How to Create Money

Robert Kiyosaki says that “money isn’t real, it is just an idea.” I do believe in what Kiyosaki claims. Money is just an idea. If you have an idea, you can create money! It’s as simple as that! Therefore, I definitely agree that knowledge is power!
Ideas can be turn into fortunes and that is why we have intellectual property rights to protect established brands, trademarks and ideas. Money comes from different ideas and concepts.
We are now living in the information age and it allows some individuals to get ridiculously rich from nothing more than ideas and agreements. Just ask people who trade stocks for a living. Ask people who are into full time blogging and search engine optimization. Personally, I have a friend who made more than $11,000 in one day through the internet! Can you imagine that?!
Today, it’s not at all out of the ordinary for millions to be made instantaneously out of nothing. By nothing, I mean no money was exchanged. You will be surprised about young people creating more money than you. . Deals are clinched with a hand signal in a trading pit, a blip on a trader’s screen, a call to a broker to buy and a second call a few moments later to sell. Money doesn’t change hands in these transactions—agreements do.
Kiyosaki told that there are three ways to create money:

Finding an opportunity that everyone else has missed. A lot of articles that I’ve read points out to the current recession as the right time for young investors who have a huge amount of cash to invest in assets such as stocks and real estate properties. Why? It’s because the value of these assets are considered distressed. If you are a young investor with a good amount of money to invest, then you have a lot of time before retirement and therefore you can ride the volatility of these investments.
The same thing as what happened to the friend of Kiyosaki. His friend bought a rundown house that nobody else wanted. He tore the house down, subdivided the property into five lots, and within two months sold the whole package to a builder for $75,000—three times what he’d paid for it.
Learning how to raise money. The average person only goes to the bank to deposit their hard earned money in savings accounts and time deposits. That’s what all they know to grow their money. But there are many ways to raise money that don’t require a bank. Let’s say you want to buy a piece of investment real estate but you don’t have the cash for a down payment. You might be able to take out an equity loan on your home, or obtain seller financing, or sell your idea to an “angel,” or form a group of investors to purchase the property. If there’s a will and a promising financial deal, there’s a way.
Working with knowledgeable people to help you reach your financial goals. This goes back to the advice about building a team. You don’t want to jump at every money-making opportunity, just the smart ones. Having a team of skilled advisors can help you quickly identify the good deals.

Why Savers Are Losers?

One of the most liberal idea of famous Rich Dad Poor Dad author Robert Kiyosaki is that SAVERS are LOSERS! Yes, you’ve heard it right, Kiyosaki said that savers are losers! You may think that this is in contrast with the notion of personal finance as it talks about saving money but no it isn’t.

Just like in Sports like the upcoming 2010 Winter Olympics, an athlete must first prepare to achieve his end goal. He then sees the end of the line before he even starts. In preparing for the big event, he must exercise and condition his body, prepare for some tactics and improve his skills to perform well. Tactics are “techniques” to reach the goal earlier than the rest and thus, it is imperative to study these techniques to win the game.
In achieving financial freedom, it’s not always sufficient to just save for money. That’s why Kiyosaki said Savers are Losers. One must know how to invest their money to fight inflation. The very goal of investing is to have an additional income because the value of our money decreases as an effect of inflation. The value of your money today is not the same as the value of your money one month ago because of inflation.
Savers are losers because they only know how to save money in the bank through bank deposits which give them very little interest income not even enough to outgrow inflation. One must build several assets that are income producing to become passive income earner. Therefore, savings should be used to invest in assets. By assets, I mean those investment vehicles that puts in money into your pocket.
Savers are losers because they deprive themselves of the comforts that money can buy. It may seem conflicting but what Kiyosaki really mean is that we should know how to properly invest our money to have passive income and use this passive buy our wants, preventing ourselves from deprivation.

What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not!

Robert T. Kiyosaki wrote a book that tells us the things that the rich dad teaches his kids about money and that the poor dad doesn’t. This book is just one of the “Rich Dad, Poor Dad” collection of books written by Mr. Kiyosaki.

About the Book

I haven’t yet bought and read the content of the book. But I am planning to buy it. I first heard about the “Rich Dad, Poor Dad” books of Mr. Kiyosaki through the blog of Tyrone.
Here’s a review of a satisfied buyer of this book through Amazon.

Rich Dad Poor Dad is a life changing book that is why this incredible book has been a best seller now for over 8 years and is still in the top 20 of all books being sold right now.
Kiyosaki will tell you some things you don’t want to hear. He is controversial. So is Donald Trump. Rich people are always controversial, but who are the people that make Kiyosaki and others controversial? Certaintly it’s not the wealthy. The wealthy agree with Kiysosaki becuase that is how they became rich.
Kiyosaki tells us that a house is not an asset. I have to admit that I had a problem with that one myself. I a lways felt that real estate was the one safe have out there and like most, was taught by parents and other early mentors that a house is an asset. Then I got a house and found out that Kiyosaki is absolutely right and so were my mentors. A house is not an asset for the buyers, people like you and me but it certaintly is an asset for the banks, real estate agents, insurance people, the local government who wack you with high city taxes and so on.
The biggest problem is that many people think that a big house is a symbol of wealth. It is a symbol of wealth to the bank. Most people typically take out 30 year mortgages. How much do you think banks make on that while you are paying for the equalivent of three house payments over time?
Conventional wisdom tells us to get a great education and you’ll get a great job. Well it started in the Clinton era and has been escalating ever since – downsizing. People who spent tons of $$$ on a college education, invested years in their jobs being servants to their employers and for what, to be downsized?
And then there is the typical way that people invest. Conventional wisdom tries to tell us that we can’t do it on our own. We need brokers (so named because they make us broker with their advice) or other financial advice. Those who do try it on their own usually get bad advice and go to deep, deep discount brokers looking for the lowest commissions or on the other end pay fees for loaded mutual funds which are supposed to be better managed (HINT: They are not!)
Kiyosaki offers a newer, better, more effective way. Unfortunately like some others who have come before him, Kiyosaki has stepped on some toes, the very people who are using your ignorance for their bliss.
Rich Dad Poor Dad is a life changing book. It is highly recommend for anyone who really wants to survive the new millennium.
I highly recommend Rich Dad Poor Dad, Rich Dad’s Guide to Investing and Rich Dad’s Success Stories (proves that Kiyosaki’s naysayers are wrong as usual)
Good luck!

