Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki


What is Net Worth?

It also is critical to look at your overall financial situation to determine if you are getting ahead from one year to the next. A “net worth statement” helps you determine “where you stand” and serves as a measure of your overall financial position.The net worth statement is a summary of your financial position at a particular point in time (on a given date). It is a list of all your financial assets (what you own) and all of your financial liabilities (the debts that you owe). Net worth is the dollar amount you have when you subtract everything you OWE from everything you OWN. You will need this information when you: borrow money; apply for a home mortgage; determine insurance needs; plan your retirement; write your will and determine estate planning needs in the event of death, divorce, or remarriage; settle a divorce. What Are Your Assets? Assets are any financial or material possessions that have monetary value. On the net worth statement the value is listed at the current market value, not what you paid for it. Assets include things such as: Cash on hand or in savings accounts (including certificates of deposit or checking accounts) Stocks, bonds, mutual funds Cash (not face) value of life insurance Money others owe to you Annuities, retirement plans Employee benefits such as company stocks Your home Other real estate and business interests Automobiles, trucks, other vehicles Household furnishings, antiques, jewelry, books, coins, artworks, etc. What Are Your Liabilities? Liabilities are the financial obligations or debts you owe to other persons or institutions. Included are: Mortgages Installment loans (cash advances, auto, etc.) Department store and credit card debts Taxes owed Unpaid bills (medical, utilities, etc.) Any other liabilities Figure Your Net Worth Total your assets and your liabilities. Subtract the liabilities from the assets. The result is your financial net worth. Now that you have taken the time to calculate your net worth, how do you feel about your financial situation? Happy? Relieved? Discouraged? If you are a bit discouraged, do realize that a negative net worth statement may easily happen to someone just starting out on their own or to young families. Just as a photograph shows how you looked at one specific time, so too, the net worth statement reflects your financial situation at only one point in time. It should be updated at least once a year or as your financial situation changes.  If you are not satisfied with your net worth and want it to grow, develop a plan to increase it. More income, lower living expenses, and/or more investment growth are some alternatives. To increase your...

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Money Lessons From Rich Dad

1. Build Your Mental Wealth Muscles This is my absolute favorite lesson from the book. The author would constantly hear his poor dad saying, “I can’t afford that.” However, his rich dad said that instead of saying you can’t afford something, ask yourself… “How can I afford this?” The first statement requires no thinking. You want something. You don’t have enough money. Therefore, you can’t afford it. The second statement is so much better. You want something. You don’t have enough money. So, let’s find some way that I can create enough money to be able to afford it. The difference between these two statements is incredible! “Forcing yourself to think of how to make extra money is like going to the gym and working with weights. The more you work your mental muscles, the stronger they get.”                 – Robert Kiyosaki, author “Rich Dad, Poor Dad” So, let’s say you wanted to buy a new big screen TV, but you don’t have enough money. What can you do to be able to afford it? Let’s come up with a plan… I don’t know you, but I bet one thing you could do is find some unneeded junk around the house and sell it on eBay. With that alone, I bet you would have enough for your big screen. Or, at least half of it anyways! Another thing you could do is start a savings plan for it. I bet you could easily save five dollars here or five dollars there. Cut back a little on your usual spending habits. Then, use those savings to help pay for the big screen. The point is, next time you want something you can’t afford, use your mental wealth muscles to find ways that will make you be able to afford it. The more you use these muscles, the better they get. And the more money you will find yourself accumulating. 2. Increase Your Financial Intelligence It’s a fact, schools don’t teach students nearly enough about money as they should. You learn history and you learn how to find what x is equal to, but you never learn what financial options that you have. I’ve learned that increasing your financial intelligence is a self-study. High school or college is never going to teach you as much as you should know. You’re going to have to pick up the books and learn it yourself. So… What areas of financial intelligence do you need to learn? Rich dad suggests four main categories. Those are… Accounting – You’ve got to be able to read financial statements. Investing – You have to learn to grow your assets...

