The word literacy is probably nothing new to many of us, from a young age, we were send to schools of different levels (primary, secondary, college, polytechnics, universities, post-graduate, professional certificates), to learn knowledge, skills and ultimately become literate and educated in our specific industry or professional skill.
However, do you recall, when you were a young child, were you ever taught on financial literacy ? Are you a highly educated, professionally successful but yet financially illiterate ? We can make a lot of money but we can also spend all the money we earn and not keeping any money at all.
Robert T. Kiyosaki, wrote, in his powerful book “Rich Dad Poor Dad“, Chapter 3 – Why Teach Financial Literacy?, the key to building wealth in the future lies in a simple rule of of solid and deep foundation :
- Understanding the difference between an asset and liability
- Buying Asset, Reducing Liabilities
The rich people acquire assets, the middle and poor acquire liabilities, thinking that they are assets. “An Asset is something that puts money in your pocket, A Liability is something that takes something out of your pocket”
In order to further understand the above points, a person needs to know about their Income Statement and Balance Sheet ~ Income vs Expenses and Assets vs Liabilities. Failure to understand the key relationships between these 2 concepts have resulted in many people struggling financially today.
Would you like to take the first (brave and wise) step to understand and learn about 2 simple accounting concepts that must be applied to your everyday life and lifelong planning ?
Or you simply don’t care ?