My wife told me that above review is not really a review but a promotional piece. So, I will just share another review of a satisfied buyer of the book:

I bought this book earlier tonite and read it in a few hours. It is an easy read. Fun. Enjoyable and educational. It made me realize that I threw away many years of commonality, of doing what felt good. What Uncle George and Aunt Martha and cousin Billy and brother Jim told me was the right thing to do, but really wasn’t.
I am now setting up a plan of action to go into real estate, the Rich Dad way. Yeah, I know everybody thinks that the real estate game is over and that is because like me they are getting the wrong information from the wrong people. How in the world can you expect people making $50,000-$75,000 year, chained to their employers coat tails to tell you how to become financially independent and earn over $100,000 a year? It doesn’t make sense.
This book was very enlightening for me. I highly recommend it. Regarding my real estate plans, I’ll let you know how I make out!

Why should you buy this book?

You see, I am one of those fools who are dreaming of becoming rich. And I think, I am already on the right track heading to my richness. But I know that there are still things that I should checked with in me to ensure that I will reach my aim .
In other words, I need to know the secrets of becoming rich. And I think, this book can help me.
But if you know other books about getting rich without doing any scams, kindly share them to us by posting comments at our comment section.

What is Financial Intelligence?

Do you ever wonder what’s the cause of the break up of marriages? It’s usually the subject of money. What if the breadwinner gets downsized? What if he lost his job?

Schools usually teach Scholastic Aptitude Test (SAT). You want to know how good you are in reading, writing and arithmetic.  These are very important skills. And depending on how well did you perform in SAT, the  next thing schools focus on is the Professional Aptitude Tests (PAT) to know whether you’ll become a doctor, a lawyer, a fireman, or whatever you want to be.

But what schools fail to train people on is the thing called Financial Intelligence. Rarely did the subject of money was discussed in schools. So what is Financial Intelligence?

If I gave a sum of money, say $10,000 to a group of people, then 80% of them might have nothing left at the end of the year. 60% of them would have earned $10,100 at the end of the year since they could have deposited it in banks to earn interest income. And 4% would have anywhere from $20,000 to $1,000,000 or more at the end of the year because they are financially intelligent.

There are two forms that one should learn in his desire to increase his financial intelligence. The income statement which involves two things - the income and expenses and the balance sheet which involves assets and liabilities. These are the very basic information that one should know to increase his financial intelligence.

What’s the difference between an asset and a liability? Robert Kiyosaki always tell that assets are something that puts money in a person’s pocket while liabilities are something thing that puts money out of a person’s pocket. There is always the issue of the house being an asset or a liability being debated a lot of times.

Kiyosaki further said that “If I stopped working, the ASSETS will FEED ME while LIABILITIES will EAT ME.”

Another important lesson in increasing one’s financial intelligence is the subject called CASHFLOW. There is a huge difference between the cashflow of a poor person, middle class person and rich person.
For the poor people, Kiyosaki said that all they have is a job. Then income comes in from the job. It goes down to expenses to pay their rent, clothing, food and other expenses and goes out of their pockets.
For the classic middle class person, Kiyosaki said that it’s a little bit more different. Income also comes from their jobs. Then it will now go to liabilities as they may probably have house mortgage payments, car mortgage payments, etc. and then it will go to expenses and then finally out of their pockets.
For the rich person, Kiyosaki said that income comes from the their assets. While the poor and middle class persons are focusing on income, the rich person is focusing on the assets. And the assets are the great secret of the rich.

THE CHOICE IS YOURS
Everytime you have income from your job, then the choice is yours. It will now depend to you what do you want to be. Is it the poor, the middle class or the rich person mentioned above? If every income goes outright to expenses, then you chose to be poor person. If every income goes out to liabilities to buy a bigger house, a new car, or you always take a vacation on your credit card, then what you chose is a middle class person. And if every income, you chose it to go to the assets, then you make that decision to be a rich person.

MIND YOUR BUSINESS!
Kiyosaki said that if we want to be financially intelligent, we should mind our own businesses! How is that? The poor people being a professional employee are not minding their own business because they mind the business of the shareholders of the company, and not only that because they also mind the business of the government when it comes to tax payments. The middle class person being a professional employee, aside from minding the business like the poor people did, also minds the business of banks as they have house and car mortgage payments. For the rich people, they mind their own business. They trade their own stocks, buy their own properties and primarily make their decisions to invest.

Kiyosaki said that most people are in the poor and middle class because they mind other person’s business. They believe in hardwork without being financially literate. They don’t know that if their income was raised because of hard work, so their taxes too. And they buy more liabilities that are camouflaged as assets because they mind what other people tells them. So their income increased because of hard work, their expenses increased too from their tax expenses and their liabilities increased too. Suddenly, they lost their jobs! Boom! What happens next? They lose their income. But will the expenses and liabilities lose too? Definitely NOT! And this causes financial insecurity or financial struggle on their end.

The answer as Kiyosaki said lies on focusing on your own business and instead have your own money work for you so that even if you lost your job, then there will be assets that will continue to feed you. We could not ascertain the lives of companies. They may be there for 5, 10 or even 20 years but few can survive 50 years or more especially nowadays that a lot of companies declare bankruptcies as the global recession continues.

THE RICH PERSON ON TAXES:
Kiyosaki said that there is a huge difference between how the income of both the poor and middle class persons were taxed as against the income of the rich person. The poor people earns income from their jobs and gets taxed right away before they can spend what remained. The rich people earns income from their jobs and assets, they spend some of it by buying more assets and then they get taxed as they cash in these assets.
Finally, Kiyosaki devised a game simulating the real world of business and investing called the cashflow game which I already played several times. One of the foundations of learning is repetition. The more you play the cashflow game, the higher the possiblity of increasing your financial intelligence and the richer you would become.

So are you financially intelligent?

Secrets of the Rich: Active Income vs. Passive Income

I’ve been spending my time lately really educating myself on financial literacy. I admit my job has been so boring and not challenging so instead of killing myself to boredom, I’ve been using my additional time efficiently and effectively by adding additional knowledge on my financial education.

In addition to my article, “what’s makes rich gets richer?” I’ve recently watched a video of Robert G. Allen, the author of the best selling books Nothing Down and Creating Wealth as he discussed the difference between linear income vs. residual income.
I came to these two terms before when I first knew about Cashflow Quadrant of Robert Kiyosaki. To him, there are two main divisions of the cash flow. One is Active Income where you work for money and one is Passive Income where money works for you. In Robert Allen’s video, Active Income is also called Linear Income and Passive Income is also called Residual Income.

Now, how do you distinguish between the two? Ask yourself the following questions:

How many times do you get paid for every hour you work? If your answer is only once, then it’s active income! In active income, one hour of effort equals one unit of money one time. However, in passive income, you will get paid many times for every hour of effort. A doctor can only see one patient at a time so he gets paid for every patient that he has.

Do you have to be present to earn income? If your answer is yes, then that’s active income. If your answer is no, then that’s passive income. A lawyer earns active income by presently attending to his clients.
Did you get the picture? Passive income is a stream of income that you can own. It can be a “hands-off” income. It’s an automatic pilot. The secret of the rich is to increase their streams of income. This is done not by increasing their active income by taking a second or even a third job but by increasing their passive income. Now, where can we get this passive income?
Here are some of the sources:

Interest Income. Yes, we can earn passive income from the interests of our savings deposits. We can also earn passive income through the interests of our bonds.

Dividends. We can also earn passive income through our stock investments. Companies share their income to their stockholders by either giving them cash or stock dividends for every share they own. Alternatively, we can also earn it through the dividends of our mutual funds or uitfs. Or probably from insurance policies which also gives dividends.

Real Estate. Real estate investments can also earn us passive income. My ideal real estate is a self-liquidating asset. That is you buy a property, pay the down payment only not the whole contract price, and rent it out to tenants. The monthly rental income from the tenant itself will be the one paying for the monthly amortization of the mortgage to the bank. The rental income will be our passive income in this case.

Royalties. Ever wonder why even though Elvis Presley was now dead, he still earns income? Yes, that’s the power of passive income! His albums that he did before when he was still living continuously earn royalty income for him. For every album sold, he gets a royalty fee that’s why even he’s dead, he is still earning.
The same goes for the author of books. Just imagine how rich J.K. Rowling, the author of Harry Potter, has become. She might be getting pennies for every sold copy of her book but it gets multiplied a million times as her Harry Potter is a best seller book with millions of copies sold. Not only that, she also gets royalty fees from the film Harry Potter series itself.

Another source of royalty income is thru franchise fees. The original owner of the business gets a royalty income for every franchisee that he has. Just imagine how rich are the original owners of McDonalds now that it has thousands of franchisees worldwide.

Websites. With the coming of industrial age, successful internet entrepreneurs have also built passive income thru their blogs or websites. I have seen a few of them and one perfect example might be one of the largest adsense earners. His website, one of the largest dating websites called Plenty Of Fish, attracts millions of visitors per month enabling him to earn an easy US$1 Million per year.

Networking. This is also called MLM of Multi Level Marketing System. This is another form of passive income yet a lot disagrees to its pyramiding concept. It’s like building a team of sales people who will provide you with huge passive income as your group and sales increase.

So there you are the sources of passive income. The secrets of the rich is to increase the streams of income more on the passive income rather than on the active income so that if one stream of income dries up, there will be other streams to support them. This what makes rich gets richer.

Someday, if God permits, I would like to be an author of a book. I would personally want to have passive income from its royalty fees. Or possibly buy a real estate where I can have passive income through rental income of tenants. As of now, I rely on my active income from my paychecks with just a very little passive income from interests on savings and dividends from stocks.
Do you still have other sources of passive income in mind?

My First Financial Planning Seminar

Last July 31, I was given the chance to be a resource speaker for the very first financial planning seminar that I conducted. I was at first nervous as this was my very first speaking stint but that nervousness was slowly swallowed as I discussed my topics.

