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

How Do I Get Rich?

In reality, that is how simple the path to extraordinary wealth is. In other words, in this high-tech world, the principles of great wealth remain simple and low-tech. I would say that it’s merely common sense. But too often, when it comes to the subject of money, common sense is uncommon.

If we focus on what is a real asset of rich people then they think differently. If we keep on following the same path that all others are following then we end up with tax payments and debt.

First, we need to start thinking differently from what common thinking is. If we focus on who we are and what we want to do then we can achieve what we want.

We need not do something just shake of doing it. We have to put our best into it. If we do not put our full efforts with willingness then we cannot able to continue it for a long time.

People focus on what the rich have and tried to own the same. But not the way rich has own. Other people focus on looking rich, not being rich and that will blow them up. It is all about being, not doing. When we focus on doing a workout then it will not last long. But when we focus on being fit then it will longer till the end. Similarly, with rich, we can be rich, not we can do rich. Changing our thinking does not cost anything but in reality, changing our core beliefs are hard. If we focus on being fit then doing workouts and having a perfect body will come as a result. So that we have to focus on being rich.

The rich or middle class, we all are human beings and as human beings, we all have an emotion. When it is about money, our emotions get stronger. But how we manage our emotions, makes us different individuals.

When it comes to money, we all have a fear of losing it. This emotion will make us a prisoner and we keep on doing work for money. When we can control and focus on emotions, we can achieve what we want. It’s not only about the financial field but the same I have observed during my workout journey. When we control our emotions, we become mature.

Sometimes, we feel that we are making a rational decision, but those decisions are purely affected by our emotions.

When we make any decision, others’ opinions always come to stop us. They laughed at our decision; they quote that you can’t do it. But we should focus on our strength and control emotions by saying we can do it. Changing a quadrant is an internal journey, we have to learn the new mindset and new skillsets. 

What’s the main difference between winners and losers? Losers keep giving more investment to their losing positions and winners cut the losing positions. Winners know that losing can come in the way of winning so they do not stay in ego that they cannot lose.

Above emotional biases stop us from taking wise, rational decisions. If a person’s emotions think for them, those emotional thoughts often blind them from seeing anything else. Emotions always need to control and that is a key to success in an “I” quadrant.

Knowledge is overrated. Temperament comes first then experience and then knowledge which was quoted by Mr. Durgesh Shah sir in one of its interview.

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

Becoming Who You Are

Money is like a drug. When we become addicted to work for money then it will be very difficult to change that habit (rather than an addiction). We get happy when we have money and upset when do not have it. And it is a reason why we cannot shift to the B and I quadrant easily.

An “E” works for the system.

An “S” is a system.

A “B” creates, owns, and controls the system.

An “I” invest money into the system.

Money addiction creates a fear within us. whereas our passion helps us to build a business, not our fear.

Many times, during a recession, hits the economy, few of the companies decide to cut employees’ strength and due to this decision, lower-level employees have to face major prices. So, seeking security becomes riskier. While this kind of fear does not chase B and I quadrant people. They work on improving the system, enhancing the system, and improving their financial knowledge.

Many of us trained with fears since our childhood which has created difficulties with change quadrant. When we want to achieve a bigger success then we need to have a faster processing time with higher accuracy. We can go how much fast, we want. But need to remember one thing is never taking a shortcut. Shortcuts will not lead us towards results but it will trap us in midways. Financial intelligence, not an emotional decision, and focus on numbers always help to achieve our financial goals.

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

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for the development of the Lucky Idiot website.

You Cannot See Money with Your eyes

If we see some tempting offer then we must have to be suspicious. There is no free lunch available.

We have to analyze various aspects before making any investment. We may make mistakes and mistakes are essential to learning about and correcting them for better growth.

People make an investment with emotion rather than with mind which led to losing money by a majority of people. At last, they become a dreamer, speculator, or broke down. When someone told us about a good deal and earning good in the future then our emotional bias comes into the picture and become greedy as well. This emotion stops us from making wise decisions.

If we want to be successful in the B and I quadrant then we have to train our mind that we can observe what others used to ignore. We can start by getting more about financial literacy. Our ability to create more money will bring more money for us. This education helps us with taking proper steps and investing becomes less risky for us. Education will help us to differentiate between good and bad advice.

Also, when we know about investing, we or our advisors choose to provide us higher yield with a less risky avenue.

We need to understand that when we buy any property on a mortgage then that’s not our assets rather than its and assets of a bank. It will fall under the liability side of the balance sheet. When we fail to make payment on time, the bank will take over that property from us. Taking debt is not always bad but if we take personal debt then it must be small. And if we go for a huge dent then someone working for paying it. That’s means business debt.

As we have learned in the series of rich dad poor dad that we consider assets to only be those properties that generate a cash inflow to us. All other properties are considered as our liabilities.

Now, comes to savings and deposits then yes those are not taking any cash flow out from us so that is our first level of assets.

Many of us spending our life on the opinion of others rather to focus on the fact. We should only trust facts nothing else.

When it comes to money, most people are either lazy or searching for shortcuts, so they don’t do enough due diligence. And there are still others who are so afraid of making mistakes that all they do is due diligence and then do nothing.  Too much due diligence is also called ‘analysis paralysis.’ The majority cannot become financially free because they live in debt till die. So, this will not bring freedom for them.

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

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for the development of the Lucky Idiot website.