Rich Dad Poor Dad | Lesson 2: Why Teach Financial Literacy?

Rich Dad Poor Dad | Lesson 2: Why Teach Financial Literacy?

Chapter Summary

In Lesson 1, I learned how different the mentality was between Rich Dad and Poor Dad. I resonated with Poor Dad and his mindset as I have always been focused on getting a better job to pay for my life and all the expenses.

Since starting my life-changing journey 5 years ago, I have had huge mental shifts in how I see myself and how I see money.

Being excited to read Lesson 2 would be an understatement.

This next chapter delved into the importance of financial literacy.

Financial literacy is the knowledge of how money works and finding ways to make it work for you.

Three decades later, I read about how Rob and Mike’s strong foundation of money management set them up for life: Rob could retire before 50 years of age, while Mike inherited Rich Dad’s business and took it from strength to strength.

Assets VS Liabilities.

Furthermore, we learn the difference between assets and liabilities. An asset generates income, whereas a liability becomes an expense and eats away at your income.

Robert included examples of the Cashflow pattern of an income statement, where an asset generates income. He also showed the Cashflow pattern of an income statement for people who own liabilities rather than assets.

Robert gets asked similar questions all the time: How can I start? What can I do to make millions like you?

His answer: If you want to be rich, spend your life building your asset column. If you want to be middle class or poor, spend your life buying liabilities that you think are assets.

One main takeaway is the notion that money does not solve all problems. Learning this over the years, I would agree.

If you don’t have the skills to manage money well, even if you make more money, you will see the same problems. Just on a bigger scale.

Robert explained the general cycle of cashflow for young, newly-weds or graduates. A couple might move in together and instead of building assets, they use their income to pay for their rising expenses.

Income goes up, but so do their financial obligations.

There begins the cycle of the “rat race”. This drove home the importance of financial literacy and why having a strong foundation of money-management is crucial to success.

Personal Reflections

Main takeaway for me personally was Robert’s view on being a homeowner.

Rob explained 3 ways a homeowner is an employee:

  1. You work for the company. You’re adding the the success and riches of the business owner. Even if you work harder, your earning is capped.
  2. You work for the government. Your income is taxed heavily depending on your income threshold. Most of the working year and income go to tax before you even see the money.
  3. You work for the bank. Once you’ve paid tax, you generally need to pay for your mortgage and/or credit-card debt.

Within the last few years, property has been an interesting topic of conversation between my boyfriend and me.

This view of a “homeowner being an employee” is not the same logic I’ve been exposed to. I’ve heard about cars being a liability – that makes sense. I always thought owning property would be a good way to ‘build wealth’ as so many other people have done this before me.

As I read further on, Rob mentions that his goal isn’t to stop people from buying property, but he is saying to invest wisely and choose homes that will generate enough income for you.

Financial survivability.

Wealth isn’t about all the material things you can buy, but it is measured by how long you can survive for if you stopped working at your job today.

Can I survive a month or a year if I stopped working? My answer is a resounding no.

However, it is just the beginning of my learning and this makes me very excited to see how financial literacy could change the course of my life.

After reading this chapter, I felt quite frantic to acquire income-generating assets. I forget to remind myself that this takes time.

It may take a year or three – or even longer – to find myself at this level of wealth. Patience will be essential – something I am trying to work on a lot!

As long as I am doing one task each day to get closer to my goals, I will achieve them.

Action I have taken & future plans*.

At the moment, I have begun investing in Raiz (investment app) and am planning to purchase stock in social media.

I have officially gotten approved for a second job, so I am hoping this will begin my journey to building my asset column.

It’s all so exciting!

My dream is to have assets pay for all expenses each month so any income I do receive, will be pure profit to go towards this blog, to re-invest or transferred to a personal savings account.

*My goals may change and I’m okay with that. We can always prepare for the best and worst moments in life but until it happens, or unless we take action, we won’t know how the future will be.

On to the third Lesson!

Have you read Lesson 2 yet? What did you resonate with most? What did you find challenging?

Read Rich Dad Poor Dad now and change your mindset!