It was a success! It was attended by around 50 attendees from our company. I was first introduced as a BS Mathematics graduate from Ateneo de Manila University, mentioned my two former employment background and my feature in Good House Keeping magazine as financial expert.

A lot of thanks for that introduction. I’ve never been given such recognition in my entire life. After that, I started discussing my financial planning powerpoint presentation.

For the readers of this blog, I would present here the details of my handout given to those who attended so that at least even though you were not able to attend, it’s as if you attended my first financial planning seminar. Basically, it’s just a summary of some of the contents of this blog.

Goals:
Goals empower us. It gives us direction. Life is full of paths. We can either go in the right direction or in the wrong direction. Goals provide us the right direction. It sets our priorities. It gives us the motivation.
When you list down your goals, you are giving direction to your life. In listing your goals, list them “smartly”. S-Specific, M-Manageable, A-Achievable, R-Realistic, T-Time Bound

S-Specific. Our goals should be specified to give us direction. To set a specific goal, it must answer any one of the following “W” questions:
o Who: Who is involved?
o What: What do I want to accomplish?
o Where: Identify a location
o When: Establish a time frame
o Which: Identify requirement and constraints
o Why: Specific reasons, purpose or benefits of accomplishing the goal.
Sample: I want to become a millionaire! But a specific goal would say, “Get a job for 10 years, establish your own food business and use your network of friends and acquaintances”

M – Measurable. To determine if your goal is measurable, ask questions such as “How much?” “How many?” “How will I know when it is accomplished?” Sample: I want to become a millionaire by age of 26!

A – Achievable. When you identify goals that are most important to you, you begin to figure out ways on how to achieve them. In the process, you develop the attitudes, abilities, skills, talents and capacity to achieve them. When you list your goals, you see yourself as worthy of these goals.

R – Realistic. To be realistic, a goal must have an objective that you are both “willing” and “able” to work. If you truly “believe” that you can achieve your goal, then it is realistic.

T – Time Bound. Goal should be grounded by time frame because if there’s no time frame, then there’s no sense of urgency. If you just say, “someday” then it won’t work. By setting a time frame, you are setting your mind to begin working in achieving that goal.

ABC to achieve goals:
ASPIRE: You start with what you want to achieve. Be specific; follow the “S-M-A-R-T” goal system. You say to yourself: “I WILL ACHIEVE THIS!”
BELIEVE: After you’ve listed down the goals that you aspire, believe in yourself that you can achieve it! I already saw a lot of people achieved it, if they can do it, then why won’t I? You say to yourself: “I CAN DO IT!”
COMMIT: The next step is to commit. This is the hardest part because your patience, attitude and determination will be tested to its fullest. It’s a test for survival. You say to yourself: “I WILL NEVER GIVE UP!”

Law of Attraction: Positive Thinking + Action = Goals
- Napoleon Hill (author of Think and Grow Rich): We become what we think about
- Newton’s Universal Gravitation: Every object in the universe was attracted by every other object -> e=mc2
- WILL POWER: What your mind conceives, your body can achieve.

Examples of Will Power:

Marathon Race: At the start of the game, the runner conditions his mind. His will power says: “I CAN DO IT!” This will power pushes his body to try harder and run faster to overcome opponents. It was the soul driving the body. The power was not in the muscles but in his will! You will notice that at the end of the race, the will let up and the body will collapse.

Rags to Riches Story: They never consider their economic status to be a hindrance to become successful in life.

Roselle Ambubuyog: A BS Mathematics student in Ateneo who graduated Summa Cum Laude and got the title valedictorian of the Year! - BUT both eyes are blind.

Motivational Quotes:
- “I will do today what other people won’t so that I can have tomorrow what other people can’t”
- “When you want something, all the universe will conspire in helping you to achieve it”
- “Show me a person backed with passion, conviction and resolve and I’ll show you a winner”
- “When a team of dedicated individuals makes a commitment to act as one, the sky is the limit”

Frugality: Ways to Manage Funds in Work Life
- Pay yourself first:
       Income – Savings = Expense
       Pareto’s Principle of 80/20:
           - In business, put most of your efforts on the 20% of things that bring 80% of income to your business.
           - In saving, put at least 20% to savings.

Frugality: Ways to Manage Funds in Home Life

Save Money on Electric Bills
       - Drop the temp. Lower the temperature on your water heater’s thermostat
       - Change bulbs. Compact Fluorescent Lamps (CFLs) use a quarter of the electricity of regular incandescent light bulbs.
       - Check filters. Remember to replace aircon filters and heat-pump filters to keep these systems running efficiently.
       - Pull the plug. Remember to pull the plug for any electrical appliances that are not in use.

Save Money on Water Bills
o Get a gadget. Get yourself a low-flow faucet aerator. It uses less water while increasing water pressure.
o Fix leaks. Check for leaks in pipes, hoses, especially in the toilet.
o Recycle water. Collect rain water to water the plants. Just be sure not to stock it very long to avoid developing a breeding ground for dengue.
o Add a hose nose. Use a hose with a shut-off nozzle when you water the plants so that there will be no wasted water if the hose is not in use.
o Wash full loads. Cleaning less than a full load of clothes or dishes wastes both water and energy.

