The Wealthy Mindset by Robert Kiyosaki

Robert Kiyosaki has been one of the greatest influences in my life when it comes to the mindset behind wealth-building and more generally, financial literacy. Even more, the way I personally define wealth has been greatly impacted by his content ranging from books, podcasts, seminars and videos. In my eyes, he is simply one of the greatest and most experienced business owners and investors out there who is willing to help others reach their financial freedom as well. In this article, I will talk about the core aspect of his writings and his ideology. The mindset. More specifically, I will look into the concept he came up with, called the Cashflow Quadrant, and how that explains the way you can identify where your mindset puts you in terms of the societal structure and wealth building. Understanding this will help you gain a thorough understanding of how you can shift and build a greater amount of wealth for yourself and for the generations to come, which will allow you do all the things you want to do in your life.

Související obrázek

The Cashflow Quadrant

As you can see in the figure above, there are 4 legal ways of generating income in society.  You can be an employee, a self-employed person (a small business owner), a (big) business owner and an investor. You can look at these 4 parts as separate quadrants, or you can look at the figure from a more broader perspective as two halves. These two halves represent two kinds of income, active income (where you actively participate in creating the income – trading time for money) and passive income (where you leverage either an entity – asset or people that you have built, or where you simply multiply your capital through investing it). In the second half, you first put a lot of time in to create the asset and then you can sit back ant the entity works on its own. This is the half where we should all be striving to live in, according to Robert Kiyosaki. Why? Because the way he defines wealth assumes that time is the most valuable commodity we have in our lives. I completely agree with this assumption and that’s why I strongly value this concept. Try comparing time with money. Can you invest it? Can you save it? Can you multiply it? Answer these questions and see whether you feel like time is more valuable or not.

The E Quadrant

As an employee, you simply have a job where you trade your time for money. Depending on your own values, you will either feel like this makes sense or like this is an unfair exchange. If you feel like this makes sense, this is probably where you fit in the most (with your current mindset). As an employee, you work on someone else’s asset in which you have very little interest. For employees, security and stability is the whole deal. But are jobs in the present really secure??

The S Quadrant

As a small business owner, you create a job for yourself and maybe for a couple of other people who work in that small business with you. Don’t misunderstand though, if you have a small business, you probably need to invest even more time than as an employee. Why? Because the business is directly dependent on your activity in it. If you own a dental clinique and you’re the only dentist there, what happens if you don’t come to work? Nothing, nothing happens and that is the problem. Since nothing happens, no money comes in. There are two major reasons why you might want to be a self-employed person. Either you really value independence or you want to scale your business later so that you can shift to the B quadrant. Examples of small businesses include a corner shop, a small dental clinique or a small local restaurant (not a chain restaurant).

The B Quadrant

As a big business owner, you own an asset. An entity that is capable of running on its own, thus generating passive income for you. This means that if you don’t actively participate in its daily running, the money will still be coming in. What you did is you started depending on your leadership skills less than your professionalism in a specific area. You brought more skilful people together and you were able to give them vision and purpose to stay together and build the business. As you moved from the left side to the right side, you have started accumulating residual (passive) income, which is the goal if you want to have more time to do whatever you want in your life.

The I Quadrant

As an investor, you keep the mindset of a business owner. You value leadership and freedom. Now, since you have generated some capital through your business, you can use other businesses and financial tools to multiply it. Real estate, IPO investment, stocks, funds and other tools are included in here.

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The Shift

As you can see in the second figure, the only (proper) way for you to safely move to the I quadrant is to go through the whole journey. The mistake most people make is that they try to jump from E to I and most often fail terribly. Understand that it is not only about the money, it is also the mindset that limits you from making such a huge jump effectively.

 

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A Question that Says It All

Yesterday, I have made a post on Instagram that involves a question I’ve been looking into in the last few days quite intensively. I have not only been thinking about my own answer to that question, but I have been also trying to observe some external examples around me or in the history of the humankind. I’ve been actively talking about this question with the people around me and I think that writing about it here and providing you with this philosophical idea can help you understand the kind of person you are and the kind of influence the environment around you has on the way you make your decisions. The question goes: “If you were the only person who knew the truth, while everyone else would follow another path you knew was incorrect, would you still choose your way?” This question involves a few different core aspects to which I will dedicate the next couple of hundred words.

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What Do You Base Your Decisions on?

We all live in some kind of a community. There are different people around us doing their thing, living their lives with their own views, values and principles. The core question we’re talking about today makes you really think about the extent to which you base your decisions on the opinions of others and even more, on the opinions of the crowd. When you see a line for lunch on the meal choice #1 nobody standing in the line #2, do you automatically stand in the first line, or do you still consider the second line? When you went to uni, did you go because you wanted to, because you really wanted to learn lots of academical stuff, or did you go because everyone else also went? Did you go because you wanted to learn or because you didn’t want to be the outcast, the so-called failure? Understand that this tag is only put on you by our society, by the mainstream. It has nothing to do with you actually not having the chance to succeed in your life.

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How Confident Are You in Yourself?

