Philosophy Tristan on 16 Jul 2008 10:47 am
I’ve been reading Rich Dad Poor Dad this week, it’s a book I’ve read before, back in 2004, so I’m re-reading it this week as I’ve been in need of some inspiration.
What I’ve taken from re-reading RDPD is that idea of reducing your liabilities and living costs, and always paying yourself first. I fully understood the idea of passive income, and the various ways of achieving passive income, however, I had fallen into the trap of thinking that I needed to earn more money to be able create spare cash that could be invested.
Another thing that has caught my attention whilst reading the book again, is that concept of people being pushed around by life, with the mark of a true winner being someone who will push back. It strikes me that a lot of people who have been pushed around, find it hard to push back, through lack of confidence or self-esteem issues, and invariably turn to things like alcohol and cigarettes to help them deal with the daily struggles.
And of course, if you go to the pub on a daily basis to have a few pints it will cost you - a lot of money. For example, I went to the pub the other night, had three pints and that came to almost a tenner. If I smoked, I would probably be getting through a pack of twenty a day, which is another £5 a day. So without being an alcoholic or a heavy smoker, you can easily spend £15 a day on unwinding and dealing with stress, which is £105 a week or £472.50 a month.
If you didn’t go to the pub every night, and smoke 20 a day, you could put that money into savings/investments.
It’s this lack of self discipline that can cause financial ruin. It’s no surprise that in RDPD, Robert Kiyosaki states that as a key differentiator between the rich and the poor, the self discipline to pay yourself first and pay your bills last, only spending the income that you’ve generated from your assets.
The more I think about this, the more profound it becomes. Everyone I’ve met who has been wealthy has been a very strong willed person, and everyone who I’ve met who is poor has been almost a polar opposite, always blaming someone/something else for why they have no money.
I can say with all honesty that I’ve been like that, when I was a student, I was always skint. That’s because I didn’t earn much money (I was studying after all), and I went out to the pub or the student union almost every night. And I smoked…
My advice to anyone struggling with their finances is to go cold turkey on cigarettes and alcohol. By not spending money everyday on cigarettes and alcohol, mentally you will feel like you are more in control of your finances. Do some excercise, and do it regularly. I read somewhere that to stay healthy, both physically and mentally, you should walk your dog every day, even if you don’t have a dog.
Lastly, be prepared to push back whenever life pushes you, if you don’t, you will be weakened by each successive knock-back, until you eventually give up.