Frugality: Ways to Manage Funds in Family Life

Save Money in Dining and Entertainment
o Know before you go. Scan over your local newspaper, check radio stations and company websites for coupons, promos, and special discounts.
o Master menu magic. Drink water instead of ice teas, alcoholic beverages, and juices. Bypass that meaty main dish. Order a meatless meal or if it’s not enough, try two appetizers or several side orders.
o Get discount coupons. Take advantage of discount coupons and treats given by sales persons in different malls.
o Win your treat. Join contest that have prices for gift certificates, free movie passes, and free vacation packages. Some of these contests are held in radio stations.
o Ask to pay less. Use discount treats that come along with your credit card. Or if you are a senior citizen or a student, ask if they have special promos for you.
o Keep your fun cheap. Attend free cultural events and other low-priced entertainment. Or just watch a DVD movie at home with your friends.

Investments: Making Your Money Work For You

Emergency Bank
o Set up a minimum of 6 months up to one year of your monthly income for your emergency fund to cover up for emergency expenses such as job layoffs, hospitalization, and other emergency expenses
Evaluate Your Investments: Risk, Liquidity, Return
o Risk is the possibility of losing the amount you invested
 Risk-Averse
 Moderate Risk
 Risky
o Liquidity is how an investment can easily turn back to cash
 How urgent do you need your money now?
o Return is the interest income of the investment or ROI
 The higher the return that we want, the riskier the investment

Investment Lessons You Need To Know
o Your Enemy: Inflation. Inflation is the rise of prices of commodity. It depreciates the purchasing power of our currency. Therefore, we must find a good investment that has returns higher than the annual inflation rate.
o Your Ally: Time. Time is of essence to investment because it takes time for you to reap the returns of your investment. In a simple savings account, time is beneficial as portrayed by compound interest.
o Know your investments. Be sure to know what the sources of the returns are and how those returns were made. Understand and learn in the process.
o Diversify. Diversify all your investments not only in one type of investment but also to others so that if it fails, you don’t lose everything.
o Minimize unnecessary expenses and taxes. Look for investments that have low taxes and other unnecessary expenses because it depletes the possible return for your money.
o Match your investment with your risk appetite: Evaluate each investment with risk, return and liquidity
o Start early. The early bird catches the worm. Time is essential in investment.

Investments: Where to Invest Extra Cash?

Risk-Averse:
o Savings Account
 Lend money to bank and bank will invest it. In return, bank will give you low interest but you can withdraw our money anytime.
o Time Deposits
 Lend money to bank and bank will invest it. In return, bank will give you higher interest but your investment is subject to a withholding period and you cannot withraw your money anytime you want.
o Special Deposit Account (SDAs)
 You lend your money to Bangko Sentral ng Pilipinas like a bond and they will give you higher interest but it requires a huge capital ranging from 100K to 1M.
Moderate Risk:
 Bonds – Investment Outlet Units (IOUs). You lend your money to corporation and they will pay you interest (corporate bonds)
Risky:
o Stock Market
o Real Estate

Robert Kiyosaki: Increase your financial intelligence
 Rat Race – a term coined by Kiyosaki to mimic our general income-spend attitude (i.e., when you receive your pay, you expense it out right away to pay bills, buy clothes, etc.)
 Cash flow quadrant:
o Employee – These are people who work for a boss and who love security. No work, no pay.
o Self-Employed – They work for themselves and don’t have a boss. They can decide for themselves. These are people who love to be independent (i.e. doctors, lawyers, etc.) No work, no pay.
o Big Business Owner – They love delegating tasks. They concentrate more on activities which produces most profits. They hire people who are more intelligent than them to make them rich.
o Investor – People who already built assets. These assets are working hard for them to make them rich. They don’t work for money but their money is working hard for them.

Robert Kiyosaki: Secrets of the Rich
Secret 1: What is Financial Intelligence?
o Income statement and balance sheet – two important simple concepts you need to know to increase financial intelligence
o Asset vs. Liability – Assets provide cash to our pocket. Liabilities deplete cash from our pocket. Asset will FEED us. Liabilities will EAT us.
o Is house and asset or liability?
Secret 2: Cash Flow Patterns of Poor, Middle Class and Rich Persons
o Poor: Every income from job goes out to expenses right away
o Middle Class: Every income from job goes to liabilities that they thought are assets, and then eventually goes out as expenses
o Rich: Every income from job, they use to buy assets that will provide them passive income in the future.
Secret 3: Increase Passive Income

Robert Kiyosaki: Good Debt vs. Bad Debt
 Good debt helps us manage our finances
 Bad debt is a burden because it drains our finances
 Debt leveraging: Using debt to your advantage
o Take advantage of credit cards
 Cashless Transaction – credit cards allow cashless transactions that are less prone to hold ups and snatchers
 Emergency Cash – credit cards have cash advance facility that you can use in case of emergency
 Float Advantage – buy now pay later.
 Huge Discounts – credit cards companies have tie ups with several merchants for discounts
 Reward Points – accumulate points in exchange of freebies
 Raffle Points – aside fro m reward points, credit card companies conduct raffle promos from time to time.

