There is an opportunity available, we need to train ourselves to see it. There are 10 steps mentioned by the author which he has used for creating wealth.
1) Find a reason greater than reality: the power of the spirit
There is always a reason for doing something which is a combination of what wanted to do and what we don’t want.
The author mentions that he does not want to get employed, want to get financially free which provides him with freedom of time. If our reasons do not strong enough then we do not get ready to work hard for doing a thing which we have decided to do. We should understand that without a strong reason or purpose, anything in life is hard. First, complete this step before proceeding further.
2) Make daily choices: the power of choice
We have a choice while we get a rupee. With this rupee, we can choose to become a rich, poor or a middle class through our spending habits. As we have discussed the assets and liabilities so that we need to work on increasing our assets column.
We do not have money then OK but how we spend our time, money which is our choice. We have a precious time with us and we can choose it for learning or just pass it out. As we have a single rupee and choice is us for how to use it. Similarly, we have every single minute and the choice is us how to spend it. When someone teaches us something then without getting arrogant, we need to understand why he is saying such, keep our mind open. We need to keep on learning and after that requires to make a mistake which helps us to understand it in detail. We can learn from the mistake of others. We have to invest in our greatest asset which is our mind. One or two of the successful investment does not make us a successful investor but we need to keep on learning and growing.
3) Choose friends carefully: the power of association
We should not have a friend with comparing to the financial statements, rather we have a friend by looking at their vow of becoming friends. We can learn from rich or middle-class friends also.
Many of the people have their point of view and we need to listen to them with an open mind. We can come to know something new also. We need to know what we are doing and true to ourselves. We do not have to go with the crowd for wealth building.
4) Master a formula and then learn a new one: the power of learning quickly
We have to learn many things and have to master particular things. We have to be disciplined to implement what we have learned. After master into the one learning, we need to move to another learning to master it. In the current fast-changing world, we need to learn fast otherwise our learning will be outdated.
5) Pay yourself first: the power of self-discipline
If we do not have self-control, then we cannot able to become rich. Without self-discipline, lottery winner also broke.
The three most important management skills necessary to start your own business are the management of 1. Cash flow 2. People 3. Personal time
These skills help us to grow and richer but require greater self-discipline. So that pay yourself first is self-discipline and important concept.
This means what Mr Buffett has mentioned
Income – Investment = Expenses
We should not get trapped of the liabilities and if we owe liabilities then we should not work to pay for it rather others need to work to pay for it.
Rich knows that savings and investments are for creating more money, not to pay bills.
This rule does not encourage self-sacrifice or financial abstinence. It doesn’t mean to pay yourself first and starve. Life was meant to be enjoyed.
06) Pay your brokers well: the power of good advice
Many a time, we try to save cost and focus on removing intermediaries but we forget that paying well to the professional help us. They provide us with a piece of useful information and services which can help us well.
We have to separate genuine and fake professional and then appoint them as our advisers.
As we have seen that we require to have the skill to manage people. The real skill is to manage and reward the people who are smarter than you in some technical area.
07) Be an Indian giver: the power of getting something for nothing
As we all are an Indian and we people want to know how fast they get their money back.
Wise investors must look at more than ROI. They look at the assets they get for free once they get their money back. That is financial intelligence.
08) Use assets to buy luxuries: the power of focus
It seems easy to use assets column to build a cash flow but difficult in practice. When we are on a diet, many noise and temptation affect our strict actions do not follow our plan. Similarly, when we have prepared a plan to follow our investment and build assets column then outside noise and temptation to fulfil the needs going stop us. In the current environment, very easy to get a loan for any need. And that creates a temptation among us. But we should focus on the creation of the assets column rather bring liabilities on the balance sheet.
Majority of the people cannot able to master their self-discipline and that stops them from becoming rich.
I do not say that do not buy a luxury or stay away from it. But rather to buy it through the liabilities, buy it from the cash flow generated from the asset’s column. And till the time, we do not build our assets column, we have to stop our temptation.
SIMPLE IS BETTER – ISSUE -1 – BASIC NEEDS V/S ESTEEM NEEDS
09) Choose heroes: the power of myth
When we have a hero, we try to become like them. And this act helps us with lots of learning. I have a hero in my investment career who are Neeraj Marathe Sir, Kuntal Shah Sir, Warren Buffett, Charlie Munger, Howard Marks, Benjamin Graham, and my friends Mr Amit Pandey, Mr Swapnil Modi. I learn from them; I look at them and try to develop skills into myself. These concepts teach me a lot. Having a hero inspire us to make a decision and act to achieve our desired goal.
10) Teach and you shall receive: the power of giving
When we want to receive something, first we need to give it to others. As a famous saying – Give respect, take respect. So, what we give, we receive it in a multifold.
So similarly, when we teach to those who want to learn then we get more learning in return. With the same mindset, I have started writing a blog so that I can distribute my learning to others and I got multifold learning over some time. I still keep distributing and keep getting back in return. And for that, I am grateful to all the readers.
Disclosure – Companies mentioned in the article are just for an example & educational purpose. It is not a buy/sell/ hold recommendation.
Read for more detail: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!