Rich Dad Poor DadI don’t encourage anyone to start a company unless they really
want to. Knowing what I know about running a company, I wouldn’t
wish that task on anyone. There are times when people can’t find
employment and starting a company seems like the best solution. But
the odds are against success: Nine out of ten companies fail in five
years. Of those that survive the first five years, nine out of every ten
of those eventually fail as well. So only if you really have the desire to
own your own company do I recommend it. Otherwise, keep your
day job and mind your own business.
When I say mind your own business, I mean to build and keep
your asset column strong. Once a dollar goes into it, never let it come
out. Think of it this way: Once a dollar goes into your asset column, it
becomes your employee. The best thing about money is that it works
24 hours a day and can work for generations. Keep your day job, be a
great hardworking employee, but keep building that asset column.
As your cash flow grows, you can indulge in some luxuries. An
important distinction is that rich people buy luxuries last, while the
poor and middle class tend to buy luxuries first. The poor and the
middle class often buy luxury items like big houses, diamonds, furs,
jewelry, or boats because they want to look rich. They look rich, but
in reality they just get deeper in debt on credit. The old-money
people, the long-term rich, build their asset column first. Then the
income generated from the asset column buys their luxuries. The poor
and middle class buy luxuries with their own sweat, blood, and
children’s inheritance.
A true luxury is a reward for investing in and developing a
real asset. For example, when my wife Kim and I had extra money
coming from our apartment houses, she went out and bought her
Mercedes. It didn’t take any extra work or risk on her part because
the apartment house bought the car. She did, however, have to wait
four years while the real estate investment portfolio grew and began
generating enough extra cash flow to pay for the car. But the luxury,
the Mercedes, was a true reward because she proved she knew how to
grow her asset column. That car now means a lot more to her than