Robert Kiyosaki: Game of Money
 1st Quarter (25-35 years old)
o Savings should be your top priority
o Learn investment options
o Get insurance
 2nd Quarter (35-45 years old)
o Plan for your children’s future
o Make sure you have enough for your emergency bank
o Have a business
HALF TIME – Mid-Life Crisis
 3rd Quarter (45-55 years old)
o Allocate much of your income to investment capital – review your investment portfolio and ask if you need to transfer funds to other nvestments
 4th Quarter (55-65 years old)
o Protect your capital – try to preserve your capital so that you can live with on its interest, And make sure to make your last will in order.
OVER TIME
GAME OVER

Robert Kiyosaki: Cash Flow Game – From Rat Race to Fast Track
Doodads. Doodads are simply the expensive wants that we can’t resist.
Opportunity. Opportunites serve as deals for you to grab. It is broken down into two: small deal and big deal. Small deals are deals that involves small money while big deals involve large sums of money. Deals can either be stocks, mutual fund, business, or real estate opportunities.
Market. Markets serve as opportunities for holders of assets. When you land in this option, you are offered by a buyer.
Baby. Baby depicts the real happening of raising a family. In the game, when you land in this option, there will be an additional cost that will be added to your expenses. And there will be a maximum of 3 babies in the entire game.
Paycheck. Paycheck depicts the real world of employment.
Downsizing. Downsizing also depicts the real happening of being fired or unemployed. In this case, you will lose 2 turns and lose a portion of your cash to fund your needs.
Charity. Lastly, charity relies on the concept of the law of reciprocation.

THANK YOU!
I hope you enjoyed my very first financial planning seminar!
Unfortunately, the company does not want me to post pictures or posters of the seminar so I cannot post it. But thanks to the certificate given to me and little present from the team.

How to Overcome Laziness

In one of my previous posts, I tackled about overcoming fear. Today, it’s time to tackle on how to overcome laziness.

Busy people are often the laziest. Busyness is a form of avoidance. If you stay busy you can avoid some of the things you don’t want to face—like exercising, or taking care of your wealth.

What’s the cure for laziness?

Kiyosaki says a little greed. Isn’t greed bad? Too much of it, yes. An excess of anything is bad. The fact is, however, that all of us secretly harbor a desire to have new or exciting things. We’ve been told by our parents and others to suppress that desire. We’ve been made to feel guilty about it. How many children have asked a parent for something and gotten the response, “Do you think I’m made of money?” In truth, guilt is worse than greed. Guilt stifles dreams.

When we stop saying “Life is too hectic to change it” and say, instead, “It’s time to exit this rat race and find new ways to earn wealth,” we begin to cure ourselves of our busy laziness.

The Rich Dad of Kiyosaki used to say, “The phrase ‘I don’t want’ holds the key to your success.”  Kiyosaki saw what he meant when he got into real estate and quickly learned that he didn’t want to fix toilets. By finding a property manager who could fix toilets, he was freed up to buy a lot more real estate. And as a result, his cash flow increased.

Go ahead, be greedy, if that’s what your heart is telling you to do. But don’t overdo it to the point that you are doing illegal things. Persevere and work hard. Make a list of what you really want, and don’t limit it according to someone else’s idea of what you shouldn’t have—be truthful with yourself.




When your list is complete, step back and appraise it. Don’t ask yourself whether you can afford the things on your list, but rather how you can afford them. This fresh appraisal will create a stronger mind and a more dynamic spirit, helping you to shed your lazy ways. I suggest that everytime you feel lazy, take a look on your list and think of ways on how can you afford it. Most of all, TAKE ACTION and don’t be a couch potato!
As and end, I would like to leave another Rich Dad Tip:

 “The words ‘I can’t afford it’ close your mind, while the words, ‘How can I afford it?’ open your mind. The human spirit is powerful—it knows it can do anything.”

Source: Robert Kiyosaki’s Coaching Program

Qualities of an Effective Leader

QThe Philippines is going to elect another leader this coming May. Who deserves to be the leader among those contenders? Who has the qualities of an effective leader?

There are a lot of people that say leaders are born. Some say that leaders are made. Whatever your opinion on this, leaders should be ‘effective’ in their leadership and should be responsible to their constituents.

Let’s discuss some of the qualities of an effective leader and apply these qualities to the country’s highest leader, the President, as we cast our votes this coming Presidential elections.


The highest form of leadership is servanthood. Leadership is one of the highest calling a person can receive. How can you distinguish an effective leader among the rest?

An effective leader is the one who serves, a bad leader wants to be serve.
An effective leader is one who empowers, a bad leader wants that power.
An effective leader wants people to grow and become great, a bad leader becomes insecure when someone grows and they always have to be the great one.

There’s this law in Physics that for every action, there is an equal reaction. The secret to become an effective leader is simple enough.

If you want to be happy, make someone happy. Instantly you become happy.

If you want to be motivated or empowered, motivate and empower someone. Instantly you’re motivated and empowered.

If you want to be appreciated, appreciate people and they will appreciate you.
If you want respect, of course respect them first.
If you want to be trusted, you must trust others too.

As an effective leader, you should not wait for someone to do those things for you first, You have to do it yourself first. An effective leader is called a ’leader’, because people follow what you do, not what you say. Effective leaders serve as inspiration and motivation among their followers.

Rich Dad Tip:

“A leader’s job is to bring out the best in people, not to be the best person.”

As an end to this post, I would like to give you the Leadership Litmus Test that I learned from Robert Kiyosaki:

- Are you depending on charisma to lead your team? Watch out—leadership has less to do with personal magnetism than with persistence in communicating your mission to your people.
- Do you hole yourself up in your office all day long, poring over numbers rather than getting out and talking with your team? Financial statements are important, but so is mixing with—and listening to—your employees. Watch out for the stuffed-shirt syndrome. The best way to keep abreast of company progress is through informal interaction and ad hoc meetings.

- When it comes to making decisions, do you put off the day of reckoning? Effective leaders need to be action-oriented; otherwise their companies will succumb to paralysis.
- Do you lead by command—telling people what to do, and punishing them if they don’t—or by enabling? Leaders who hire talented people and give them space to shine are establishing an atmosphere of trust in which creative ideas will flower.

