Mindset: Best Lessons from Rich Dad, Poor Dad

Episode Summary

In Julia’s final episode, she is sharing what she learned from the book Rich Dad, Poor Dad by Robert Kiyosaki. She breaks down five amazing lessons from the book, gives examples of how she is implementing these lessons, and talks about three small changes you can make to get started on your path to wealth.

Episode Notes

In Julia’s final episode, she is sharing what she learned from the book Rich Dad, Poor Dad by Robert Kiyosaki. She breaks down five amazing lessons from the book, gives examples of how she is implementing these lessons, and talks about three small changes you can make to get started on your path to wealth.

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Transcript

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  Hey, this is Julia and this is my last episode taking over the Coffee and Coin podcast. And to close it out, I actually think this episode is gonna be really fun. Rich Dad Poor Dad is a financial book that totally changed my life. So I thought today, we could break down some of the key lessons I took away from this book.

  This is Allegra Moet Brantley, and you're listening to the coffee and coin podcast where women talk well, I'm the founder and CEO of Factora of company on a mission to leave 1 million women to 1 million in net worth. Because when women have more money, we'll have more power to be the change we want to see in the world. If you're ready to hear real women share their real numbers and investment journeys and have a sneaky feeling you should be doing a little more with your money, you are in the right place. Just sit back, relax and turn me up.

  All opinions expressed by Team Factora and podcast guests are solely their own and do not necessarily reflect the opinions of Factora Incorporated. This podcast is for informational purposes only and should not be used as the basis for investment decisions. Team Factora. And podcast guests may maintain positions in the securities or investments discussed in this podcast.

  So the basic premise of Rich Dad Poor Dad is that the author Robert Kiyosaki, he had a dad, his biological dad, who was all about studying hard and getting good grades and then finding a job. But his biological dad wasn't doing very well financially. And his rich dad was the dad of the author's best friend. He was an eighth grade dropout and was also a millionaire. So the whole book is kind of about the lessons he learned from both of these dads and talks a lot about the lessons he learned from his quote, Rich Dad. So the first lesson that really blew me away, the beginning of my personal finance journey was to buy assets and not things. An asset is something that puts money in your pocket. And a liability is something that takes money out of your pocket. And the only way to become financially independent is to own enough income generating assets, so that they can pay for all of your expenses. I always think it's kind of funny when people say, Oh, I'm investing in a new coat this season. Or, yeah, it's time to finally invest in that Berkey Water Filter I've been thinking about, unless you're renting out your coat or your water filter out to your friends, those things are liabilities, because they're taking money out of your pocket, not assets. I'm actually a quick side note reading another book called The lifestyle investor by Justin Donald. And he says that before every big expense or his family like a renovation or a vacation, instead of paying for those things outright, he actually buys an asset first, that can cash flow and cover those expenses, which I think is so inspiring. So once you buy income generating assets, then you take that income and invest it into new assets and more assets. So then your wealth begins to utilize the magic of compound interest, which we talked about a couple episodes ago. So some examples of income generating assets are businesses that don't require your super active involvement, stocks, bonds, mutual funds, income generating real estate, royalties, and something that I think is a really nice sort of bow to leave on this lesson is, for most people, their profession is their income. And for rich people, their assets are their income. Mind blown. The second lesson is to pay yourself first, which is a lesson that Factora talks about a lot in the wealth circle. The true Factora of wealth building isn't about how much money you're making, but it's actually about how much you're able to keep. And Kiyosaki argues that the way to keep more money is to make paying yourself the priority even over paying your bills. So essentially, you treat your investment money like a mandatory bill and you pay that bill before any other expenses that you might be on the hook for thinking about this, in terms of paying myself first was a really powerful exercise for me because it forced me to reshift my priorities. Most of us pay bills, and then we pay for our lifestyle and then we save or invest what's left over. So that kind of tells you what you're prioritizing the money that we owe other people and then the money we spend, and then our assets. But what Kiyosaki says is to prioritize our assets first, which automatically shifts your thinking to optimize your whole life and spending for buying more assets. And that's what he means by paying yourself first. So before Any other lifestyle expense or Bill, you force yourself to put aside money for your investments, which was really powerful and totally changed the game for me. The third lesson is that financial education in itself is a great asset to have. I love this idea that your wealth is proportional to your ability to take risks. The narrative that we're generally told, at least the one that I was told, is to study hard, find a secure job, and work hard forever. But the rich play it differently, they develop their financial IQ, so they can take smart and calculated risks. And so that they can build their own wealth rather than worrying about getting a raise, which is usually just a small incremental percentage of whatever you're earning. This was the main reason I joined the wealth circle, so that I could build my knowledge and make smart decisions. And that one decision has paid me dividends over the past four years. Another point on this topic that Kiyosaki makes that I really like is the idea of going wide and shallow with what you learn. So a quote from the book, my poor dad said, you need to know a lot about one specialty, my rich dad said, You need to learn a little about a lot of things. I really liked this lesson, because again, it goes against what I was personally taught, which is find a niche and go really, really deep. But when you know a little about a lot of really useful skills, like accounting, investing, marketing, leadership, writing, public speaking communication, you can be pretty dangerous in a lot of pursuits. And he actually talks about how he became a best selling author, not because he's amazing at writing, but because he knew a little bit about writing, and a lot about personal finance, and a little bit about marketing. And he was able to put those skills together in order to create this best selling book, which by the way, is another example of an income generating asset is an amazing book that people just buy without him really having to do anything.

