Wednesday, November 30, 2016

Some millionaires live paycheck to paycheck

If you had $1 million in the bank, would you feel wealth? How about if you had $2 million? What about $5 million?

If you're not a millionaire, more than likely you said, "YES!"-probably at the $1 million mark, and most definitely at the $5 million mark. Most everyone thinks that having enough money will make them rich and solve their financial problems. But what those who are really rich know is that money doesn't make you rich at all.

Revisiting our $1 million to $5 million question, consider this finding from a survey by UBS: Only 28% of those worth $1 million to $5 million considered themselves as wealthy.

How could this be?

"Half of those worth $1 million to $5 million believed that one bad break, such as a market crash or a job loss, would have a major impact on their lifestyle."

In other words, these millionaires have a lot of money but not a lot of financial intelligence. How do I know? Because a financially intelligent person isn't ruined by a job loss or market problems. The rich do not worry about these things nearly as much as the poor do. Why? Because the rich know how to prepare for them.

The survey by UBS brings to light a reality of many millionaires. They are not really financially free. Rather they are high-paid employees that have a large amount of liabilities, bad debt, and bad spending habits. Some even live paycheck to paycheck.

This confirms a simple truth: no amount of money can change bad financial habits. In fact, it often magnifies them. The rise and fall of lottery winners and pro athletes are good examples of this.

In 2015 consumers spent $67,560,000,000 in store and another $2,932,000,000 online on Black Friday deals-an average of $403.35 per person. This year, even more shoppers are expected and even more money will be spent.

This will be just the beginning of a glut of holiday spending. With the average shopper going into debt by $986 on average. Couple that with the fact that the average household has a total personal debt of more than $90,000, and you can start to see that the average person has a real problem when it comes to money.

For most people, the problem is not that they don't have enough money. It's that they spend it far too quickly and on liabilities. As I've mentioned before, a liability is something that takes money out of your pocket. An asset is something that puts money in your pocket.

The fundamental difference between the truly rich and wealth, and the poor-even those with millions of dollars-is that the rich invest in cash-flowing assets that cover their liabilities, and the poor rely on a paycheck, spending it all often before they even have it in hand. These "poor" millionaires just happen to spend a lot more each month than the average person.

So, as you ponder the questions I asked at the beginning of this article, perhaps a better question would be, "Do you have the financial habits and intelligence to be wealthy when you have $1 million to $5 million? Or would your financial habits still keep you poor, even if you had more money?"

This holiday season, as we come into a new year, is a great time to reevaluate how you manage your money. If you need to make some adjustments, now is the time. That will be the best gift you get all season.

Wednesday, November 23, 2016

How Donald Trump can help everyone including the poor

During this election, I've been clear on my support for Trump, who is both a friend and a co-author. I've also been adamant about my belief that when it comes to your financial well-being it doesn't matter who was president.

How can I hold these two seemingly opposing positions? A little context is helpful.

The poor getting poorer

Unless you've been under a rock this week, and quite possibly you have just to get away from all the news coverage, it's clear that a surge of working-class, white, rural voters propelled Trump into the presidency. These are the people Trump referred to in his acceptance speech as "forgotten." And he's right. They have been forgotten.

I've detailed throughout this election how the middle class is being decimated. Just read, "The Reason You Feel Poorer" and "Why the Middle Class is Screwed".

If you want to dig really deep, read The Wall Street Journal's series, "The Great Unraveling".

The long and short of it is there are millions upon millions of Americans who really, truly don't feel that America is great…not for them or their families. Millions upon millions of Americans who are struggling mightily financially and who are losing ground each day.

The poor do not need more government

Now here's the problem. They think that a president and the government can solve their problems. Unfortunately, this is simply not true. Can the economic policies of Trump help some people marginally? We shall see. There is a lot he will have to contend with both at home and abroad. But it is very doubtful that he can fundamentally change the lives of these forgotten people through government alone. This will be the fundamental challenge of his presidency-to appease the very people who put so much hope in him…just as many people put their faith in Obama and have been let down.

So where will Trump make the greatest impact?

The greatest thing a Trump presidency can do for the American working class is to help them reorient their mindset from one that looks for others to solve their problems to one that looks within both individually and as communities to solve their problems.

In the process, some of Trump's policies can help make this easier.