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Image by Valentina Conde.

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The Four Agreements: A Practical Guide to Personal Freedom

The Four Agreements: A Practical Guide to Personal Freedom

After reading online reviews of this book, I decided to join the bandwagon and buy it. This book is literally, as it states, practical. It’s a great read about how and why we may relate to the world as we do.

As you know, I am forever curious about human behaviour, emotion and interaction. I find it fascinating that we can change our habits, perspectives and mindset once we are exposed to a new way of living!

The Four Agreements are as follows:

  1. Be impeccable with your word.
  2. Don’t take anything personally.
  3. Don’t make assumptions.
  4. Always do your best.

I read this book in chronological order. Surprisingly, it helped to read each practical guide in this way. To digest the information and apply it accordingly takes time and patience.

If you’re anything like me, curious about human behaviour and finding ways to improve the way we treat others, I’d definitely recommend this book. Below, we can look at each Agreement and how I personally used them to improve my life. I’ve also included a link to the book so you can try these out for yourself!

1. Be impeccable with your word.

This was an interesting agreement. Ruiz defines this simply as not gossiping about others.

When we’re so engrossed in other people’s lives, it doesn’t give us much space to practice self-awareness or empathy for others. We can get caught in a cycle of rumours about people we probably don’t know too well. What’s the point? Not only is this harmful for others, it sets a negative tone in our own minds.

Say what you mean and mean what you say.

As we are emotional beings, there are many moments that we can lose our cool or spit out the wrong thing at the wrong time. That’s normal. Paying attention to the way we think and speak can help alleviate awkward foot-mouth situations.

2. Don’t take anything personally.

This agreement really hit home for me. Ruiz explains this rule simply: what other people say and do are a projection of their own reality.

When someone would correct my mistakes, it felt like a personal attack. The story re-played in my head: “I don’t know anything, of course I made a mistake. I can’t do anything right.” I struggled with self-confidence and self-doubt. I was told often that I didn’t know anything, so I believed it.

If I could remove the attachment to another’s words, I wouldn’t find myself in this toxic cycle of pain and belittling.

I fought so hard, for so long to begin changing my mindset. Changing a story we’ve told ourselves for years is difficult to say the least. It’s confronting. It will always be a work in progress. But progress is still progress! That’s a win!

3. Don’t make assumptions

Yet another agreement that resonated deeply for me. I was beginning to think that this book could address universal social/personal problems with unbelievable ease.

The way my brain has been wired, unfortunately jumps straight to conclusions.

Although expecting the worst may prepare us for certain challenges, it doesn’t help in daily life.

Assuming the worst about others or ourselves is sabotaging. It can affect how we trust others and maintain relationships.

Instead of making assumptions, ask. Having difficult conversations have been a struggle for me. I will say after years of working through my fears and building up my confidence, asking to clarify something has improved my life exponentially.

It can be difficult to know the line between clarifying a topic/opinion and starting a fire. So tread lightly while putting this agreement in practice. Our laundry doesn’t need to be aired to the general public.

Change first starts with you. So instead of replaying an assumption in your head, remind yourself that there is no evidence for it. If that person/group of people have not expressed their dislike toward you, don’t assume they do. Of course, we can tell through behaviour and social settings how someone may feel toward us. If it is hurtful or toxic, then leave.

4. Always do your best

This agreement was the easiest to digest for me. Growing up, I knew that my best was the only option.

I learned that nobody is perfect. We make mistakes and we may hurt others in the process. I learned that our best may not ever be good enough to some people. That’s okay. Take the lesson and move forward.

Of course, being hard on ourselves isn’t the way to go about accomplishing all our goals. There must be balance between work and play.

Doing your best can look different when comparing to another person, so just focus on living life according to your best ability. Our best effort changes from moment to moment. For example, we cannot expect the same quality of work or productiveness when we’re sick. Be mindful of yourself and others.

At the end of the day, if you know you tried your best, you’re saving yourself from your own and even others’ judgement. No one can take that away from you. Stand tall in your accomplishments!

Have you read this book yet? If so, which agreement did you resonate with most? What did you find challenging?