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Book Review: Increase Your Financial IQ by Robert Kiyosaki

~ Justin McHenry ~   Robert Kiyosaki is back with another in his “Rich Dad” line of books; this one’s called Chicken Soup for the Rich Dad’s Soul. Just kidding. But the Rich Dad theme has been beaten about as often as the Chicken Soup horse at this point, so if you’ve read Kiyosaki’s other books, you can expect about 50% new material and 50% recycled ideas. And if you expect more than that, you need to learn a thing or two about brand extension. Anyway, the new book is titled Increase Your Financial IQ, and from this point forward I will discuss it on its own merits, regardless of what may have come before. Increase Your Financial IQ has at its core Kiyosaki’s 5 main aspects of financial genius: 1. Making More Money 2. Protecting Your Money 3. Budgeting Your Money 4. Leveraging Your Money 5. Improving Your Financial Information This core section is pretty good; Kiyosaki has a lot of words of wisdom here. In terms of making money, his biggest advice is to get yourself to a place where your income is not entirely predicated on trading hours for money, i.e., only getting a paycheck for hours worked. Whether that means you’re a full-time entrepreneur or you use your extra money to create passive income (owning rental property for instance) is up to you. Protecting Your Income covers everything from taxes to estate planning to prenuptial agreements. Thinking about who might put their hand in your pocket is important, although I think Kiyosaki goes off the rails a bit through his tired tirades against 401(K) investing (or really against any investing that isn’t real estate or gold). One piece of advice I heartily agree with is that railing against the tax system is a waste of time: “I am not trying to change the system. My personal philosophy is that it is easier to change myself than to change the system.” Budgeting Your Money is the strongest chapter in the book. Despite the name, this chapter isn’t really about listing your income and all your expenses and figuring out how to make it all work. It’s more about a way of thinking, a philosophy that forces you to pay yourself first and put the money you’ve paid yourself into assets that make you more money. It’s sort of a “no excuses” budget in that Kiyosaki says if your income isn’t enough to finance your expenses, you’d better make some more income. Your budget should demand that you take some of your capital and put it to work, regardless of which bill collector may be coming after you....

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Gerri Willis – Home Rich: Increasing the Value of the Biggest Investment of Your Life

From The Oprah & Friends Radio Show with Jean Chatzky, 11 April 2008 Home Rich: Increasing the Value of the Biggest Investment of Your Life by Gerri Willis Your home is the single most valuable thing you can own, yet making it pay can intimidate and confuse even the savviest investor. Now, in an indispensable new book, finance expert Gerri Willis leads you step-by-step through the entire experience of buying, maintaining, and selling a home, and shows you how to come out ahead–maybe even way ahead. Americans used to raise their families in one place, knowing that their homes would someday make them wealthy. These days, on average, people spend just nine years in a house; it’s become a medium-term investment in a volatile real estate market. Home Rich is the first book that offers simple rules specifically designed for this brave new world of home buying and selling. Here are the ways to maximize your profit, from the time you get the keys to the time you hand them over. • before you buy: Learn about the best and safest loans available, how to finance and refinance them, and how to pick the right real estate agent (watch out for the “dual agency,” when one agent represents both buyer and seller). • buy right: Understand what size home you need and can afford (it’s the features and the fit, not the square footage), and check out location, location, location (a school system is a tip-off to a growing neighborhood). • keep up your investment: Make a checklist by season to determine maintenance expenses and find out how to protect against monster storms, mold, and vermin. • upgrade in ways that count: Be practical (an updated kitchen beats a Jacuzzi), discover the new green improvements, and plant the best trees and shrubs for your zone (landscaping can add 6 to 7 percent to the value of a home). • sell right: Inspect and repair, clear and clean, then set the correct price, advertise, and field the offers. Home Rich addresses the needs of homeowners in all regions and at all income levels, featuring helpful case histories, practical charts, and clear instructions. Gerri Willis has written a comprehensive, reader-friendly guide for creating a special personal space that you will love living in–and that others will also value and happily pay for when the time comes for you to sell. Customer Rating: Read Reviews Tags: Gerri, Willis, Home, Rich:, Increasing, the, Value, of, the, Biggest, Investment, of, Your, Life, real, estate, nate, berkus, peter, walsh, clutter, organize, organizing, stuff, marianne, williamson, maya, angelou, spouse, issues, unemployment, instability, divorce, jean, chatzky, finances,...