Overcome Fear in Investing

Without doubt, each of us don’t want to invest because we are afraid of losing our hard earned money. The fear of losing money is the main reason a huge percentage of the public struggles financially. But fear isn’t the real problem. It’s how people handle fear that matters. Kiyosaki tells people that the primary difference between rich people and poor people is how they handle the fear of losing money. Some people, when hit with a financial loss, give up. Others transform the loss into a win. As John D. Rockefeller said, “I always tried to turn every disaster into an opportunity.” Losers are defeated by failure. Winners are inspired by it.


Kiyosaki often commented that the real reason for lack of financial success was that people played it too safe. “People are so afraid of losing money that they do lose it,” he would say. If they have some cash, they buy big houses and big cars rather than big investments. Or they invest all of their money in balanced portfolios—in CDs and low-yield bonds and mutual funds and a few individual stocks. These are people, driven by fear, playing not to lose.

Rich Dad Tip:

“The primary difference between rich people and poor people is how they handle fear.”

Of course, a balanced portfolio is a lot better than no portfolio at all. It seeks safety through diversity. Having a financial plan for security and comfort first are important. But if you have any desire to become rich, you must focus, not diversify. You must put a lot of eggs in a few baskets rather than putting a few eggs in many.

FEAR: I’ll lose all my money if I invest in anything riskier than CDs, bonds, and mutual funds.

FACT:  If you lose some money, you can learn from the failure. Once you become an educated investor you’ll be positioned to reap potentially huge rewards.

FREEDOM:  Financial failure can be transformed into financial gain.

If the prospect of failure frightens you, then play it safe. Keep your daytime job until you have enough cash to buy bonds and mutual funds and consult with a financial planner. But if the prospect of failure inspires you to fight and win, maybe you should challenge yourself to change your financial habits. Educate yourself and take some financial risks. The more education you have, the less risk there will be.

In investing, the higher the risk, the higher the reward. You won’t become successful if you didn’t take risks and part of that risk is the fear of losing money. Personally, when I increased my financial education, my risk appetite also increased. I started investing in mutual funds and unit investment trust funds and then went to a riskier type of investment - the stock market. As I increased my business acumen, sooner or later, I will begin engaging myself into business. The more financially educated I am, the less the fear that I am feeling about.

Source: Robert Kiyosaki’s Coaching Program

Cash Flow Management in Business

Cash flow is the heart of a business. Cash flow determines if your business will prosper or fail. A positive cash flow provides good return of investment while a negative cash flow means that you are draining money in your business.


Whatever kind of business you have, you must have the right cash flow management skills. Attention to details in the early stages of your business will pave the way for success. Here are some pointers I learned from Rich Dad Coaching Program to help you contain and direct your cash flow in your business.

- Call on an accountant, banker, or financial consultant for advice in structuring your cash management system.

- Delay taking a salary until your business is generating cash flow from sales. If you’re terribly strapped, keep your day job and start your company part time.

- Review your cash position daily, looking at cash sources and needs for the coming week, month, and quarter. This way you can plan for any large cash need before it becomes a crisis.

- Keep a close eye on your ratio of assets to liabilities. This will enable you to move quickly when money needs to be borrowed. Be alert when liabilities rise over assets. You should be generating enough cash flow to pay for those liabilities.

- Bill customers as soon as your product is shipped or your service provided. Do it outright. Don’t delay.

- Require payment up front until credit has been earned by your customers. Business customers need to gain your trust before you can avail of credit.

- Pay your bills promptly, but ask for extended-payment terms from day one. Ask for extended-payment terms again after you’ve made several timely payments.

- Keep your overhead to a minimum. Don’t purchase anything new—such as a copy machine—until sales justify the purchase. You must examine your expenses thoroughly. Expenses are negative cash flows and if not managed properly, it can eat your business.

- Invest your cash on hand to maximize its earning potential. If you have extra cash in your business, try to look for other investments options where it can generate the highest yields.

- Establish tight internal controls over the handling of cash.

- As your business grows, continue to keep a close eye on cash management. Losing sight of cash flow during expansion is a common reason businesses go under.

- Make sure your bank account is reconciled by someone other than the person preparing checks or signing them. Always have a check and balance.

Rich Dad Tip:

“The ability to run a company from financial statements is one of the primary differences between a small business owner and a big business owner.”

Follow your cash from receipt to deposit, from purchase order to writing the check, and have an outside accountant review your system to make sure you have adequate internal control procedures

Rich Dad vs. Poor Dad Thinking

As many of you are aware of, Robert Kiyosaki’s Rich Dad Poor Dad book became one of the hottest selling books. He introduced the term “rat race” which refers to the ordinary income-spend lifestyle, living from paycheck to paycheck.

In order to get out of the rat race, we need to build passive income from assets which would generate enough income to sustain our needs and wants. One of the things that we must first do is to change and open our minds from industrial age thinking to information age thinking. We need to shift our minds from negative to positive. Instead of making excuses, think of ways to get out of the rat race. That separates the winners vs. losers.

Here are some of Rich Dad vs. Poor Dad Thinking. Notice the difference between the way both dads think:


Poor Dad says: “Go to school and make good grades.”
Rich Dad says: “Become financially literate.”

Poor Dad says: “Get a safe, secure job.”
Rich Dad says: “Build businesses.”

Poor Dad says: “Workd hard and invest.”
Rich Dad says: “Don’t save, invest.”

Poor Dad says: “Work for money.”
Rich Dad says: “Let money work for you.”

Poor Dad says: “Pay your creditors first.”
Rich Dad says: “Pay yourself first.”

