The most important asset you have is your mind, and to increase the value of this asset, you have to devote your time to things that do just that. Most people tend to agree with this, yet the majority of people are subject to the common reality of going to school, get a job, and work for money. If your “why” to start working is to earn money, you’re going down the wrong path: “the rich don’t work for money” (R. Kiyosaki, 1997).
Back in 2016, when Donald J. Trump got elected as President of the USA, he promised a tax-cut which was appreciated a lot by the majority of the voters and, therefore, among other reasons, they voted for Trump as their president. Although this tax-cut has definitely been implemented, it didn’t apply to the majority of people, as the tax-cut was there for rich (i.e. big businesses & investors), not for employees. As you see in the above quadrant, the money that’s being made on assets, whether it be in the form of big businesses, stocks, bonds, securities, or real estate, are being taxed the least; this is where the rich make their money.
When it comes to money, the only skill most people know is to work hard, while all employees let the government take almost half of what they make from them. So, if the reason that you’re working is just to earn money, you may have to change your approach.
The above picture shows you the income statements of three classes: the poor, the middle class, and the rich. As you’ll notice, the poor and the middle class follow a similar pattern: their only source of income is their job, and they have regularly recurring expenses that they can pay for once the taxes have been deducted. The only difference between the middle class and the poor is the amount they get paid and the amount they spend. Either way, in most cases, they spend what they receive and just wait for their next pay-check to do it all over again. Looking at the income statement of the rich, you’ll see that the main source of income is generated by their assets. The rich invest in assets to make the money work for them instead of working for money. To be able to understand the difference between assets and liabilities, you have to know that an asset puts money in your pocket, while a liability takes money out of your pocket (R. Kiyosaki, 1997). Most people believe their house is an asset but is it? Does it bring money into your pocket or does it take money out? Think again.
I’m not implying that you shouldn’t get a job, as there is a variety of reasons to get one. For example, depending on where you’ll work, it has a social aspect which is very important, you’ll learn what it is to work for a company (and for a boss), and you’ll experience and learn things you haven’t before. In short, you’ll develop yourself, you’ll learn, and you’ll grow. But, if your purpose of getting a job is just to make money, be aware that your learning curve will soon stagnate and, hence, this may not be the best way to go. For the money, you have to work on your asset column rather than your income. Of all assets, your mind is the most important, so try to devote your time to things that make this asset grow rather than to exchange your time for money only. Knowledge empowers imagination, and (financial) knowledge combined with imagination is the basis for financial success. For the money, focus on learning rather than earning.
(Main source: Rich dad Poor dad by R. Kiyosaki, 1997)