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Financial advice: buyer beware

Diana Clement ~ NZ Herald Not everyone can be a financial expert. And in the same way you might go to a doctor for medical advice or a careers coach for guidance on how to climb the corporate ladder, many people choose to get professional financial advice from someone qualified and experienced. A number of professions offer advice and some overlap. These include accountants, lawyers, financial advisers (also called financial planners), insurance advisers, stockbrokers, and mortgage brokers. You can also get free advice from budget advisers associated with the Federation of Family Budgeting Services. If you’re in debt, this can be a very good place to start because it costs nothing. Or, if you need a kick up the pants as well as advice, you might consider employing a financial coach or mentor. Their role is to keep you on the straight and narrow and focused on achieving your financial goals. Seeing your coach is like getting a weekly or monthly financial reality check. Have you done what you said you would do? Are you fooling yourself with myths and excuses? Banks and life insurance companies also employ people who can give you “advice”. But only about the products that their particular company sells, which may not be best suited to your circumstances. Before you choose an adviser it’s important to understand the way your adviser gets paid. In the case of accountants and lawyers it’s usually on a per-hour basis, which should, unless you’re really unlucky, mean that you’ll get advice best suited to your needs. A small number of financial planners charge by the hour and either don’t take commissions, or reinvest them for you. Many Kiwis aren’t prepared to pay up front for financial advice. If you do, however it will save you wondering if you’re getting the best advice. Typically, financial advisers get a commission or cut from products you invest in and sometimes charge an ongoing annual management fee. In some cases this has led financial planners to recommend inappropriate products to clients. However, most are professional in their dealings with clients and offer best practice advice. Most advisers use what is known as modern portfolio theory, which uses diversification to optimise the return from investors’ portfolios. Usually investors will be given a portfolio containing a mixture of cash, shares, bonds and property, weighted according to their risk and return. Because of the way most advisers are paid, they tend only to recommend those investments that pay commission and residential property investment is often left out of the mix. They will, however, include commercial property syndicates, which do give investors exposure to property. In...

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Printing money by Federal Reserve in US and European Central Bank in EU

First I heard about this topic from RichDad Insiders. Then I heard it again and again from different sources… most interesting story’s have been when Mike Maloney is talking… Today I would like to share with you two graphs:M3 (money offering) of US Dollar:Source: Seeking AlphaM3 (money offering) of EURO:Source: European Central BankWhat we see here?Basically we see here that there is today 20% more US dollars and 12% more EUROs in circulation than one year ago!!!Both of graphs show how many percents more currency is in circulation compared to a year ago. To be honest both currencies have lost more value as these percents because central banks have sold at the same time also their assets – so there is less and less assets backing the same number of currency. Read the original post: Printing money by Federal Reserve in US and European Central Bank in...

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Calling all Bizkid$

KLRN and Security Service Federal Credit Union are looking for kids with a little bit of business savvy. Throughout the month of April, kids six to 12 can shout out their business successes at the KLRN Web site, or they can pick up an entry at Security Service Federal Credit Union.Each week, one kid will be chosen to win $100. A grand prize winner will get $500 and be submitted to PBS for possible inclusion on an upcoming episode of Biz Kid$, a show that teaches kids about money. More here: Calling all...

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In case of emergencies, break into stash of cash

~ Annette Sampson ~ The strategy To stash some cash for emergencies. Do I need to do that? Are you kidding? Hasn’t all the mayhem on world debt and sharemarkets this year brought home the fact that spare cash is a good thing to have? Whether you believe the latest rally is the turnaround point or not, the fact remains that the easy money of recent years has dried up and the resulting credit squeeze has put meaning back into the old adage that cash is king. There’s not a lot the experts agree on but on one point they are unanimous: the uncertain times aren’t disappearing any time soon. We’re still seeing the unwinding of dodgy lending practices, a recession in the US looks increasingly likely and Australia can’t seem to work out whether the porridge is too hot, with inflation the main problem, or about to become too cold as all those interest rate hikes start to bite. A cash buffer gives you the security of having money on hand if your personal circumstances take a turn for the worse and the ability to take advantage of opportunities when other people are strapped for funds. In falling markets, investors with liquidity can snap up bargains as cash-strapped investors are forced to sell. How much of a buffer should I have? Denis Orrock, the general manager of InfoChoice, says his Depression-era dad always advocated having three months’ income set aside to help you get back on your feet if something went wrong. He says that’s still a reasonable ballpark figure, though how much you need will depend on things such as how much debt and other commitments you have. “[Having a buffer] also frees you up and gives you more choice in life,” he says. “You often see people who don’t like their jobs but can’t afford to leave. But people make decisions if they have money set aside and want to make changes. They reap the benefits of their savings.” Financial planner Laura Menschik of WLM Financial Group says in uncertain times you need to look at what you can do to make yourself as comfortable as possible. This could mean having cash set aside but it could also involve paying down your debts so that you have money to draw on if you need it. “If you pay off all your credit cards, you know that you can use them in an emergency,” she says. “Reducing your debt over time gives you access to finances when you need them.” If you have a home loan with a redraw facility, Menschik says pumping extra money into your...

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What?s your money personality?

US-based psychologist Kathleen Gurney, a leader in the field of money personalities says everyone fits into one of these nine money personalities. ENTREPRENEURS: This is a very male dominated group that favours investing in the stock market. HIGH ROLLERS: They are thrill seekers who enjoy the ride of financial risk. HUNTERS: These are often women. Usually highly educated, with a live-for-today financial style. ACHIEVERS: These are often conservative and not interested in risking assets they have worked hard to accumulate. They’re big on insurance and like to take charge of their money. MONEY MASTERS: They get contentment and security from money and are the top wealth accumulators. They tend to act on sound advice and don’t rely on luck. PERFECTIONISTS: They hate making mistakes and as a result they often don’t make decisions about their money. They find it difficult to find suitable investments thanks to having tunnel vision. PRODUCERS: They have a lack of self confidence in money management and do not profit from risks because they can’t evaluate them carefully. OPTIMISTS: They can cope with risk, but are more interested in enjoying their money than taking risks. They have few anxieties and tend to outsource the management of their money. SAFETY PLAYERS: They are the really risk averse investors who put their money into really safe and secure investments such as the bank. They don’t take enough risk to make their money grow. Here is the original post: What?s your money...

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U.S. teenagers lack financial literacy

By Barbara Hagenbaugh, USA TODAY WASHINGTON — U.S. teenagers are making little headway when it comes to financial literacy, a survey out Wednesday shows. High school seniors on average answered 52.4% of a 30-question financial survey correctly. That was up from 52.3% when the survey was last conducted two years ago but down from 57% in 1997, the first year for the survey, according to the Jump$tart Coalition for Personal Financial Literacy.”Financial literacy is still a very significant problem. It doesn’t seem to be getting any better,” says Lewis Mandell, a professor at SUNY Buffalo School of Management who oversaw the survey, which was conducted in December and January. It includes topics such as investing and managing personal finances. He said the lack of knowledge was troubling given that today’s high school seniors likely will be more responsible for their own financial well-being when they retire given trends away from company pension plans and an uncertain future for Social Security benefits. But the study suggests students are unprepared for such a task, Mandell says. In one question, only 14.2% of the students correctly answered that stocks would have the best growth potential for money over an 18-year period. That was the lowest percentage in the survey’s history. “In the 21st century, the only person you can really count on is yourself,” he says. The results of the survey taken by 5,775 high school seniors in 37 states were unveiled at a news conference in the boardroom at the Federal Reserve. Fed Chairman Ben Bernanke called improving financial education “vital to the future of our economy.” Survey details: • White students answered an average 55% of the questions correctly vs. 44.7% for blacks and 46.8% for Hispanics. The gap between whites and blacks was the widest in the survey’s history. • Students from families with incomes of $80,000 or greater answered 55.6% of the questions correctly on average vs. 48.5% for those with incomes less than $20,000. The gap between the two income groups was also the largest in the history of the survey. • Nearly 17% of the seniors had taken a money management or personal finance class, down from 20% in 2004. Surprisingly, students who had taken a class actually fared worse than those who did not. Students, however, who had played a stock market game, in which they used play money to pick stocks, fared better than students who had not participated. • There was little difference in financial literacy based on gender. Boys on average answered 52.6% of the questions correctly vs. 52.3% for girls. Students aren’t the only whose financial literacy is lacking. In a...

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