The core question also makes you think about your own capability and confidence. Do you trust yourself to the degree that would allow yourself to make the decision based on what you know to be the truth? Do you doubt your decisions simply because someone told you that you’re wrong, or do you seek factual evidence? This is a very important aspect of our decision-making, as it allows us to understand how much value we put on our own ability to seek facts and how much we depend on the people around us. Can you be the one leading the crowd, or do you need someone else to lead you at all times? Of course, you need to be led in order to be able to lead, but can you make the decision to submit (so you can learn and then lead) on your own or do you also need to be led to do that?

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How Do You Know that You Are Really Correct?

This question comes up in one specific case. In this scenario, you have already started doubting yourself. You have started thinking: “Oh, so since I am the only person who is going this way, there must be something I have missed, I might be wrong.” When you assume that you are wrong because the others are going in a different direction, you automatically delegate the responsibility of your decision-making to the crowd. Can you really succeed in what you want to succeed in if you do that? Even more, can you actually think of your own dream if you submit to the crowd instantly? On the other hand, do violent extremists think in this way as well? Do they think they are making their own decision based on their own truth, or are they following the crowd (the organisation they cooperate with)? Is there a danger of you becoming an extremist if you take this stance? Is being an extremist always the wrong thing? What if you are extremely dedicated to love and respect? You are also an extremist – is extremism always negative? How can you tell that what you’re doing does not hurt the people around you, if you are trying to make the decision purely based on your views? Questions like this follow me these days and I hope you will share your opinions with me, as I am very interested in your perspective on these.

This might have been a bit more philosophical than it usually gets, but it is also very important to think about these issues from time to time to make your stance on certain things a bit clearer. Please do leave a comment below to help me make my stance clearer as well. Thanks!

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3 Ways to Gain A Positive Outcome from A Conversation

One of the most natural acts for a human being like me and you is to socialise. We have conversations all day, every day. What surprises me is the fact that most people have no idea how to handle a conversation, or how to lead one properly. Today, I want to talk about 3 major ways how you can direct a conversation towards a positive outcome that you might be looking for. Do you want to maintain your rent? Using these 3 methods to discuss this with the landlord will increase your chances tremendously. All of these 3 ideas come from the book called How to Win Friends and Influence People by Dale Carnegie.

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Begin in A Friendly Way

Every conversation you ever have, be it to scold someone or to beg for something, should be started in a friendly way. This is the most basic skill of a successful conversationalist. Imagine that you are coming to one of your bosses to talk about your salary. What do you think will happen if you come up with an angry tone complaining that your coworkers are getting paid more for the same amount of job you do? What you hear is: “Boss, I have a family to feed, can you help me?” However, what your boss hears is: “Hey! You are the most unjust guy under the sun! How come you pay the others more than me?! You better increase my paycheck!” Always remember that starting a conversation is about making a good connection with the other person, which you can build on throughout the conversation. Don’t just get straight to the business, small talk matters. Utilise it to your advantage and get on a good side of the other person. Give a compliment, ask about the person’s mood and show that you care. This way, your conversations will become more positive and straight forward.

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Get The Other Person Saying “Yes, yes” Immediately

This ability builds up on the first skill I spoke about. Creating a positive environment around the conversation is very important. After starting the conversation in a friendly way, your next goal is to reinforce the fact that you mean good in the other person’s mind. You want to reinforce the idea that you both have the same purpose in the conversation, although the method might differ. You can do this through putting through some questions you know the other person will agree to – will actively say “yes.” For instance, if you are meeting your landlord to discuss your rent, you might want to start talking about how nice the place is. You can choose sentences like: “I really like this place, it must have taken a lot of effort decorating it, right?” Or if you know anything more in detail about the landlord, you could say: “I know that there are some other tenants that are quite hard to deal with, it must have been hard on you.” Choose the sentences that you know he will probably agree with. This way, he will start thinking – this guy is really good, he’s kind and I agree with most of what he says. This conclusion will make a huge difference in the landlord’s attitude towards your request later on.

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Let The Other Person Do A Great Deal of The Talking

Something that people love is to talk about their issues, about their views and about their experiences. Have you ever met someone who just threw up all his issues at you in the period of 10 minutes? People need to do that from time to time and the fact that you understand it and support it will make them love you. When you’re managing a conversation, ask a lot of questions and be patient with your answers. Let the other person finish completely and then ask questions to clarify or to expand on what they’ve already said. What this will do for you is that it will make them feel respected and appreciated, which gives you constant rapport and leniency from their side. In short, people should leave you happier than they were before they came to you and this is the way to achieve that.

Find Your Life Anchor – How to Stay Consistent When Life Happens

There is a question I have been always struggling to answer… What is the most common reason why people give up on their goals & dreams? However, in the last few months, I have been slowly uncovering the answer to this question. Now, I think I have finally found it. People give up because life happens. We all have our own goals & dreams, but we also have our own hardships & struggles. We always account for the hardships that are on the way leading to the target we’ve set up for ourselves. What we fail to account for are the hardships that happen outside of that path, in life. The fact that is the hardest to accept is that we can’t accurately predict and account for these issues. You can’t possibly account for a disease occurring in your family or for a financial bankruptcy of your close friend. Things like this will happen in life, so how can you prepare yourself for them so that you will be able to maintain your consistency on the way towards your dreams?

