Lesson 2 – The Merchandise of Kings!

What is “The Merchandise of Kings”?

“Power is simply ‘the ability to act’. Since ancient times, power has been the commodity of kings. Power originally came to those who were physically stronger. Later, it came to those who had a special heritage to through royalty. More recently, it came to those with the greatest wealth or capital. Today, those who possess specialized and valuable knowledge have the greatest capacity for power.”Anthony Robbins – from his book Unlimited Power

Specialized and valuable knowledge.

In Lesson 1, we learned that there are only two things that can keep you from getting rich. You don’t know how, or you’re not willing to apply what you know. Today we will dive into reason number one.

Simply put, chances are you’ve never been taught how to get rich. Think for a moment, what is it that separates you from the Donald Trumps of the world or from any mega-rich person?

It’s time? Nope! We all have the same 24 hours in each day. However, as you will learn, how you spend your 24 hours will make a difference.

Is it a privileged environment? No problem. Remember that rags to riches require rags to start.

AHA! It must be education! Absolutely not! At least not in the traditional sense. When we think of education, most of us think of going to school, graduating, possibly going to college or grad school so we can graduate and get a good “JOB.” Traditional education teaches us to become a productive part of the workforce, but it in no way teaches us the fundamentals of wealth! Maybe you remember going to algebra class, or studying a foreign language, history, or economics.

How many times have you gone to Wealth Building 101 or Advanced Personal Financial Success? We never suspect, and if you attended classes that you think were teaching wealth building, doesn’t it make sense that your instructors were rich? It was them?

Did you know that Fred Smith, founder of Federal Express, received a “D” in his final paper? The one that describes the world’s first overnight package delivery service! Also known as Fed_Ex

Avis from AVIS Car Rentals, McDonald’s from McDonald’s Burgers, Colonel Sanders from Kentucky Fried Chicken, Lear from Lear Jets, Henry Ford, and Abraham Lincoln all have one thing in common: they never graduated from HIGH SCHOOL!

So much for traditional education!

The fact is that the specialized and valuable knowledge of wealth creation is self-taught. The good news is that it’s easy to understand and fun to learn, and if you apply that knowledge, you’ll start building wealth.

Welcome to your first day of class, Wealth Creation 101.

How did most rich people get like this?

If you knew that you had a 74% chance of winning, would you buy a lottery ticket? Millions of people line up each week to buy lottery tickets for a chance to get rich. Yet according to the US Department of Health and Welfare, less than 1% of all wealth in America was created by lottery winners.

What if you could beat the odds!

74% of all wealth in America was made in one way; starting and owning your own business. If you own your own business, your chances of getting rich are 284% higher than any other way wealth is created. This includes all other methods of getting rich, from professional athletes to savvy investors to lottery winners! It makes perfect sense that if your goal is to get rich, you should have your own business!

So now we have learned that the greatest opportunity to get rich is to own your own business.

The second set of valuable, specialized insights is a whole new way of looking at your personal finances.

Robert Kiyosaki, in his #1 bestselling book, developed an entirely new and simplified way to understand your personal income and spending patterns, and how they are moving you closer to or further away from becoming rich. Explain these cash flow concepts in more detail.

The following information is compiled from his book Rich Dad Poor Dad – What the Rich Teach Their Kids About Money That the Poor and Middle Class Don’t! and Robert’s website: http://www.richdad.com

financial statements

Rich Dad said, “The riskiest investor of all is a person who is out of control of their personal financial status. These are people who have nothing but liabilities they think are assets and both expenses and income and whose only source of income is your job.”

Understanding your financial status is the foundation for taking control of your personal finances. Rich Dad believed that the relationship between the income statement and the balance sheet was everything. What is the first step towards financial freedom? Take control of your Financial Status.

Cash flow pattern of the poor (or a young person still living at home): The poor spend every penny they earn and have no assets or liabilities, only expenses. Cash flow is limited to income and expenses and the cash flow pattern of the poor reflects income from a job that is used to pay expenses such as rent, food, clothing, transportation and taxes.

Middle Class Cash Flow Pattern: Middle class people accumulated more debt as they became more successful. A pay raise qualifies them to borrow more money from the bank so they can buy personal items like bigger cars, vacation homes, boats, and RVs.

Your salary income comes in and is spent on current expenses and then on paying off this personal debt. As your income increases, so does your personal debt. This is what we call the rat race.

Cash Flow Pattern of the Rich: The rich make their assets work for them. They have gained control over their spending and are focused on acquiring or building assets. Their businesses pay most of their expenses and they have few, if any, personal responsibilities.

An individual’s cash flow pattern may show a combination of these three types. What pattern does your financial statement reflect? What story does your financial statement tell? Do you have control of your expenses?

As you can see, the poor, the middle class, and the rich all have radically different cash flow patterns. The poor and middle class work for income and spend their money on necessities or servicing a growing debt load; while the wealthy make their money or assets work for them, reinvesting their income in additional income-generating vehicles.

Part of being financially fit to get things going. You may be wondering, “How can I invest the income I earn in income-generating assets when I already spend most or all of my income on necessities and debt?”

In tomorrow’s lesson, we’ll show you how to immediately put extra money in your pocket, this month, without changing your job, asking for a raise, or taking profit from whatever business you choose to start. In fact, tomorrow we’ll show you how you can finance your first income-generating asset with your leftover cash to help you with your monthly budget.

That’s all for today’s lesson.

Here are the key points to remember from today’s lesson:

When it comes to building wealth, no formal education is necessary and it does little to prepare you to become rich. 74% of all wealth in America was made in one way; starting and owning your own business.

Your biggest chance to get rich is owning your own business.

The poor, the middle class, and the rich all have radically different cash flow patterns and spending habits.

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