Step 3: Know the Difference Between risk and risky

Business and investing are not risky, but being under-educated is.

We are always taught in our school, family that business and investments are riskier so that we should stay far from it. But no one taught to build wealth, manage risk, and financial literacy.

Proper cash flow management can help us to go out of the rat race and debt trap. People not going for investment by considering it risky but when we are financially uneducated then that creates more risk to us. We have to understand what actual risk is. After the proper education, we can generate income from our assets as well as build more assets from income also. This will help us to attract fortune and financial freedom in our life.

When we write down our fears and work on overcoming them, then it will help us to grow fearlessly. Knowledge is the only option to grow substantially from any of the situations. We should start with scratch, learn about the various assets class, experiment small portion in all of them to find out which assets class suits our temperaments. After that start learning about mistakes made by others which helps us to stay one step ahead. Be ready to make mistakes and learn further from them.

Kindly check out mistakes and learn from well-known investors.

Bibliophile: Big Mistakes

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

Wish you all a happy and prosperous new year. Have a healthy and wealthy new year.

Step 2: Take Control of Your Cash Flow

We focus on earning more money with the belief that more money aids to knock out our problems. But if we do not have the skill to manage cash flow then higher-earning also will not be able to help us, even it can work as a curse for us. Many a time, with more money, people will increase their spending and take higher debt. This will create a problem bigger compared to what it was earlier. We are the CEO of our life so that we have to think in a way to improve our position.

Our liability is an asset for someone and we are working to make them rich rather than to make ourselves. We need to remember that good debt is debt someone else paid for us. Bad debt is a debt that we paid with our sweat and blood.

We need to learn to spend within our means rather than spending more on liabilities, we should work on increasing our means (assets).

We can reduce personal debt by not using multiple credit cards, focusing on earning a few amounts extra every month, try to repay slowly one by one debt. As we get debt-free then we should start investing the same amount which we paid every month on debt. This process will help us to grow steadily.

Investment always helps us to become financially free while debt drag down our dream.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

Step 1: it’s time to mind your own business

Do we work hard and make other people rich? Or working for achieving your dreams? We are programmed in such a way that willingly or unwillingly; we are stuck with such a situation. When we make other people rich, we consider ourselves safe. When we consider ourselves safe ourself then we fall into the trap of our comfort zone, which makes us helpless to work for others’ dreams. We forget to pursue our dream.

Action plan

  • Fill your financial statement

Before we proceed, we must have to know that where we stand. And to know our status, we have to write down all income and expenses which helps us to see a clear picture.

  • Set financial goals

Without setting up goals, we cannot achieve what we want. So that we need to set five years, one-year goals to achieve financial freedom. Few examples and formats are given by the author.

Few examples and formats are given by the author

We need to be genuine with ourselves for filling our financial statement then only we can reach where we want to be. For better guidance, we should keep an auditor – a person who has achieved in real what we want to achieve. A mentor, who helps us to achieve our dreams, guides us to walk on a bumpy road.

When we start walking on this road, we faced lots of obstacles. And for overcoming those, we need a guide who is stronger enough to hold our hand to cross it.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

Take Baby Steps

When we learn to run before it, we have to learn to stand up, to walk, to lift our weight. We cannot be directly born and start running from the very next day. It is like 1st day of the gym and the expectation of lifting 80kg of weight and coming out with 17 inches of biceps. Nature has created such a process of progress. We also have to keep it in mind. We started taking baby steps for shifting towards the B and I quadrant.

We have to remember that those who do something are much better than those who do nothing.

By looking at the financial statements of all three categories, we can understand what we should focus on and where we have to control.

The author has mentioned seven steps that help us to find our financial fast track and achieve our goal of the B and I quadrant. I will continue with those seven steps from my upcoming articles.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom