Before we dive into Budget Tip 4, let’s first see how assets can be compared to luxury liabilities with an example.
Robert explains, “As an author, when I want to take on a new liability, I write a book first. The royalties from that book then cover the cost of the liability.”
Now, let’s take a look at how this type of transaction might work in the future:
He also emphasized that now is the perfect time to remind you of what he explained in Rich Dad Poor Dad: 'An asset is something that puts money in your pocket, while a liability is something that takes money out of your pocket.'
He adds, 'It’s fine to enjoy liabilities, as long as you make sure to pay yourself first and buy them with the money earned from your assets.'
To clarify this further, Robert shares another example.
Let’s dive into Budget Tip 4!
Do you know where we often go wrong?
When times are tough, most people reduce spending instead of increasing it!
He shares an example: when he and Kim figured this out, 'Instead of letting their bookkeeper Betty cut back and pay the bills first, they focused on boosting sales, marketing, and promotion. They didn’t reduce spending!'
Ever wondered how being poor can actually lead to wealth?
Robert shares an important lesson from his Rich Dad: financial problems can be seen as resources if you find a way to solve them. Whether it's not having enough money, dealing with a bad boss, or being buried in debt, if you treat these challenges as opportunities to learn, you'll eventually create a budget surplus.
The key is in the choice: will you choose good debt or bad debt?
According to Robert, "Good debt is the kind that helps you get richer, and someone else helps pay it off for you. Bad debt is the kind that makes you poorer, and you have to pay it off yourself.”
He also suggests that if saving 30 percent of your income feels difficult, start by saving just 3 percent. For example, if you earn $1000, instead of saving $300, start by setting aside $30. If saving that 3 percent makes life feel tougher, that’s actually a good thing. Challenges can be beneficial because they help you become more resourceful.
When we shift our mindset from saying "We can't afford it" to "We refuse to live below our means," things will start to change, leading to a more abundant life and a surplus in our budget!
