Robert Kiyosaki talks about the reasons people choose security over freedom. These include;
1. Being trapped by debt. Often this starts when we leave college or university and continues to grow through our life. Most of us can relate to this and have been there at some stage.
2. The success trap. Working so hard and having less and less time. I know this one very well.
3. The money trap. People who are not financially literate often make poor choices and do not manage their money well. In this trap people often seek higher salaries, then pay more in taxes and very often increase their debt. It becomes a very vicious cycle.
Rich Dad is quoted in the book as saying something I heard many times in my financial planning career. “It is not so much how much you make, but how much you keep, how hard it works for you, and how many generations you keep it for.”
People working as employees often feel trapped and search for freedom in various ways.
• They change jobs thinking the next one will be better.
• An “E” often becomes an “S”. (this is not freedom!)
• People are joining home based businesses at a record level.
Have you ever done any of these?
Robert recommends people in the E and S quadrants first become “B”s before they become investors. His reason is if you first develop a solid business sense you can become a better investor. After years of working as a financial planner I agree. It is not a good thing to be a very nervous investor. It is in the B quadrant you learn to be more risk tolerant.
Where do you fit in this model? Are you trapped in employment and seeking to become free? Are you self employed and working very hard? I would love to hear your comments.