Rules of Money

Rules of Money

by Robert Kiyosaki

Rule of Money #1: Money is knowledge

Today, traditional assets do not make you rich or financially secure. You can lose money on businesses, real estate, stocks, bonds, commodities and even gold. Knowledge makes you rich and a lack of knowledge makes you poor. In this brave new world, it is your knowledge that is the new money.

Rule of Money #2: Learn how to use debt

After 1971, the US dollar switched from being an asset to being a liability-debt. Debt exploded because the banks could create more money by creating more debt. Our current subprime mess was caused by subprime borrowers and subprime banks. Obviously, both the poor and the rich need to learn to use debt, not abuse it.

Rule of Money #3: Learn to control cash flow

After the US dollar became debt, the name of the game was getting you and me into debt. When you are in debt, your cash flows from you to others. Today, many people are in financial trouble because they have too much cash flowing out of their pockets and very little money flowing into their pockets. If you are going to be financially secure, you need to learn to have more cash flowing into your pockets.

Rules of Money #4: Prepare for the bad times and you will only know good times

The last depression made some very rich and made some very poor. Some saw the depression as an opportunity and the others saw it as a crisis.

The baby boomers have only known good times. Many are not prepared for the bad times. By preparing for bad times, you will do well in good times.

Rule of Money #5: The need for speed

Money evolved from barter to digital money as the world's financial system picked up speed. Today, slow people are left behind. A well-positioned person can transact business 24/7. Rather than making money by the month, people can make money by the second.

Where are you?(please do not reply, this is fyi)

1. Are you being paid by the month, the hour, the minute or the second?

2. Are you earning money eight hours a day or 24/7?

3. If you stop working today, will money continue to come in?

4. Do you have multiple sources of income?

5. If you are an employee, are you working for an employer who is in business that is being left behind?

6. Are your friends and the family moving forward or being left behind financially?

Two friends were walking in the woods when a bear suddenly jumps out and quickly approaches them.

"Do you think we can outrun the bear?" one friend asks.

To which the other friend replies, "I don't have to outrun the bear. I only have to outrun you."