How To Budget Like the Rich During the Holidays, According to ‘Rich Dad’ Robert Kiyosaki

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Each year, the holiday season brings joy and memories to families across the United States. However, it can also bring stress to those who aren’t prepared.

The National Retail Federation reports that Americans spent $875 on holiday expenses in 2023. Expenses from travel, events and gift-giving can rack up quickly through November and December if you don’t adjust your budget.

Robert Kiyosaki, author of the New York Times bestseller “Rich Dad, Poor Dad,” has advice for anyone worried about their holiday spending. In a post to his website, he outlined how the rich budget for the holidays and which adjustments you should make to enjoy the holidays without sinking your finances.

Here’s what you should know to budget like the rich during the holiday season.

The Importance of Budgeting

No matter the time of year, having a budget is essential for knowing where you stand financially and controlling your future. The Federal Reserve reports that only 54% of American adults have three months’ worth of emergency savings as of 2023. Budgeting can help you become the financial minority.

Kiyosaki explained that there are four key things that you must know before creating a budget:

• Income: the amount of money you make each month
• Expenses: the amount of money you spend each month
• Assets: the total value of your savings and everything you own, such as your home, car and investments
• Liabilities: the total value of what you owe, such as student loans, credit card debt and your mortgage

With these four components, you can determine your net worth by subtracting your liabilities from your assets. If your net worth is lower than you want it to be, you can find ways to reduce your monthly expenses to put more of your income into savings and investments. Budgeting effectively guarantees you stay on the path to long-term financial success no matter what time of year it is.

The Wrong Way To Budget

Keeping a budget is essential for improving your finances. However, simply tracking your expenses doesn’t guarantee financial improvements. One of the major budgeting mistakes that Kiyosaki noted is keeping an eye on your spending while still lacking a real plan. Monitoring your monthly expenses might help you refrain from overspending, but it will do little to bolster your savings and long-term success. Often, individuals who only track their expenses end up with nothing or very little left over at the end of the month, meaning there isn’t much to put into savings.

Another budgeting mistake is using a budget to determine how much you’ll have left over at the end of the month. These individuals might keep a close eye on their spending and follow a strict budget, but they don’t reward themselves for their efforts correctly. Instead of putting their money toward investments that would compound over time, they use the money they’ve put away to upgrade to the newest iPhone or take a vacation to Disney World. Kiyosaki points out that this saving-to-spend-more budgeting model isn’t going to amount to long-term gains.

How To Budget for the Holidays

If you don’t want to feel financial stress at the end of the year, you must realize that holiday budgeting doesn’t start a month before Christmas. Kiyosaki explains you must set up your budget to produce passive income, some of which you can spend when the holiday season rolls around.

Instead of using a budget to balance income and spending, Kiyosaki said you should use it as a guide to create more money. For this budgeting model, you must regularly put your income into assets that create passive income streams. Examples of these money-generating assets include:

• Real estate: Purchasing a property and renting it out is an excellent way to generate cash flow. Renters pay you each month, which you can then use to repay the initial loan on the property, invest in a new asset, or even put toward holiday shopping.
• Dividend stocks: Buying stock in a company that pays dividends allows you to share in its profits. These companies pay shareholders in cash or additional shares at set times throughout the year.
• Products: Products you create once and sell online can serve as a long-term income source. Creating online courses, selling digital photography, writing a blog with affiliate links, or starting a YouTube channel that generates ad revenue can all create passive income.
• Businesses: Starting a business may not seem like a typical path to passive income, but some models allow for it. Creating businesses focused on services like vending machines, storage units, or laundry machines can make money with minimal upkeep.

Putting a percentage of your monthly income toward money-making assets will expand your earning potential. With more money coming in, you won’t need to worry about holiday spending like those who have made budgeting mistakes.

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