Click here to purchase the book! (Paid Link)

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5 Reasons To Take The Love Language Quiz

5 Reasons To Take The Love Language Quiz

Four years ago, I saw “The 5 Love Languages” by Dr. Gary Chapman on a list of recommended books to read. Around the same time, I watched a news segment where a celebrity couple spoke about how learning their Love Language changed their perspective about expressing love. I headed to the website and read a short run-down of how learning love languages can help you connect with your significant other. I was intrigued.

After 15 minutes, I had taken the quiz and received a list of what my Love Languages were. I then convinced my boyfriend to take the quiz too. There was a small part of me that wondered if these could actually help in a relationship…

My Love Language Result:

  1. Words of Affirmation
  2. Acts of Service
  3. Quality Time
  4. Receiving Gifts
  5. Physical Touch

My boyfriend’s Love Language Result:

  1. Physical Touch
  2. Words of Affirmation
  3. Receiving Gifts
  4. Quality Time
  5. Acts of Service

After mulling over each other’s results, I was pretty shocked. This explained why I felt elated whenever Luke would help me with errands and why I’d feel content just spending one-to-one time with him. This also explained why Luke would hug longer than I was used to and why he appreciated every gift I bought him.

Not only was it interesting, but it helped us understand each other on a deeper level. It facilitated conversations we would never have had if it wasn’t for the quiz!

Here are 5 reasons why this quiz could help you!

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Although we both felt loved and appreciated by each other, there was yet more to learn! Of course, just because a Love Language was on the bottom of the list, it didn’t mean we hated it – it was something that we could work on and improve.

I thought about others in my life and how they express love. We’re all so different! Depending on our personality, upbringing and close social interactions, we can express our love for each other in a myriad of ways.

Learning isn’t just for the classroom!

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I realised that Luke and I would occasionally show each other love in opposite ways: Luke would be quite close in proximity while I would shy away. I would want to spend time with him, while he would buy me gifts. Although we appreciated these gestures of love, we weren’t completely connected.

In other words, we were speaking different ‘love languages’.

We’d be told all the time that we balance each other out as a couple. Luke is a planner, while I am spontaneous. I am creativity-minded, while Luke is logical and good with numbers.

To an extent, opposites can attract but when you’re constantly on a different page to your partner, it can cause discord. We may feel frustrated, misunderstood, misheard and even lonely. Sound familiar?

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Luke and I discussed what we thought of our results and we agreed to do our best to express our affection in ways that would be meaningful. We also made it a priority to always communicate if we felt uncomfortable, hurt or misunderstood by the other person. We worked on empathising with the other and did our best to understand each other’s perspective.

In a small but sure way, this helped us to be aware of those in our inner and outer circle. We may come from different, extreme or similar walks in life, but we all show love in universal ways.

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I became more open to physical affection and challenged Luke to respect personal space. In the same way, Luke continued to help me with errands but also challenged me to become more independent.

This was a great exercise for us to trust each other more and lean in to the process of trial and error.

Challenge. Trust. Communicate.

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It may sound “wishy-washy”, but you only need to look at Harry Harlow’s study of infant monkeys. It shone a light on the importance of maternal contact and the need for comfort in order to survive. This can extend to connection between partners, friends and even co-workers. One of our basic needs is to be loved, according to Maslow.

It is important to know ourselves mentally, emotionally and physically. It doesn’t have to include every single layer of our lives, but it can be beneficial for us to know our strengths, weaknesses, and what goals drive us. This can inform how and why we relate to others in the world in the way that we do.

Once we are aware of what makes us ‘tick’, we can feel confident in:

  • Decision-making
  • Setting boundaries
  • Trying something new like traveling alone
  • Creating and maintaining healthy relationships

Knowing what makes us feel loved and cared for can set the foundation for deep and enriching relationships! The world would be a much better place if we had more informed love and care.

What are your Love Languages? Is there something you’d like to explore or improve in your relationships and how you relate to yourself?

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Click here to take the quiz!

The 5 Love Languages: The Secret to Love that Lasts

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