5 Frugal Habits of Robert Kiyosaki
According to data from the Federal Reserve of St. Louis, Americans saved only 3.6% of their disposable income for the month of February. This is down from the 5.4% amount a decade ago and much lower than the typical savings rate before the pandemic.
If you want to save money and build wealth, you’ve likely sought advice from some popular personal finance experts. When it comes to frugality, Robert Kiyosaki, the founder of the “Rich Dad Poor Dad” brand, has unique views compared to others.
What are Robert Kiyosaki’s frugal habits? We will explore how the financial expert saves money and creates wealth.
Also see seven of Kiyosaki’s money secrets.
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Invest In Your Financial Education
Kiyosaki is a proponent of investing in financial education and believes you should learn how to manage your money properly. As important as frugality is, you want to ensure that you’re getting the correct financial information.
“A solid financial education allows you to know the difference between good advice and bad advice, rich advisers and poor advisers,” Kiyosaki explained in a blog post.
When you invest in your financial knowledge upfront, you don’t have to stress as much about daily expenses. Frugal people are aware of the importance of learning about how to manage money to stretch their dollars further.
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Pay Yourself First
Kiyosaki believes that paying yourself first is an effective strategy for saving money. This one frugal habit allows you to save money without feeling too restricted since you’re not constantly denying yourself.
Robert and his wife Kim came up with the 10/10/10 plan and they decided to allocate 30% of their paychecks into the following segments:
Investments: The couple started putting 10% into quality investments that they found, often real estate, in the beginning.
Savings: Another 10% of their income went towards emergencies and other savings that were not intended for survival.
Charity: The final 10% went towards charitable donations since they believe in giving back.
With 10% going to each segment, they paid themselves first and then saved money. One of the best frugal habits you can implement is finding ways to set funds aside without it feeling like a hassle.
Borrow Money Only to Invest in Assets
In this YouTube Shorts clip, Kiyosaki stated that he borrows money to invest in assets. He stresses that poor people will borrow money on a credit card to purchase a luxury item or vehicle they can’t afford, which will hold them back. He doesn’t believe in racking up credit card debt or borrowing money to enjoy yourself because this will hurt your future financial situation.
The core of Kiyosaki’s frugality revolves around not borrowing money for liabilities. So while some personal finance experts will suggest buying a house in cash, Kiyosaki doesn’t mind borrowing money to invest in assets because these can be used to cover your liabilities.
This brings us to the next point.
Use Assets to Pay For Liabilities
Kiyosaki advocates investing in assets that will pay for your liabilities since he doesn’t emphasize daily expenses as much as other financial experts. The logic here is that you can treat yourself as long as you invest in assets that will cover your liabilities.
When you increase your assets, by investing in real estate, stocks or anything that provides you with a monthly cash flow, you have more money to buy luxury items or to spend on whatever brings you joy.
For example, instead of financing a vehicle upfront, you can invest in a rental property that will pay you the money needed to purchase a vehicle. You can use your stock dividends to cover your caffeine habit. The basic premise is that you want your assets to cover your spending so you don’t have to feel limited by your frugality.
Don’t Just Focus on Saving Money
One of his more controversial views is that you shouldn’t save money. He even declares that savers are losers. Kiyosaki doesn’t want you frivolously spending money, he would just prefer that you invest the savings instead of leaving them in an account that doesn’t earn much interest.
The goal is to find assets and instruments that outpace inflation, so your money continues growing for you. He often stresses how periods of soaring inflation could lead to your savings losing value since your account could be paying you a much lower interest rate than the amount that overall prices are rising by.
Kiyosaki summarized his thoughts in a blog post:
“You don’t have to go out and buy a ten-unit apartment building or throw all of your money in the stock market. But, you have to do something! Learn about other options … just get started; do anything but rely on savings. Remember, savers are losers.”
The main message is to learn and study as much as you can about investing. You should also embrace frugality, pay yourself first and invest in assets. These simple frugal habits should help you build wealth and prepare for retirement.
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This article originally appeared on GOBankingRates.com: 5 Frugal Habits of Robert Kiyosaki