The Poor & Middle Class Work for Money - The Rich Have Money Work for Them

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LukeLewis

LukeLewis

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I will tell you that it's uncanny how this book makes me feel so many years after I read it the first time. Back then, I was younger and I read it because I wanted to learn its lessons. Today, I'm older and as I go through line by line, I find how true rich dad's words truly are. It's so crazy how so many people absolutely refuse to learn anything other than what they already know about money, which isn't much. I've got family and friends who plod along every day working for the man. Doing their best to make ends meet. Just bouncing from job to job to job, pretending that that's what life is about. I get so frustrated when I think of people like this because I know they'd all like to work less and earn more. Frustrated indeed. But they'll never change because that's just the way they are. It takes a special type of person to break free. Some try, but they almost always fail. People really are destined to complain for the rest of their lives. I've heard it so many times. They wish they can change, but for some reason, they can't seem to get there.

Just this morning, I was talking about a guy I know who recently told me that he didn't have enough money to invest. I said, "Yeah, but all you need to do is put a set amount into your account weekly or monthly. Put it on your calendar or set it up so it gets done automatically." He replied, "I would, but I just don't have the money right now." His response made me want to scream. For the life of me, I can't understand why he refuses to comprehend how investing works. I suggested a high dividend ETF for him to purchase and to keep on purchasing. For every dollar he puts in, he receives a quarterly dividend. If he began investing a decade ago, he'd probably be making more money from dividends right now than he would be making pay from his job. But no, he just can't see it. Yet, he's more than happy to go on vacation and pay for random junk he doesn't need on a daily basis.

Anyway, in this section, Robert continued talking with Mike's father, also known as Rich Dad. Mike's father explained that making real money takes energy, passion, and a real desire. And that if Robert had been happy with the $.10 he was getting paid, he'd be a lost cause. He explained that for most people, fear guides their financial decisions. I don't know about you, but I can't remember the last time I saw someone who was scared of losing money, make a lot of it. For most people though, the fear of getting fired or losing money in the market or in a business venture all but paralyzes them. Part of this is because they've overspent so much that they've left themselves little wiggle room for when they might need it. If the bills are piling up and if terrible and catastrophic things will happen if they're not paid, then I'd say there's a problem. Being in that type of a situation is terrible for learning about financial freedom.

Another conversation I had recently was about a man from my home town who won millions in the lottery about 20 years ago. I remember the story well. He won so much money that he went on multiple shopping sprees, bought a new house, new cars, and pretty much anything else he could get his hands on. Guess what happened. About ten years later, he had to file for bankruptcy. It's maddening to think about something like that happening and to be honest, I'm not even sure how it can. You have to be a real genius to be forced into bankruptcy after winning the lottery, but believe it or not, it occurs often. It. seems that the more money certain people make, the more they go broke. I've seen this sort of thing out there too.

I'll tell you one thing; it's pretty easy to get a job and work for money. You see almost everyone do it on a daily basis. The mantra is, graduate high school, go to college, get your education, get married, buy a house, buy a car, have kids, send them to college, rinse and repeat. And all the while, train those kids to do the exact same thing you're doing. And also all the while, complain the entire time about job security, how the job is terrible, and about the lack of funds you have. I don't even need to write this sort of thing here because it's such a popular lifestyle. I dare you to tell me everyone you know isn't doing this. You can't because they are. We all know this.

Let me give you a taste of what a sliver of financial education feels like. Did you know that right now, you could buy an ETF that will pay you 4% per year in dividends? It's a very stable and risk averse ETF that's full of blue chip stocks. I know what you're thinking. "Okay, that's fine, but what's that going to do for me?" I'll tell you what it's going to do. When it pays you the dividends, you'll have more money in your pocket that you didn't have to work for. Also, that money from dividends is considered what the IRS refers to as unearned income, meaning, you don't need to pay payroll tax on it. You know the 15% tax that comprises social security, medicare, and FICA. Also, did you know that if you hold on to this ETF for more than 60 days, all of the dividends are considered qualified, meaning, until you make $40,000 per year, you don't pay any tax on them at all. So here's the situation: you work for a good number of years, all the while building up the number of ETF shares you own. A day comes where you make $40,000 in dividends per year. You quit your job and live off of those dividends. At the end of each year, you file your taxes and your tax bill is $0. You don't pay one dime in taxes. Not even payroll tax. Crazy? Surprising? Yes. I learned this after about ten minutes of reading a few years ago. People, this stuff isn't rocket science. You just need to have a bit of financial curiosity. Will you take action on what I just informed you of? I bet not. No one does and I've told multiple people the same thing. This is why I get so frustrated. People want money and after I tell them how to get it, they give me blank stares.

I have to tell you that probably the best way to learn about money is to start your own small business. That'll get you out of the rat race and into the field of business and financial education. The moment you do this, you'll also change as a human being. You'll begin to realize how badly others are running their lives and you'll understand what it took for your bosses and other entrepreneurs to get things going. Other things you should dive right into learning are taxes and investing. These two things can save and make you enormous quantities of money down the road. Owning a business will hopefully put the brakes on your spending too. You'll have a renewed appreciation and respect for money and paying taxes. You'll learn that your taxes are actually your biggest bill every week, month, and year. You'll come to loath them and you'll watch as they're wasted by our local, state, and federal politicians. Until you write a check for payroll and estimated taxes that come right out of your bank account every month, you won't appreciate any of this at all.

What's the worst part of everything that I've just shared above? It's the fact that not one iota of it is taught in grade school or college. Not one iota of it. Wait, actually, that's not true. I had an accounting professor in college once who said, for about a minute and a half, that we should all open small businesses out of our houses because there are tax benefits for doing so. He seemed to be eager to teach us about that, but because no one gave any sort of a hint of interest, we continued on with our curriculum lesson. Honestly, when taxes are pulled out of a paycheck, you don't feel the loss. It's only when you have to actually write a check for them that the concept hits you right in the heart.

Okay, back to the story. Towards the end of the section, Mike's father asked Robert if he wanted to continue working and learning. Robert said yes and then Mike's father said, "Good, but I'm not going to pay you anymore." Of course, Robert was appalled by this and complained about how horrible it would be to do the same work, but now for not even the measly $.10 per hour. Mike's father was steadfast though and claimed that he would teach Robert how to not work for money. He said that Mike was already working, so Robert better get going. He said that if Robert got used to the paltry pay, he'd be looking for that sort of thing for the rest of his life and that was exactly what he should try to avoid. Mike's father explained that money, and especially more money, was never the answer. That it was a frame of mind or a mindset. The lesson of the section was that if you'd like to make real money in your life, you'll need to learn about it and use your head. I wholeheartedly agree.

This post is part of a series: Rich Dad Poor Dad by Robert T. Kiyosaki
 
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The Poor & Middle Class Work for Money - The Rich Have Money Work for Them was posted on 06-05-2021 by LukeLewis in the Finance Forum forum.

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