Learn to Earn: 10 Tips for Financial Success

By Steve Michaels

April 2008

I received a call from a call center owner who had hit rock bottom.  Essentially, her business was destroyed when its sale to an unscrupulous buyer went bad.  When I asked her what I could do, she broke down and cried.  This scenario is played out all too often; she had been working in the business for twenty years, but just because she knew how to answer a phone did not qualify her to know how to run her own business.

One of the first things I suggested was that she read the book, Rich Dad Poor Dad by Robert Kiyosaki.  This number one New York Times best seller would help her learn more about the business world.  Although the author does not agree with the strict accounting rules advocated by CPAs, his methodology of making money is proven and can help anyone who owns their own business.  Here are some of his more thought-provoking tips (with my thoughts interspersed):

Tip 1: Choose your thoughts rather than reacting to emotions.  Ask yourself, "Is working harder the best solution to this problem?"  Most people are so terrified at the truth that fear is in control.  By not thinking, they continue to work themselves to death.  "We will always have emotions of fear."  By not giving into your emotions, you are able to delay your reactions and think.  Learn to use your emotions to think instead of thinking with your emotions.  Higher emotions tend to lower financial intelligence.

Tip 2: Know the difference between liabilities and assets; then buy assets.  If you want to be rich, this is all you need to know.  As Kiyosaki says, "Rich people acquire assets.  The poor and middle class acquire liabilities, which they think are assets."  An asset is something that puts money in your pocket; a liability is something that takes money out of your pocket."  The road to wealth is through increasing your monthly cash flow from the asset column to the point where it exceeds your monthly liabilities (expenses).

Tip 3: Being financially "illiterate" leads to financial struggle.  Most financial difficulties are caused by a lack of education.  Too many call centers charge an arbitrary rate that is not supported by the financial facts.  Financial reports tell a story – the numbers reveal the plot; they tell you where your cash is going.  In poorly run businesses, the financial story is working hard in an effort to get ahead. 

Tip 4: Be realistic about how long you could survive without working.  Do you have assets that create wealth in addition to your paycheck, or is your paycheck your primary source of income?  Wealth is the measure of cash flow from the asset column compared with the expense column.  If you have to increase your expenses, first you must increase your cash flow from your assets to maintain your level of wealth.  Your next goal would be to reinvest the excess cash flow back into your asset column.

Tip 5: Take advantage of being a business owner.  Your financial security should revolve around your asset column versus your income column, which can be aided by owning your own business or developing your assets.  Being an owner of, or a partner or investor in a business can enrich your asset column.  Other income generating assets include stocks, bonds, mutual funds, income generating real estate, and notes.

Tip 6: Put your money to work for you.  The following advice from Rich Dad Poor Dad applies to you whether you are an owner or an employee: "Once a dollar goes into your asset column, it becomes your employee.  The best thing about money is that it works twenty-four hours a day and can work for generations.  As your cash flow grows, you can buy some luxury items.  Rich people buy luxuries last, while others tend to "buy luxuries first."  Remember, investing in your assets and developing them is the real luxury!

Tip 7: Maximize your tax advantages.  Utilizing a corporation or another legal entity wrapped around the technical skills of accounting, investing, and markets can aid growth.  An individual with the knowledge of the tax advantages and protection provided by entities such as corporations can get rich faster than someone who is an employee or a small business sole proprietor. 

Tip 8: Don't be afraid to take some risks.  Quoting Kiyosaki again, "It's not the smart that get ahead but also the bold."  Called guts, chutzpah, audacity, bravado, cunning, daring, tenacity, or brilliance, financial genius requires both knowledge and courage.  "If fear is too strong, the genius is suppressed."  You need to take risks, be bold, and tap into your inner genius, allowing it to overcome your fears and self-doubt, turning them into power and confidence.

Tip 9: Decide to "pay yourself first."  This is probably the most difficult to master if it's not part of your makeup.  When you collect your monthly receivables, Kiyosaki's advice is to "allocate money to your asset column before you pay your monthly expenses.  Use this pressure to inspire your financial genius to come up with new ways of making more money, and then pay your bills."  Remember, "Poor people have poor habits."  One such habit is depleting your savings.  The rich know that savings are only used to create money, not to pay bills. 

Tip 10: Your two most important assets are education and time.  The single most powerful tool you have is your mind.  Conversely, Kiyosaki warns that "an untrained mind can create extreme poverty that lasts a lifetime."  Most people simply buy investments rather than first learning about investing.  Having no money to invest is not an excuse not to learn.  Each of us knows people who are highly educated, but their balance sheet paints a different picture. 

Here are twelve more poignant quotes to keep in mind:

• "A truly intelligent person welcomes new ideas."

• "People who hurry and catch a wave late usually are the ones who wipe out."

• "Don't listen to poor or frightened people."

• "You become what you study."

• "It's not how much information you know but how fast you learn."

• "Keep your expenses low.  Build up assets first."

• "Use [your valuable] time to make more money."

• "Save money instead of borrow money."

• "Don't be too focused on money"

• "Financial intelligence solves problems and produces money."

• "Money without financial intelligence is money soon gone."

• "Sometimes you win, and sometimes you learn." 

In the process of writing this article, I have learned a lot.  I discovered that if you want to learn about making money, teach it to someone else.  This is also true for a smile, love, and friendship.  I trust that the law of reciprocity works; what I give out, I will receive.  Simply put, "what goes around comes around."

I give Rich Dad Poor Dad a five-star rating; it is ideal for anyone interested in growing his or her business and creating financial wealth.

Steve Michaels is a business broker with TAS Marketing and can be contacted at 800-369-6126 or tas@tasmarketing.com.  His Web site is www.tasmarketing.com.