Rich Dad, Poor Dad for Teens
is a book written by Robert Kiyosaki for teenagers, who want to learn the secrets about money. Robert Kiyosaki was very successful in business life, which enabled him to retire at his forties. He found a mentor who taught him and his best friend Mike about money and investment at a young age. We will call this mentor Rich Dad and his real father, Poor Dad. His real dad had a good education and job, but he had a wrong way to look at money. I will tell you about things Robert learned.
There are three types of income. The first one is earned income. It is the type of income you get from a job and every week or two weeks you get your salary from it. Poor Dad had an earned income.
The second one is passive income. The money flows in, but your not physically at work. When you write a book every time your book is sold, you receive passive income. You can also receive passive income from businesses you have started, but which you do not run yourself at a day to day basis. Robert and Mike had a business at a young age too. They had a comic library for kids and they could collect comic books that were not sold at the supermarkets in the neighborhood. Mike's sister was hired to run the library and Robert and Mike received passive income. Rich people often earn a lot of passive income and while the money flows in, they can set up a new business or just enjoy their lives.
The third kind of income is portfolio income. When you invest in stocks or other assets like that you have portfolio income. It works the same as passive income, but from this you will receive the money only one time.
Rich Dad told the two children several times that it is very important to see the difference between assets and liabilities and to buy assets. If you persist on having the most expensive and most beautiful car in the street just to excel, it is a liability. However, if the car helps you earn money, it is an asset. Assets put money in your pocket at a regular basis. Most people see assets as anything you own and is worth money, but until you sold it, it is not an asset. This is because it does not bring in money until then and after that it is not an asset anymore. Money is not an asset too. It does not reproduce itself in secret, so it does not put extra money in your pocket. It would be great if it would, but it does not.
A liability means money out of your pocket. Things you would have considered to be an asset can be a liability instead. That car for instance cost you money and if you would sell it again (if you are not a car dealer), it would probably bring in less money than it cost. A car is worth money, but it is not necessarily an asset.
The conclusion is that assets put money in your pocket, liabilities get money out of your pocket and it buy assets who give you an income and make sure you have the right type of income.
Joy Ter Welle lives in the Netherlands, Europe. She is still in high school (Dutch gymnasium). Her hobbies are flying glider planes and reading books. Article Source: http://EzineArticles.com/?expert=Joy_Ter_Welle |
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