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Find Your Anchor

To successfully prevent our failure to cope with such issues, we need to create something in our lives that will hold us to our path and keep us accountable to ourselves. A something that makes you stick to your path no matter what, a something that helps you overcome any unexpected but inevitable issues that will occur in your life. We need to identify an anchor in our lives that will help to hold us close to our ambition, exactly like the anchor on the picture above holds the boat stuck to the bottom of the sea. In the next part of the article, I will talk about a few ways you can make this a reality for yourself.

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Find a reason why you should make it to the finish line

In many, many of our articles we mention the concept of the why. Why? Because it is the number one, central, most important concept that will make you stick to your path. Put very simply, if you know why you’re doing it, you are very likely to stick to it. This obviously involves many aspects of reminding yourself of your why and developing it further. Visualisation, spoken word and mentorship are a few aspects of this that will help you understand your why and stick to it.

Find someone you will be accountable to

In addition, mentorship not only provides you with the opportunity to cooperate with and learn from an already well-experienced individual but also to stay accountable to him. This is very well visible in many gyms, where you can get a personal coach. They will not only come up with a gameplan for you, talk to you about your goals and motivate you, they will also serve as an anchor for you. When you feel down, when you feel like you don’t want to work out today, you will think of your coach/mentor and you will make it happen. Assuming that you are a responsible and mature human being, the sense of accountability will keep you grounded and moving.

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Develop a daily routine of self-development

Having a strong habit in place that helps you grow as a person and that keeps you moving forward is something incredibly powerful. It keeps you grounded and motivated to move forward. What is the greatest issue with that? Many people have an issue developing this habit in the first place. So when their life starts going downhill, they don’t have anything to stick to. Dig your well before you’re thirsty. Develop a habit of reading, listening and associating with positive individuals every day. This will keep you on your path no matter the scale of the hardship you might be going through is.

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Always remember that the strongest anchors come from within. Your internal motivation beats your external motivation every second of the day. That’s a fact. Find your anchor and grow it. Screw safety plans, burn the ships and develop anchors instead. Move forward and never look back. And know that if you do, your anchors will turn your face forward again.

Set Yourself Up For Success

Most of us know what kind of movies they like, some of us know what subject in school they enjoy, few of us know what they want to do as a job and most of us don’t know how they want to live. This is a major flaw in modern society. It is clearly a fault of the tradition. We are led to think about the “what” rather than about the “why“. This is something that cripples us in the long run and makes most people regret not having done what they’ve dreamed of doing in their lives. This flaw has a further crippling consequence. We are unaware of where we are and what we should do next with our time. Why do you think many teenagers end up drunk every weekend? Do you think they would still do that if they understood their direction and the reason why they’re taking that path? In this article, I will be talking about a few steps you can take to set yourself up for success in the long run.

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Step #1 Find Your Direction

As I have mentioned many, many times before, it is not important what you do, but why you do it. Why do you go to school? Why do you go to uni? Why do you workout? Why do you wake up early? Why do you procrastinate? Why do you read books? Why do you not read books? Begin with the end in mind. Become outcome-focused, not process focused. Why? Because processed focus people never actually achieve what they want. Even more, they don’t understand what they want, they don’t understand the outcome. They only understand the process. If you know that you have to go to university, but you don’t know why, how are you going to feel? Will you study just to “get it done” or to actually learn and grow, so that you can utilise that knowledge in the long run?

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Step #2 Identify Where You Are

The second step is slightly easier than the first one, but its biggest challenge is your subjectivity. To understand how far we are from the desired outcome, we need to set up some framework that will make it easier for us to clear up some confusions created by the subjectivity of this matter. What I would suggest is setting up a scale from 1 to 10. 10 would be that goal of yours, maybe the life that you want to live. It is “the why” you came up with. Now it is important to take some time and think about how far you are from where you want to be. The scale helps you to specify it for your reference. You can set up some points where you’ll be stepping up one number. If your dream is to live the life of a judge, not for the sake of being one, but for the sake of imposing justice, one of your steps could be graduating from a law school. Which leads me to the third step…

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Step #3 The How

After you have figured out how far you are from your goal, from the final point, you should start planning out the “how” in terms of how you are planning to get there. What are the steps you have to undergo to achieve that goal? What are the experiences and learnings you have to go through to live that life? How will you grow to your success? This is the time for you to find the right platform that will deliver the results for you. In order to do this, a very helpful aspect of your focus should be a person. A someone who is closer to that 10 than you are or a someone who is already past it. Pursue them and learn from them. That will cut your path much shorter than it would be otherwise.

Finally, understand that your 10 is not a static point. It is very likely that as you grow and as you start approaching it, it will expand. It will shift and you will find yourself sitting on a 5 even though you were on a 7 before. Why? Because you have grown, you have expanded your dream and your 10 became an 8. This should not disappoint you, it should excite you. It is a sign of you developing a growth mindset – understanding that there is always some space for growth and improvement.

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