  The next lesson, again, I love all the lessons, but I really like this one a lot, is don't work to earn, work to learn. It's really nice that arrives to so the the foundation behind this lesson is he argues that most people sort of run in this loop between fear and greed or desire, which is the word that I personally prefer. The fear of not having money makes people work really hard. And then once they get a paycheck, it fuels their desire for the things they want to buy. And they spend the money that they earn thinking that it can buy joy, but that joy is short lived. And then they're kind of back to square one, regardless of how much they continue to earn. This is exactly how lifestyle creep happens, you are scared that you're going to run out of money. So you work really hard, you get a raise, and then you buy the things that you think are gonna bring you joy. And then you don't have any money because you spent it all. So this kind of Fear and Desire loop results in this career loop where people are optimizing for raises, and never truly exploring their dreams. And another quote from the book, this is a quote from Rich Dad, the sooner you stop thinking you need a paycheck, the easier your adult life will be. keep learning keep using your brain keep working for free, in your mind will make you more money far beyond what I could afford to pay you, you will see opportunities right under your nose that other people choose not to see. They're blind to these opportunities because they look anxiously for money and security. Which also goes back to this idea that is taught in the wealth circle, which is we all think that our jobs are secure, but they're not secure. Some of the most coveted jobs right now are tech jobs. And there have been layoffs, so many laughs across so many tech companies that I've seen on LinkedIn. And a job might seem like security, but it's not security. And actually, one of the riskiest things that you could do is to only depend on one source of income, AKA a job to create wealth for you. So that lesson actually leads really nicely into the next lesson, which is that spotting opportunity is a skill that can be acquired. In the book Rich Dad is trying to get the author Robert and his friend Mike who are middle school age at the time or younger. He's trying to get them to see the value of working for free. So he's, he's hiring them to work at his store. And he's not planning on paying them any money. But he's, he wants them to come to that conclusion on their own. So the boys agreed to work in his store and not get paid. And so the story goes that these two boys noticed that the woman running the store was getting rid of old comic books. And she got half the cover off of each book and throw the rest away because she said she had to give the covers back to the distributor for credit. So the boys asked if they could have the old comic books. And the distributor said they could keep them if they didn't resell them. So they collected all these old comic books and opened up a comic library in a room of one of the boys basements, they charged the neighborhood gets 10 cents to come and read as many comments as they wanted for an afternoon. Since the comics usually cost 10 cents each, this was a bargain. And they hired Mike sister to work at the library for $1 a week. And they made $9.50 Every week, which was a lot more in the 1950s. And the argument is that these boys would not have been able to spot that opportunity had they been focusing on their paycheck as opposed to working for free, opening up their minds and treating the job as a learning experience. The last chapter of the book is all about how to take these lessons and implement them and put them into place, which I like because a lot of these lessons can be very abstract. But there are a lot of small changes that you can make in order to get started on the path to true wealth. And one of the first that he recommends is to find your true why. Why do you want to be wealthy, you need to find something that resonates so deeply that it'll keep you going when things get tough. And he says this can be a combination of both wants and don't wants. So an example is you want you want to have the freedom to really spend time with your kids. And you don't want to be working 60 hour workweeks. The second key thing to get started is to make good daily choices. Align your spending with your values, keep learning about personal finance, read books, or listen to podcasts from a variety of smart and successful people and invest in your greatest asset, which is your mind which two can benefit from compounding interest. The more you learn, the more you can practice, the more you can continue to learn and practice. The third is to choose your friends wisely. Back Torah really helped me with this. He says that you need to surround yourself with wealthy people who are doing what you want to be doing. They say you're the average of the five people that you spend the most time with. And I always would kind of look at that quote and laugh a little bit. But I do believe it's true. Ever since joining the wall circle, I'm constantly surrounded by women that are doing really cool things with their money. And I can ask them for advice. And I'm also just constantly inspired. And the fourth key thing to get started is to master a formula and then learn a new one. I think this is a really powerful and interesting lesson. So that existing default formula for me was to get good grades, go to college, get a job, work forever, like I said, But Kiyosaki has run through a bunch of different formulas to acquire a lot of different assets. He earned millions by buying foreclosures. Cody Sanchez, who is