8 Scams That Make You Poor

Robert Kiyosaki - Scams That Make You Poor
In this article, I'll share one of Kiyosaki's gift to the world: Rich Dad Scams -- the vehicles of the rich they don't want to share with the poor (who love walking anyway).
Please understand that by reading further, you agree to keep an open mind for you to appreciate what the article presents. If you do not want to get financial wisdom and stick to the old-age beliefs about money, STOP!

But if you seek financial freedom and wish to break loose from what you have been thought to believe all your life about money, move on and challenge your very own thoughts! 
1. Higher Education
We are told to believe that the best path to success was to go to school and that it was the best way to get a good job. But what will make you successful is not going to school but rather financial education: learning how money works and how to make it work for you. 
Higher Education
This is what will make you successful and, unfortunately, you can’t get that in school. Why? Because when it comes to money, going to school doesn't make you financially smart.

This doesn't mean though that education isn't important. In fact, the basic education you get is very important to everything that comes before and after. And if you want to be a teacher, a lawyer, or a doctor, then obviously you’re going to need to go to college.

But what you won’t learn in school is how money works. Education alone doesn't teach students how to live or be self-sufficient. Instead, it teaches us to be employees instead of our own bosses. It makes us workers instead of innovators. It prepares us to work for money, and not have money work for us.

2.  Get a Job
The reason “Get a Job is a Rich Dad Scam is because it makes you poorer, especially if you have a high paying job, because you pay the most in taxes. And guess who isn't paying a lot of taxes? The owner of the business you work for. The scam gets even worse when you look at it long-term: If you do well at your job, if you claw your way up the ladder, what is your reward? Oh, a small increase in pay and a bigger increase in taxes. The only way to avoid this is to be the owner of a big business or to be an investor, to put your money to work for you.
Get a Job
That’s where the rich work and live. The government gives tax breaks to those people they identify as creating jobs: entrepreneurs and big business owners. They want the private sector to develop real estate, start companies, and generate wealth. The government rewards that. In return, the government expects employees to pay taxes.
The reality is that having a job does not make you secure. In an economy where people are losing their jobs, the more secure position is to own the company that is firing people.

3. Work Hard
Poor Dad worked hard all his life. He went to school because he was told to. Yet, he struggled financially his whole life, and often he was not happy. 
Work Hard
It seems like a simple math equation: effort = reward. You work hard, you earn more, you get more for your effort, and it seems like it should work.  Once upon a time, it may have worked that way. But now, there are two problems.

One, if you’re an employee, working harder may get you more money but it also means you’ll be taxed more. Working harder can actually result in you being punished financially. 

Two, you’re working hard for something in particular: Money.

And that money is worth less and less every day. Every week most people just hold on until Friday because they hate their job. And when Sunday rolls around, they’re miserable because they know they have five days of work to look forward to. It’s a lousy way to live, but it’s not the only way. We've just been trained to think it’s the only way.

4. Live Below Your Means
On the surface, “Live below you means” seems to make sense, but the only people who live below their means are poor people. The rich don’t live below their means. Rather, they make better means.
Live Below Your Means
Poor Dad said, “We can’t afford that.”

Rich Dad said, “How can I afford that?”
Live below your means”, is a poor mindset because it teaches you to think too narrowly. Rather than teach you to be creative in making more money, it teaches you to be merciless in what you spend your money on. 

Think like an investor or an entrepreneur. Identify what you want and work out a plan to get there in a smart way through assets. If you live within your means, you can never add assets, so you’ll never break the chain of cutting costs and budgeting to afford something.

5. Save Money
The big problem with Rich Dad Scam #5, “Save Money”, is that it used to be true -- a generation or two ago, saving money paid off. You could set aside a certain amount of money and retire on it. Your parents or your grandparents might have done just that, and it worked. But what worked for them cannot work for you in today’s economy.
Save Money

Today, Savers are Losers.

Why? The bank pays you a lower interest rate on your savings than the inflation rate. In essence, this means that your money in the bank loses more value than it gains over time. It’s a losing proposition to save. The money you save today will be worth less a year from now.
Rather than believing the Rich Dad Scam #5, “Save money,” you should instead invest your money in cash-flowing assets. That is the true path to wealth.

6. Your House is an Asset
It seems like every financial “expert” says, “Your house is your biggest asset.” Alas, your house was a liability.

Your House is an Asset

In reality, an asset is only something that puts money in your pocket. If you have a house that you rent out to tenants, then it’s an asset. If you have a house, paid for or not, that you live in, then it can’t be an asset.

Instead of putting money in your pocket, it takes money out of your pocket. That is the simple definition of a liability. 

This is doubly true if you don’t own your home yet. Then it’s the bank’s asset, and it is working for them, but it’s not earning you anything. The simple definition of an asset is something that puts money in your pocket. There are four primary assets: business, paper, real-estate and commodities.

7. Get out of Debt
Isn't debt bad? The Rich Dad Scams we identify are the ways the rich stay rich and make sure the poor stay poor. That can be counter intuitive, especially when some of the scams, like getting out of debt and saving money, seem like they would help you get rich. But that’s the scam.

Get out of Debt

The rich carry debt. But they have assets that more than make up for the debt the carry. In fact, the rich not only carry debt, they also use it to get richer. 

The difference between the rich and poor when it comes to debt is understanding the difference between good debt and bad debt.

Bad debt is debt that makes you poorer, such as credit card debt, car loans, and more. This is the type of debt used to buy liabilities. Good debt is debt that makes you richer, such as a loan for investment property or to purchase equipment for your business that will make you a return. This is the type of debt that is used to buy assets. 

8. Invest Diversely in the Long Term
If there’s anything to be learned from the last few years of financial mess, it’s that nothing is guaranteed. And that includes all the long-term investments that your financial planner will encourage you to buy, such as mutual funds, stocks, and bonds.

Invest Diversely in the Long Term

Nearly every financial planner will tell you that in order to be financially secure, you must diversify. By this they mean to invest in stocks, bonds, and mutual funds. 

Unfortunately, this is not true diversification. But everything you’re invested in is still on paper, it’s based on the same fragile economy, and the same investment model. When the stock market goes down, it goes down everywhere, not just in certain places. Investing in BPI and Jollibee won’t make any difference if the market tanks and everything goes down. 
True diversification is investing across different asset classes, not different stocks. This holds true with any of the asset classes.  

In Conclusion
Have we been financially brainwashed? I believe we have. The primary reason why most people cannot see the truth is because we have been financially programmed mindlessly to repeat mantras that cost us our wealth.

Our leaders don’t encourage us to change or to seek ways to move from the employee mindset to the investor mindset. Rather, our leaders teach us to live below our means instead of expanding our means. In my opinion, living below your means kills your spirit.

That’s no way to live.

This article was an edited version from the original “8 Rich Dad Scams” to cater Filipino readers.

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  1. looks like everyone is offended by this one. hehe

    but theyre flooding you comments about mlm :)


  2. AnonymousJune 04, 2015

    True! I strongly agree with your opinion - living below your means kills your spirit.

  3. Such an effective post, often students encounter many difficulties while drafting assignments and seeking editors and proofreaders in Dubai to handle all writing work smartly and reduce workload.


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