Robert Kiyosaki is one of the most well-known names in personal finance largely due to the success of his best-selling book, “Rich Dad Poor Dad.” He wrote that workers won’t get rich toiling away at a conventional nine-to-five job.
His advice continues to resonate with people, so GOBankingRates has once again selected him as a finalist in its 2015 Best Money Expert competition presented in collaboration with Ally Bank. As part of this year’s competition, Kiyosaki was asked to share his best money tip for 2016.
“Don’t wait for the government, a financial advisor or your boss to take care of you,” he said. “You must take control of your finances. You must get financially educated. Take responsibility for your life and your future.”
Here are 10 of Kiyosaki’s best money tips of all time to help you take control of your finances as you head into the new year.
1. Financial Education: The Key to Wealth
Kiyosaki has said that his true passion is teaching. He created the Cashflow board game and the financial education-based Rich Dad Company to teach people about money management. The board game is designed to simulate real-life financial strategies and scenarios.
“Financial education and getting smarter with your money is always a great way to prepare for the future, whatever it holds, good and bad, and hedge against all the unexpected speed bumps on the road to financial freedom,” Kiyosaki told GOBankingRates.
2. Take Control of Your Finances
No one cares as much about your financial security as you do. So Kiyosaki’s advice is to “take responsibility for your finances or take orders all your life.”
He added: “You’re either a master of money or a slave to it.”
3. Pay Yourself First
Budgeting isn’t only about paying the bills. It’s also about paying yourself first by socking away money routinely.
“When Kim and I were first married, we committed to making our investing an expense in our budget,” Kiyosaki wrote on his Rich Dad blog. “Each month, we paid ourselves through our expense column the money we needed to save up for and purchase assets that would provide us cash flow. This was an example of an expense that made us rich.”
4. Have a Contingency Plan
In the event of a job loss, decrease in income, medical emergency or other unexpected situation, it’s important to have a contingency plan and cash reserves to cover expenses, he said.
“Setbacks often leave us reeling since they’re often unexpected and can involve high emotion. And when emotion goes up, intelligence goes down,” Kiyosaki said. “I try to step back, calm my emotions and ask myself: What’s the lesson here? What can I learn from this? How can I be better prepared in the future?”
5. Spend on Assets, Not Liabilities
To get ahead financially, Kiyosaki recommended that you spend money on assets that generate wealth such as real estate. You can’t grow your wealth if you’re spending it on cars, clothes and vacations.
Yet, Kiyosaki said that people should not consider their house an asset, even when it’s paid off. “The home that I live in still costs me money every month for utilities, taxes, insurance [and] maintenance,” he said in a published interview.
6. Make Money Work for You
Kiyosaki has often said that stashing your money in a savings account earning a low rate of return won’t make you rich.
“Invest it,” he said. “Put your money to work for you instead of working for money all your life.”
7. Know the Difference Between Good and Bad Debt
Contrary to what you might think, Kiyosaki said that not all debt is bad. “The first step in a debt strategy is to understand the difference between good debt and bad debt — and how good debt can make you rich,” he said.
For example, getting a mortgage to buy income-generating rental property is considered good debt. Bad debt is when consumers overspend and find themselves with too much credit card debt.
“Kim and I had lots of bad debt at one time in our lives and we did two things: systematically paid it off and thought long and hard about [accumulating] any new bad debt,” he said. “Most important, we started to look for new and creative ways to make good debt work for us in business and real estate.”
8. Learn From Your Mistakes
When Kiyosaki worked for Xerox, he wanted to learn how to be a better salesman. He volunteered for a charity and made cold calls to ask for donations.
“Paradoxically, the more I failed as a volunteer, and learned from those failures, the more successful I became as a salesman,” he wrote. “At the end of the day, successful people are those who practice, practice, practice, fail, fail, fail and eventually succeed as a result.”
9. Take Advantage of Market Downturns
One of the tenants of investing is to buy low and sell high. Yet emotions often drive investing decisions, and people end up getting out of the market when it tumbles. But that’s when it can be a good time to buy up stock to add to your portfolio.
“The true investors make more when markets crash,” Kiyosaki said in a recent interview.
10. Work With a Team
To succeed, you need support, especially when it comes to business and investing. “Money is important to success, but it’s only a component,” he wrote. “There are other people who help a venture to be successful.”
Kiyosaki has said that his rich dad called business and investing team sports. “The reason why employees and self-employed people often lose against business owners and investors is because they are individuals playing against a whole team,” he said.