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Pocket Science

Changing your thinking about income and assets

In my blog post last week, I gave some practical advice about an important financial tool: the financial statement.

This week, I want to give you a new way of seeing your finances and the world through the filter of your financial statement. I want you to start seeing the world through assets rather than income.

Assets are not difficult to understand. I’ve heard many people say, “It’s not rocket science.” And it’s not. I think of it as pocket science—specifically “put-it-in-my-pocket” science. So as you pursue your financial goals, see, feel, and hear that money flowing into your pocket.

A Different Focus

Here is the revelation I had when looking at the income statement and balance sheet.

My focus today is on acquiring assets

The key to financial freedom is to focus on acquiring assets.

My focus today is on acquiring assets

I was always told to focus on the income column. I was taught to get a job, work hard, and keep getting pay raises. Or if I worked on an hourly basis, I was taught I should put in more hours or increase my hourly rate. The focus was always on income, specifically ordinary earned income—increasing my salary, wages, or commission. As long as I put my focus and attention there, then I would be working hard for that income all my life.

The lights came on when I realized that the key to financial well-being is not to focus on acquiring income but to instead focus on acquiring assets.

When I made that connection, life became easier, both in my personal financial life and in our business – The Rich Dad Company. I focused on acquiring assets personally and also focused on the assets we were building within our company.

I also began asking one important question: What new assets am I building today?

It is simply a different way at looking at the world.

Carrie’s story

Carrie, a woman I’ve met a few times, overheard me talking with my friend about assets. She jumped into our conversation and said, “I’m so fortunate. I just received a big asset—a large inheritance from my uncle.”

My friend asked her, “What are you going to do with it?”

She said, “Well, the first thing I’m going to do is take twenty family members and friends to Hawaii for two weeks. First-class hotels, yachts—whatever they want. I’ve budgeted about $300,000.” Our jaws dropped open.

“And then what?” my friend just had to ask.

“After Hawaii,” she said, “I’m going to start looking for a new home with a big swimming pool.”

We smiled, wished her well, and moved on. Even an inheritance may not be an asset if you don’t have the financial intelligence to use it well.

Invest in assets for true wealth

The strategy to achieve infinite wealth, where the cash flow coming in is equal to or greater than your monthly expenses, is very simple: Stop focusing on income and start acquiring assets that give you cash flow.

It’s no secret that wherever you put your time, energy, and focus will grow in your life. So if you want to achieve your financial dreams, you may want to put your time, energy, and focus on acquiring assets.

Original publish date: October 10, 2013

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