- Giving more power to states empowers local politicians who can make real change on the ground.
- Cutting loopholes for large corporations to ship jobs overseas provides stability and an even playing ground for up-and-coming entrepreneurs
- Lowering tax rates for individuals and businesses will stimulate growth and lower risk
- And restructuring the healthcare system and stemming the alarmingly-high rising costs of health insurance will allow people to strike out on their own more easily

But none of these things will in and of themselves solve the problems plaguing the working class. Only they can do that for themselves. They'll have a helping hand, but it is ultimately in their hands-and yours.

What a Trump presidency will do is provide a model for all Americans of what a successful businessperson and entrepreneur looks like, how they lead, and how they inspire others to succeed around them. I stand by my words, that is what America needs.

Monday, November 21, 2016

I respect Hillary Clinton more after the elections

Congratulations to my friend, President-elect Donald Trump. He is a cat with nine lives. Many times I thought he was finished, yet he tapped into the core sentiment of the American people and won.

Also, my respect for Hillary Clinton has gone up. She is a tough competitor. My poor dad lost his election for Lt. Governor of the State of Hawaii and that defeat crushed him and our family.

I felt for Hillary as the returns came in and the map of the US went red for Republicans rather than Blue for her. I doubt if I could have taken such a massive personal vote of no confidence. She has my respect.

You may know that Donald Trump and I wrote two books together. I still cannot believe I am on the cover of two books with the President of the United States. That is beyond being lucky and my wildest dreams.

While I am happy he won, I am concerned for him. He is President at one of the most turbulent times in world history. I know he will bring changes, but I wonder what the changes will bring.

I know the future is bright, yet I am afraid in the short term…our nightmare has just begun. May God watch over all of us during this time of global change.

Monday, November 14, 2016

You can control your own financial destiny

Recession is looming

Most people intuitively feel what economists are predicting: a new recession is likely within the next four years. And we're already seeing serious ripples in the banking industry with Deutsche bank facing serious challenges . Could it be a canary in the coalmine? And all those new jobs you keep hearing about? Many of them are temporary or part-time jobs.

We don't trust our leaders or our institutions

The current approval rating of congress is 18 percent. For the most part, it's widely acknowledged that our politicians are in the pocket of the rich and powerful on Wall Street. After all, as MSN reports, "Big Banks, hedge funds, private equity shops and other securities and investment firms have made more than $273 million in donations to federal candidates during the 2015-16 election cycle, according to Americans for Financial Reform."

Politicians won't save you

Four years ago, on the eve of our last election, I wrote these words:
    This week's election is an opportunity for instant feedback. As you watch the results come in, take note of how you react. What does that reaction say about you and where you place your hope? If the news isn't good about how you react, what are you going to do about it?
    I've said it before, politicians cannot save you. Only you can.
    Rather than blame others for where you are in life, today I encourage you to look within yourself and see where you can make changes personally, which will lead to changes financially. In fact, I'd say that would be a much better way to spend election night than watching-and fretting-as the results come in.

Those are words I still stand by today. Each cycle, people think the politicians will finally solve their problems. They never are. Meanwhile, things continue to get worse for many in our country and the world when it comes to money. Fundamentally this is a personal finance problem in the truest sense of the words. You have to personally take care of your finances. This starts with financial education and putting your new knowledge to work.

I have seen and truly believe that when people take control of their own financial future and education, they can thrive no matter if the times are good and bad. In fact the hallmark of true financial intelligence is to succeed in the hard times. No matter what the next four years bring, you can control one thing: your mindset and your money. Start today.

Robert Kiyosaki is a Japanese American investor and author of the popular book 'Rich Dad Poor Dad' where he wrote of his two dads. His rich dad taught him to think differently, inspired and helped him get rich on his own.

Wednesday, November 9, 2016

How to budget your way to success

It's no secret that the average American isn't good with money. As "The Motley Fool" reports, almost 70 percent of Americans don't have even $1,000 in the bank. And "almost half of Americans claim that to cover a $400 emergency, they'd need to borrow the money or sell something quickly to round up the cash."

"The Motley Fool" goes on to share a U.S. Bank study that states only 41 percent of Americans budget their money. This, writer Maurie Backman thinks, is a big reason why money problems are so big in the US.

I agree that having a budget is an important first step to gaining ground in your personal finances. But having a budget alone won't fix the underlying problems that most Americans have when it comes to money.

