The first chapter in part 3 of The Cashflow Quadrant™ by Robert Kiyosaki is titled “Take Baby Steps”. This is excellent advice and is where everyone needs to start. Robert says many people try to do too much with too little. I know that one as I have fallen into that trap several times now.
The first step is to take some action. I have witnessed many people buy books and attend seminars and do nothing. I have seen many attend seminar after seminar after seminar and still do nothing. Hey and I have been guilty of this at times. We get all fired up and then just go back to our life and comfort zone and do not get started.
Robert mentions a study that was done some time prior to him writing this book with the intention of identifying the characteristics of people that were born into poverty and became wealthy. The qualities that were identified were:
1. They maintained a long term vision and plan.
2. They believed in delayed gratification.
3. They used the power of compounding in their favor.
The same study also researched the reverse, that is, people who were born into wealth and ended up losing their money. There are many rich families that have lost most of their wealth after 3 generations. The characteristics identified in the study were:
1. They have short term vision
2. They have a desire for instantaneous gratification.
3. They abuse the power of compounding.
Let’s talk about long term vision and planning as it is critical to success. Once you have a plan then you start with baby steps. Through my years as a financial planner I saw many people start a financial plan only to abandon it a couple of years down the track.
Delayed versus instant gratification is a big one. How many people do you know that no matter what they earn seem never to have any money? There are many high income earners that appear wealthy because they have all the trappings of the rich – but they also have corresponding levels of debt.
How many people do you also know who stay in jobs they hate because the money is good? They would love to leave to start their own business or become an investor but they continue to go for the immediate dollar. Now sometimes this is necessary for survival – but many times it is not they are purely addicted to immediate gratification.
The power of compounding is a big one and depends on your age as the power runs out as we get older. So if you do not have the years left to truly take advantage of compounding building a residual income becomes critical.
Robert says people have to start thinking like a rich person. I totally agree. To do this I suggest you follow his advice and become educated. In my opinion the best way to start is to play the board game Cashflow. It is brilliant. My husband and I have a group of friends we play with and we never cease to learn about ourselves. The aim of the game is to have your passive (or residual) income be greater than your expenses; then and only then are you out of the rat race.
Please leave me your feedback below. Have you played Cashflow?