The 3 things you absolutely need to know about becoming wealthy

+ Nate Chai reveals the three essential pieces of knowledge about wealth gleaned for Robert Kiyosaki’s Rich Dad Poor Dad

After reading Robert Kiyosaki’s Rich Dad Poor Dad (review here) it seems like becoming wealthy is the easiest thing in the world. The rules he gives you are fantastic and are 100 percent doable for anyone. In this article, I’m going to walk you through the basic steps in beginning your journey to becoming wealthy.

1.    Being Wealthy is not the same as being rich

Currency, wealth, money
Will a purse full of gold help you make better decisions?

Having already read a fair few “guides to wealth” a lot of Kiyosaki’s tips I’d heard many times before and in many different ways. However, I was shocked at how I’d been flagrantly using “wealthy” and “rich” interchangeably throughout my life.

Anyone can be rich, all you need is a lot of zeroes on your bank account statement. Kiyosaki gives a wonderful definition of wealth (which he borrowed from Buckminster Fuller):

“we can account wealth more precisely as the number of forward days for a specific number of people we are physically prepared to sustain at a physically stated time and space liberating level of metabolic and metaphysical regeneration.”

Essentially, Fuller is saying that “wealth” should be measured by how many days could sustain you and your family without stress, worry, and malnutrition, whilst not having a job-based income. For example, if my job pays me £2,000 a month and my outgoing costs are £1,000 a month, then my level of wealth would be one month.

How this affects you

In order to be truly wealthy you need to build up an asset base that provides you with the level of income that accomplishes three tasks:

  • Pays for your outgoing costs (food, utilities, insurance etc.)
  • Will allow you to focus your time on tasks that fulfil you
  • Keep you and your family emotionally and physically happy

For some of you, the figure may be quite high, for others it may be lower (mine’s £3,139.25 but I don’t have children or a mortgage). It may take some time to work out what your figure is, but once you have a figure, you’ve got a much more achievable goal.

2.    Once you start the journey it’s hard to stop

metaphor, wealth, how-to
Hopefully, your journey to wealth won’t be as cold Image Credit: Wikipedia

Arguably Kiyosaki’s best advice is when he defines the differences between the wealthy and the middle class:

The rich are rich because they focus on the long-term acquisition of assets… assets such as stocks, bonds, businesses and income producing real estate. Many times the rich will forsake meals, a steady paycheck, a vacation, or the comfort of a nice home, to build or acquire real assets.”

As soon as you begin acquiring assets you are creating a self-sustaining financial eco-sphere, that once begun is very difficult to stop.

Let’s say you’ve saved £1,000 and you put it in an investment that nets you an average of five percent yearly. Each year you re-invest the return, after 10 years you’ll have £1,628.98! At these levels, it doesn’t sound particularly sexy, but look at the actual numbers:

  • A five per cent return is the average for most low-risk investments
  • If you invest in stocks and the stock price goes up, your £1,000 will also be worth more
  • You earned £600 for literally doing nothing

Assets produce income, you re-invest the money you made from the assets, the assets make more money, you re-invest the money… and so on and so forth. Once you start acquiring assets and making asset acquisition your primary focus you’ll snowball.

As time goes on you’ll realise that in order to sustain yourself you needn’t work so many hours at your job or office, and have even more time to focus on asset creation.

3.    Wealth is a way of thinking

The thinker, Rodan, Wealth
A key part of becoming wealthy is learning to ponder exactly like this

Everybody wants to be rich and yet so few are. This is largely in part due to the sacrifice that must be made in order to build assets or cut expenses, I mean would you rather have £1,000 now, or the £1,628.28 in 10 years?

In many ways, wealth is a way of thinking. You need to trust yourself that you can mitigate your risks, you need to be able to see opportunity and have the drive to jump on it, and you have to put in an ungodly amount of time learning how to do it.

You have to really want to be wealthy in order to achieve it. You’ll have to give up on certain parts of your life, and you’ll have to take more risks, and you’ll need help. I opened this article by saying how it seems as if becoming wealthy is easy, but anyone who became wealthy will tell you that it’s not (or they’ll lie and tell you that they were lucky). Here are five traits that you need to cultivate in order to think “wealthy”:

  • Delayed gratification: “I’m doing this now so I don’t have to do it later”
  • Empathy: “How can this situation/tool/product help myself or others?”
  • Boldness: “If not me then who?”
  • Curiosity: “How does this work?”
  • Moderate: “That’s enough of that for now”

Wrap up

So there you have it, the only three tidbits you need from Robert Kiyosaki’s RDPD. Here they are again:

  • Prioritise developing systems that generate money in the most time efficient way possible
  • The first step is always the hardest, but once you take it you’ll be running in no time
  • Wealth is a mindset that you need to cultivate if you’re going to succeed

What were your three essential tips from RDPD? Let me know in the comments.

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