1. ROBERT KIYOSAKI’S DEFINITION
“Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth.” – Robert Kiyosaki
Robert Kiyosaki is an American businessman and author of the many books on Personal finance including the Bestseller and #1 Personal Finance Book of all time, “Rich Dad, Poor dad”.
He is an Educational Entrepreneur and founder of the Rich Dad Company, a private financial education company that provides personal finance and business education to people through books and videos. He is also the creator of the Cashflow® board and software games to educate adults and children business and financial concepts.
According to Wikipedia, he has authored more than 26 books, including the international self-published personal finance Rich Dad, Poor Dad series of books which has been translated into 51 languages, available in 109 countries and have combined sales of over 27 million copies sold worldwide.
I am concerned that too many people are focused too much on money and not on their greatest wealth, which is their education. If people are prepared to be flexible, keep an open mind and learn, they will grow richer and richer through the changes. If they think money will solve the problems, I am afraid those people will have a rough ride. – Robert Kiyosaki
To my mentor, Robert, wealth is neither a goal nor the means to a goal, rather, it is “a measure” for financial survivability or how much money your money is making, “a gauge” that lets you know how far or close you are to achieving financial freedom.
Wealth is defined as the measure of the cash flow from the asset column compared with the expense column.” While trying not to sound too technical, I will break this down in a moment.
He said that “wealth is a person’s ability to survive so many number of days forward… or if I stopped working today, how long could I survive”? In other words, if you were to lose your job or major source of income, how long will you be able to survive without borrowing?
To enable you understand better, perhaps I should just share with you an excerpt from his book, “Rich Dad, Poor Dad”.
“Unlike net worth-the difference between your assets and liabilities, which is often filled with a person’s expensive junk and opinions of what things are worth-this definition creates the possibility for developing a truly accurate measurement. I could now measure and really know where I was in terms of my goal to become financially independent.
“Although net worth often includes these non-cash-producing assets, like stuff you bought that now sits in your garage, wealth measures how much money your money is making and, therefore, your financial survivability.
“Wealth is the measure of the cash flow from the asset column compared with the expense column.
“Let’s use an example. Let’s say I have cash flow from my asset column of $1,000 a month. And I have monthly expenses of $2,000. What is my wealth?
“Let’s go back to Buckminster Fuller’s definition. Using his definition, how many days forward can I survive? And let’s assume a 30-day month. By that definition, I have enough cash flow for half a month.
“When I have achieved $2,000 a month cash flow from my assets, then I will be wealthy.
“So I am not yet rich, but I am wealthy. I now have income generated from assets each month that fully cover my monthly expenses. If I want to increase my expenses, I first must increase my cash flow from assets to maintain this level of wealth. Take notice that it is at this point that I no longer am dependent on my wages. I have focused on and been successful in building an asset column that has made me financially independent. If I quit my job today, I would be able to cover my monthly expenses with the cash flow from my assets.
The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left. – Robert Kiyosaki
“My next goal would be to have the excess cash flow from my assets reinvested into the asset column. The more money that goes into my asset column, the more my asset column grows. The more my assets grow, the more my cash flow grows. And as long as I keep my expenses less than the cash flow from these assets, I will grow richer, with more and more income from sources other than my physical labor.
“As this reinvestment process continues, I am well on my way to being rich. The actual definition of rich is in the eye of the beholder. You can never be too rich.”
From this excerpt, you can see that Robert’s definition creates the possibility for developing a truly accurate measurement of wealth through which you could determine and really know exactly where you are in terms of your goal to become financially independent.
What is your own definition of Wealth? Drop it in the comments section. Let’s discuss.