the only rule” — for getting and staying rich:
‘You must learn the difference between an asset and a liability and buy assets.’
It may be simple, or even anticlimactic, but Kiyosaki says most people without a proper financial education just don’t get it. “An asset puts money in your pocket,” he wrote. “A liability takes money out of your pocket.”
The truly wealthy understand this, Kiyosaki said, while everybody else will likely struggle until and unless they wrap their brains around the concept.
He used this visual to capture the concept:
“Very simply, the rich invest their money in assets that put more money in their pockets, such as real estate, stocks, bonds, notes, and intellectual property,” he explained. “The middle class and poor invest their money in liabilities that take money out of their pockets such as mortgages, consumer loans and credit card debt.”
Kiyosaki also breaks it down in this short video: