Episode 1 Rich Dad Poor Dad Flashcards
Asset
an asset puts money in my pocket (whether I work or not).
Liability
a liability takes money out of my pocket.
Income Statement
aka Profit and Loss Statement, it measures money in and money out
Balance Sheet
balances assets against liabilities
401(k)
A U.S. retirement plan developed by the ERISA Act of 1974 when companies realized they could not provide for retirees’ health care.
Cash Flow
Cash coming in (as income) and cash going out (as expenses). It is the direction of cash flow that determines whether something is income, expense, asset, or liability. Cash flow tells the story.
Financial Aptitude
What you do with the money once you make it, how to keep people from taking it from you, how to keep it longer, and how to make that money work hard for you.
Income
The money that is received as a result of the normal business activities of an individual or business.
Mutual Fund
A variety of stocks, bonds, or securities grouped together, managed by a professional investment company and purchased by individual investors through shares. The shares possess no direct ownership value in the various companies.
Social Security
A social welfare or social insurance program commonly funded through automatic payroll deductions to subsidize persons in their old age.
Bond
A debt security in which the authorized issuer owes the holders a debt and is obliged to repay the principal and interest at a later date, termed maturity.
Entrepreneur
Someone who creates a system to offer a product or service in order to obtain a profit. Entrepreneurs are willing to accept a level of risk to pursue opportunity and are viewed as fundamentally important in the capitalistic society.
Financial Statement
A statement of your income, expenses, assets, and liabilities. Your “report card” when you leave school and what your banker wants to see before lending you money.
Stock
The capital raised by a corporation through the distribution of shares.
The following are REAL ASSETS…
Businesses that do not require my presence
Stocks
Bonds
Income-generating real estate
Notes
Royalties from intellectual property
Anything else that has value, produces income or appreciates, and has a ready market
Financial IQ
Financial intelligence that comes as a result of financial education. People with high financial IQ learn to use other people’s money to become rich.
Financial Literacy
The ability to read and understand financial statements, which allows you to identify the strengths and weaknesses of any business.
3 Main Management Skills Needed for Success
Management of Cash Flow
Management of Systems
Management of People
5 Main Reasons Why Financially Literate People Do Not Become Wealthy
1.-Fear
2.-Cynicism
3.-Laziness
4.-Bad Habits
5.-Arrogance
0 Steps to Develop Your God-Given Powers
1.-Find a reason greater than reality: the power of the spirit (you must have a strong WHY)
2.-Make daily choices: the power of choice (choose to be rich through your daily choices & spending habits)
3.-Choose friends carefully: the power of association (surround yourself with wealthy people you admire)
4.-Master a formula and then learn a new one: the power of learning quickly (Learn investing formulas that work)
5.-Pay yourself first: the power of self-discipline (Read “Profit First)
6.-Pay your brokers well: the power of good advice (Pay good advisors well)
7.-Be an Indian giver: the power of getting something for nothing (Get your initial investment back quickly)
8.-Use assets to buy luxuries: the power of focus (Use cashflow from investments to buy the things you want)
9.-Choose heroes: the power of myth (Have heroes that have achieved what you want to achieve)
10.-Teach and you shall receive the power of giving. (When you want something, give first, and it will come back to you)