First and foremost, there is a great need for financial intelligence. The problem with most budgets is that they cater to the old rules of money that simply don't work anymore, like save money, get out of debt, and live below your means.

Ultimately, budgeting, as it's usually taught, is a vehicle for cutting expenses, not making money. I wrote a while back on how budgeting like a business can turn a budget into a vehicle for growing your assets, not saving your expenses.

Ultimately, your budget is a plan. As such, it can be a good plan or a bad plan. A bad plan is one that requires you to cut expenses and save money. You don't enjoy the things you're used to enjoying and you make little to no money on the money you save. Ultimately, it won't get you where you need to be financially.

A good plan, however, is one that spurs action for the better. And a good budget is one that will inspire you to make more money so you can do what you love and grow your money exponentially.

With that in mind, here are three tips on how your budget is a helpful a tool to grow your cash flow the right way, through investments.

1. A budget shows you your monthly outflow
A common exercise we do when working with people who want to be financially free is to have them write down all their monthly expenses in one column on a piece of paper and then write down their salary on the other. Then, we have them cover the salary column with their hand.

"What," we ask, "would you do if you didn't have your salary?" The result is often a momentary flutter of panic.

This is helpful because it is a quick splash of reality-that is, most people have a lot of expenses and are reliant on a salary to pay for them.

But how great would it be if you had passive income coming in every month that covered your living expenses? What would you do then? Would you retire? That's what Kim and I did when we reached that point in the 1990's.

But to get to that point, we had to know how much we were spending each month. Why? So we knew how much we'd need to make in cash flow to be financially free.

2. A budget helps you understand what kind of cash flow you need
Once we understood our monthly expenses, we then were able to make a plan to acquire the assets we needed in order to cover those expenses. And here's where things got really interesting. Instead of cutting expenses, we created a new one-an investing expense. We called this paying ourselves first, the financial golden rule.

3. A budget inspires action to get your cash flow
By making it an expense to invest each month, we made it a priority to grow our assets. We worked our butts off to make the extra cash we needed. We started teaching classes on the weekends. We got creative in how we paid our creditors. We dreamed up and launched new products. We found amazing real estate deals. All of this was made possible by shifting our mindset when it came to budgeting away from saving money to making money. Our budget gave us the road-map to financial freedom, and we were inspired to make it happen.

So, if you're ready to begin your journey towards a better financial future, then yes it's time to start with budgeting. But don't do it the old school way; do it the rich dad way. Only then will you be really successful.

Monday, November 7, 2016

How you can use free money to own real estate

There is such a thing as free money. We've talked a lot about Other People's Money (OPM) in Rich Dad circles. The concept of OPM is simple, but the execution of the concept takes a high level of financial intelligence. With OPM, you use other people's money to invest in cash-flowing assets that cover both the expenses required to maintain the asset and the expense of the investor capital (OPM). In the process, you significantly increase your return on investment.

A common example is using a bank to fund a real estate investment. You put up 20 percent of the capital and the bank puts up the other 80 percent. In return you get 100 percent ownership for 20 percent of your own money and 80 percent of OPM. If you find the right investment, the income covers the OPM and provides you cash flow each month. As such, your return is much higher on only 20 percent of your money than if you had to put up all the money.

Friday, November 4, 2016

Network marketing and team work

Network marketing represents amazing time leverage. Successful network marketers understand that a key to success is using other people’s time as a way to leverage yours.

Small and Medium-sized enterprises benefit by investing in their teams and by helping everyone to achieve success. Who’s on your team and how strong are they? [An entrepreneur] needs a team with specialised talents, skills and experience to build a thriving organisation.

Robert Kiyosaki is a Japanese American investor and author of the popular book 'Rich Dad Poor Dad' where he wrote of his two dads. His rich dad taught him to think differently, inspired and helped him get rich on his own.

Thursday, November 3, 2016

Monopoly game and business success

Business success is a multifaceted scenario. Learn to use debt. Smart entrepreneurs know how to use debt to get rich.

Many factors come into play: market conditions, timing, supply and demand, economic environment, access to money, risk tolerance… the list goes on and on. All these lessons play out in Monopoly. The key to great wealth is three green houses, one red hotel.

Robert Kiyosaki is a Japanese American investor and author of the popular book 'Rich Dad Poor Dad' where he wrote of his two dads. His rich dad taught him to think differently, inspired and helped him get rich on his own.