Why Robert Kiyosaki’s cash flow makes so much sense?
I’ve started reading Robert Kiyosaki’s book about a year back and at that time I wasn’t really having my finances in order. Sure, I tracked my money whenever I could. I knew that I had to pay rent and food, loans and living expenses but I always wondered why was I barely surviving each month, living paycheck to paycheck.
I’ve been reading a lot of personal finance books trying to make sense of things, but most of the books usually had lots of theories and fluff, which made it really hard to implement. Reading Kiyosaki’s diagram of the income statement and balance sheet of a rich person vs a poor person suddenly made so much sense to me. It was like a lightbulb moment for me.
Personal Cash Flow diagram
He highlights that the rich know the difference between an asset and liability and buy assets.
Assets: Put money into my pockets
Liabilities: Take money out of my pockets
Kiyosaki illustrates it really well by outlining how the middle class receives their salary and pays off their liabilities (mortgage, loans, credit card debt) and then expenses( food, living expenses, etc), with little money left over at the end of the month. I think this is very common for most people, after all, debt needs to be settled, loans…