Poor Dad says: “Save money by shopping for bargains.”
Rich Dad says: “Make money by shopping for investments that will go up in value.”

Poor Dad says: “Don’t buy something you can’t afford.”
Rich Dad says: “Ask yourself how you can afford it.”

Poor Dad says: “Investing is risky.”
Rich Dad says: “Not investing is risky.”

Poor Dad says: “Your house is an asset.”
Rich Dad says: “Your house is a liability.”

Poor Dad says: “The rich are greedy.”
Rich Dad says: “The rich are generous.”

Poor Dad says: “Money is a neccesary evil.”
Rich Dad says: “Money is power.”

Poor Dad says: “The love of money is the root of all evil.”
Rich Dad says: “The lack of money is the root of all evil.”

Poor Dad says: “Your pension and Social Security will protect you in retirement.”
Rich Dad says: “Your pension and Social Security will not support you in retirement.”

Poor Dad says: “Put your investments in the hands of someone else.”
Rich Dad says: “Watch your investments but seek competent advisors.”

So which path would you like to follow? Which advice would you like to take? The path of Poor Dad working harder and harder for money or the path of Rich Dad having your money work for you?

Robert Kiyosaki, Rich Dad Poor Dad, Cashflow Quadrant

One of the early eye openers for me is about this book of the famous author Robert Kiyosaki entitled Rich Dad Poor Dad. This book was a huge success with millions of copies being sold worldwide. In this book, Robert Kiyosaki had two dads, one is his biological dad tagged as “poor dad” and one is his friend’s dad tagged as “rich dad.” Both dads taught Robert Kiyosaki how to reach his financial goals and achieve success but with different approaches.

His poor dad spent so much time in school earning him a doctorate degree landing on a high paying job but ended with a lot of bills left unpaid  while his rich dad did not finish school but ended up owning a business empire. How did this happen? Just look at the contrasting ideas each dad have:
His poor dad says: “I CAN’T AFFORD IT!” while his rich dad says: “HOW CAN I AFFORD IT?”

His poor dad says: “MONEY IS THE ROOT OF ALL EVIL!” while his rich dad says: “LACK OF MONEY IS THE ROOT OF ALL EVIL!”

By viewing these two contrasting ideas, his poor dad’s brain stopped working when he said those, killing his initiative and promoting negativity while his rich dad’s brain kept on thinking on ways creating initiative and promoting optimism. Which one is best? Of course, undeniably, it’s rich dad’s ideas! Here are some more comparison of Rich Dad vs. Poor Dad Thinking.

Robert Kiyosaki continued and coined the term RAT RACE. This is the race of our lifetime INCOME and SPEND. We receive our income regularly from our paychecks yet we spend the same to pay bills and satisfy our wants. We are now trapped in this rat race. We live our lives to pay our everyday bills! Now, how can we escape from this rat race trap? By understanding the Cashflow Quadrant.


This is understanding where our income flows. It was divided into two main sections. The left side called “Active Income” and right side called “Passive Income.” What’s the difference? Active Income says “You Work For Money” while Passive Income says “Money Works For You.”

It is then further subdivided into four quadrants. Quadrant 1 is the so-called Employees. Quadrant 2 is the so-called Self-Employed. Qudrant 3 is the so-called Big Business Owners. Quadrant 4 is the so-called Investors. Where do you belong to these four quadrants? Let’s examine it one by one:

Quadrant 1 - EMPLOYEES. I do think that most of us belongs here. We have a job. We have to work hard, follow instructions from our bosses and superiors and get paid. We don’t own our time. These are people who love security or tenure. They will work hard to climb up the corporate ladder. The higher they climbed the ladder, the higher they pay is. Sad to say, the higher their pay is, the higher also their taxes. And it’s not them getting rich, it’s their bosses, it’s their company. Time will come, they will get tired. Their body will collapse because of age. And when they stopped working, they will also stop receiving income.

Quadrant 2 - SELF EMPLOYED - They work for themselves. The difference with the employees is that self-employed own their time since they don’t have superiors. They can decide for themselves. These are people who loves to be independent. They don’t want to work for others, instead they want to work for themselves. These are doctors, lawyers, and small business owners. But still, they are an employee of themselves. And if they stopped working, they will also stop receiving income.

Quadrant 3 - BIG BUSINESS OWNERS - They love delegating tasks. They concentrate their efforts more on activities which produces most profits. They hire people who are more intelligent than them to do the work for them. They have built a solid system and they own it. They have built their resources to make this possible. And so they can leave for vacation and can leave work for some time but still earns money because there were people working for them. Examples of this are the taipans and tycoons and some franchisers who have built a solid business.

Quadrant 4 - INVESTORS - These are people who have built their assets and are not working for money anymore. Instead, the assets they have accumulated works for them providing them constant income even if they don’t work. These are people who are called “living on interests”. They are living thru the interests of their assets and investments. Money works for them. They have invested their money to have more money. They can differentiate which one is an asset and which one is a liability. Examples of these are investors in the stock market, real estate, etc.

Did you see the difference? The only way to escape from the rat race is by travelling from active income to passive income, from employee or self-employed to becoming a big business owner or investor. And this is the challenge that Robert Kiyosaki left to us readers.


As a final note, I’m leaving this quote from Mr. Kiyosaki.

“The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets. The poor and the middle class work for money. The rich have money work for them.”
Furthermore, if you want to become a millionaire like Robert Kiyosaki, I would like to refer to you on how to become a millionaire.