Advantages Of Cash Flow Statement Over Fund Flow Statement Free Book Summary – Unfair Advantage: The Power of Financial Education – Written by Robert Kiyosaki

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Free Book Summary – Unfair Advantage: The Power of Financial Education – Written by Robert Kiyosaki

Robert Kiyosaki has a clear message. America needs financial education. Right now our education system is broken and nothing is being taught that prepares people for financial independence. All of Robert’s books are good and teach the basics about financial education and the need for continuous learning. Rich Dad/Poor Dad is another famous book of this author. We will give a separate summary of that book

The cashflow quadrant is a very important concept that people need to cement in their memory if they want to gain control of financial freedom. Quadrants include:

1.) E – stands for Employee

2.) S – stands for Small Business or Self Employed

3.) B – means large business (500 employees or more)

4.) I – stands for Investor

Traditional education prepares us for the E and S quadrants. Getting a good job and saving in a 401K for retirement is the mantra going into school and then college. As many of you know this is not a good model in this day and age. On a side note, I was very fortunate to grow up with an excellent financial teacher. My father taught me the principles that Mr. Kiyosaki teaches in his books Rich Dad/Poor Dad, The Cashflow Quadrant, and Unfair Advantage. I can also tell you that most people are financially illiterate. Writers like Mr. Kiyosaki and Dave Ramsay are really needed and we are doing what we should be teaching in our school systems nationally.

Why is this important to me?

This can be answered by asking a few more questions. Do you know the difference between good debt and bad debt? Can you define assets and liabilities in simple terms?

Did you know there are three types of income taxes?

If none of this is clear to you, you need to read this book. In short, I will answer all these questions. A good loan is one that spits out positive cash flow and increases in value. Thus if you have a rental home loan that generates positive monthly cash flow, it is a good loan. If you have credit card debt that you don’t pay off every month, it’s bad debt. In short, good debt makes you money and bad debt costs you money.

Assets and Liabilities! Anything that generates positive cash flow is an asset while anything that costs you money is a liability. Example: A business that generates monthly profits is an asset. Your home is a liability. I know many of you will disagree with this but your house has to be paid for every month. This is not a bad thing but because you need a place to live but it is a responsibility.

Includes three types of income: ordinary, portfolio and passive. We’ll go into more detail later in this summary about how they play a role in your financial freedom. If you want to be financially free and get out of the rat race of running out of money before the end of every month, this book is essential for you.

Unfair Advantage has many examples and details but for the sake of time we will cover each in summary.

1.Knowledge – Knowledge put to use equals power. There are many ways to make money in business, real-estate, stock market, content creation, licensing deals, internet marketing or many other endeavors. The point here is that nothing happens without educating yourself. Warren Buffet is the second richest man in the world known for his constant reading and learning ability. Unfair advantage is based on very high economic education, money goes in instead of out. You can pay zero taxes and make millions with very little risk by using other people’s money in good or bad economics. This creates a very unfair advantage.

2.Taxes – Taxes are government incentives to get people to do what they want to do. Since businesses thus create jobs and wealth, they have tax policies as incentives to keep the economy going. There is a big premise that people need to understand. I will make a difference. When you are an employee, you work, pay your taxes, and then get your money to spend. When you run a business, you work, pay all your expenses, and then pay taxes on what’s left over. This is completely legal and can legally increase the rate of return. Remember one thing – tax avoidance is prudent while tax evasion means jail time.

3.Loans – Good loans create real wealth by allowing you to use OPM (other people’s money). It is very powerful and requires discipline. This is an area I

I would like to talk about this book in more detail. Please note that loans used wisely can lead to leverage and unlimited wealth. Excessive debt can lead to financial ruin if misused. Also, know that 85+% of the US population has very high BAD debt. This is not what we are talking about. To truly achieve financial freedom, this must be taken care of. Use of debt is an advanced strategy and must be used wisely which requires financial education.

4. Risk – The biggest risk in investing comes from financially illiterate individuals giving their money to financial planners and hoping things work out. This has caused huge losses to people so far. Despite what the government says, inflation is still going strong. This is a bigger risk for savers than taxes. Saving money as an investment is a bad idea because over time inflation eats away at the value. 401Ks and mutual funds and diversification are all risk-free. This is far from the truth. 1. Mutual funds are subject to double taxation as well as the fees get deducted in your return. Also, you are not in control of your money. Note: This does not mean that all funds are bad. This is where financial education comes in. Many financial planners will tell their clients to diversify. According to Warren Buffet – “Diversification is a defense against ignorance.”

5. Compensation – Rich people don’t work for money. Think hard work for a moment. If you’re working overtime, you’re trading hours for dollars. The problem becomes that your marginal tax rate rises as you earn more ordinary income. Because you work more, your overtime is taxed more. I am not against hard work. Just make sure you pair it with smart and appropriate work. The wealthy work to buy assets that generate cash flow. Your goal should be to make your money work harder than you and make you more money as quickly as possible.

What assets will pay for your liability? This concept was first introduced in Rich Dad / Poor Dad. This simple question changes the entire frame of mind and if people follow it, they will be better off financially. So if you want a new boat, what property will you pay for the boat? Understanding this simple idea will change your world.

I hope you found this short video summary helpful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits are formed in 21 days. I recommend getting the knowledge of compounding ingrained in your head. Answer the following correctly and you will understand the power of compounding. Would you rather have $1,000,000 in cash today or double a penny every day for 31 days? You can email me with your answer at jmosed@successprogress.com.

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