an investor that Factora women love, her formula is all about buying boring businesses. So what he's saying is master a formula, and then move on to the next one to keep building wealth in a variety of different asset classes. Some of the ways that I implemented his lessons into my own personal life are the following. I set up an automated transfer after every paycheck that I received to go into my first down payment fund. And this was really exciting for me to see this build up automatically without any attention from me. And to me, that was myself paying myself first. And I knew that that automatic deduction was going to come out of my paycheck no matter what I was on the hook for that month in terms of my mortgage or anything else. Another way that I thought about what he said about treating about treating my job as a way to earn is I actually went to go work for Factora. And I took a 50% Pay decrease. So I wasn't working for free. But I certainly wasn't earning as much as I was before. But I learned so much, working at Factora taking a big risk by working at an extremely small startup. And I've learned incredibly valuable lessons in terms of all the skills that he was talking about marketing, investing communications, that I can bring with me for the rest of my career. I also am living the piece of advice about who you surround yourself with. I think even just switching my mindset into looking for people that I can talk to about money has totally changed the game. Number one, it's opened my circle of people that I do feel comfortable talking about with money in terms of my existing friends. So now there are plenty of friends that I had even before Factora that I can talk to you about money. And now when I meet new people, I'm always curious about what they're doing, how they're building wealth. And recently actually one of my best friends her husband was in town. And we ended up getting on the topic of his own personal wealth building journey, and his plan to actually buy a bunch of franchises and sell them to a private equity firm, which totally blew my mind because I'd never heard of anything like that. Keeping this filter in mind and has made me learn so much more from the people around me and has kept me really dedicated on my wealth building journey. I also worked really hard to define my personal why I know that I don't want to work for somebody else. And that y really drives me to create my own wealth, create my own business, my own work on my own terms, so that I never have to report to somebody else ever again. And in the book, he talks about an example of just people sometimes aren't suited for working for other people. I don't think that it's not that I'm particularly suited for it, I love working with people. But having the ability to make my own decisions and dictate my own freedom, my own days off my own creative decisions, really, really drives me to create true lasting wealth. Another reason that drives my why for building personal wealth, is being able to choose how I celebrate or spend time around life milestones. I've had a couple of friends give birth, and have only been granted, you know, four weeks, six weeks of paid time off, and their partners haven't been granted any paternity leave. I think that giving birth is such an amazing and special life milestone, that should be treated with a lot of respect and care. And women should be able to choose how they approach that. And I totally understand that, you know, a W two job can be security in those situations. But that, to me is something that I personally want to be able to choose how I celebrate those really big life moments. And even if it's not giving birth, you know, being able to fly across the country for my dad's 65th birthday. Not worrying about how much time I can take off for a honeymoon, if I have one. Those kinds of decisions and having the freedom to really dictate how those go for me, is a big driving factor for me. The last thing I'll say about the way that I've implemented some of his teachings into my life is thinking about making good daily choices. I also read atomic habits, which was also a life changing book. And in it, he kind of talks about compounding interest just in terms of daily habits. So making time to read just 10 pages a day means you're probably going to get through a lot more books than if you just read five chapters once a day, every other week or something like that. So I actually have a habit tracker on my phone, and I get to swipe every habit that I do on a daily basis. And one of them is to read. And right now I'm reading the lifestyle investor by Justin Donald. And a lot of the things that he's talking about in that book, are really blowing my mind and are so inspiring to me. So yes, I did the wealth circle. I did it four years ago, I'm still using the financial concepts that I learned. But I'm also choosing on a daily basis to continue to invest in my financial education because, like he said, that is one of the best assets you can have. And compound interest applies there too. I hope this was helpful. And I hope that you enjoyed these podcasts. I am so excited for you guys to apply these lessons into your own life. And I'm sure I'll see you in another episode in the near future. Talk to you soon.

  If you enjoyed this episode, come join us in a wealth circle. It's our live online 12 week course and community where we teach you how to create a personalized financial plan alongside hundreds of other women building wealth. It will change your life and your money for good. You can apply at factorawealth.com forward slash wealth circle. That's factorawealth.com forward slash wealth circle. See you in the next episode.