4 Tips on Budgeting to Become Rich

How the rich budget to get richer

Last week, I wrote about how budgeting gives crucial insight into your financial mindset. In that post I wrote, "Want to be rich? Learn to budget like the rich."

This week I want to dive a bit more into what it means to budget like the rich, giving you four crucial tips my rich dad gave me.

#1 - A budget surplus is an expense.

One of rich dad's most important lessons was, "You have to make a surplus an expense."

What he meant is that most people view a surplus as an asset. They place their extra cash in the bank or they spend it on liabilities. Rather than view extra money as an asset, rich dad viewed it as an expense in the form of charity, investing, and saving.

Most people want to give to charity, invest in assets, and save money, but the problem is that they view it as something to do after they've paid their expenses. By making these things expenses in his budget, my rich dad ensured that he would make them a priority. He called it paying himself first.

#2 - Your expense column is a crystal ball.

If you want to predict a person's financial future, look no further than their expense column.

Here's an example of two different expense columns:

Person A:	Person B:
Donation to charity	Six-pack of beer
Savings	New shoes
Books on investing	New TV
Seminar on real estate	Football tickets
Gym dues	(Another) Six-pack of beer
Personal coach	Bag of potato chips

While that's a humorous example, it's not far from the truth. When you look at most people's expense columns, they're littered with payments to other people and for liabilities. In each case, expenses only go to things that permanently take money out of your pocket, rather than things that will make money.

What Are You Doing To Make Your Dreams A Reality?

Take a look at your expense column. What does it say about you?

#3 - Use assets to pay for liabilities.

My poor dad was frugal and thought that was a virtue. If he wanted a luxury item, he'd simply deny himself that item. He'd say, "We can't afford it."

My rich dad loved luxury and if he wanted a nice toy, he'd find a way to buy it. He wasn't reckless with his money. Rather, he was smart in how he made it work for him and used his financial education. He asked, "How can we afford it?"

By increasing his assets, which increased his monthly cash flow, my rich dad used this money to purchase his luxury items and liabilities. If he wanted a nice car, he'd invest money until the asset produced the cash flow required to purchase that car. Then he had a nice car and a great asset.

Kim and I have used this philosophy over and over in our life to buy things we enjoy and build our wealth in the process.

#4 - Spend to get rich.

Being able to execute on the first three budgeting tips means building a mindset that says, "When the going gets tough, the tough get going." Most people stop spending on charity, investing, and saving when times get tough. The rich, however, figure out ways to make more money by spending more money on assets, even when times are tough.

When Kim and I were over $1 million in debt, we could have easily thrown in the towel, gotten jobs, and settled into a middle-class life. Instead, we always paid ourselves first by budgeting for financial education and investments (much to our bookkeeper's despair), and hustled hard to find ways to make more money to pay our bills.

By pushing through those hard times, we developed a mentality that enabled us to make more money, no matter what the circumstances-and you can do the same. And that will make you richer than you ever imagined.

Source

Erna Basson interviews Kim Kiyosaki on how women can become Entrepreneurs

Doing the Impossible

An exercise in self-sabotage helps you clear the path to entrepreneurship

“We are all faced with a series of great opportunities brilliantly disguised as impossible situations.”
— Charles R. Swindoll

In the continued spirit of January being the perfect time for creating new habits and fresh perspectives, I have a new challenge for you: Stop sabotaging yourself with your own thoughts and actions! All too often, we place limitations on ourselves that prevent us from living out our dreams. Whether your dream is financial freedom, jumping out of an airplane, losing weight, or expanding your social circle, we sometimes get in our own way—and often, without even realizing it.

Here are a few ways we do that:

1. Comfort zone. Our critical inner voice likes to keep us in a nice, safe box. Our brains view this as self-preservation, because it wants to protect us from feeling vulnerable, making a mistake, being judged or being disappointed. That critical inner voice may say “you aren’t worthy” or “that’s too much work,” or “what’s another slice of pizza gonna matter at this point?” You’re may be so programmed to listen to that voice that you’ve even started to believe it.
2. Negative self-image. Whether this is leftover from a tough childhood, a painful divorce, a harsh boss or self-inflicted, your inner critic is so familiar to you that you don’t even stop to challenge it. We get stuck in patterns and then base our whole lives around those parameters because that’s what we are used to. The defenses we put up to protect us only limit our lives and our potential.
3. Fear. In almost everything you do in life, you either act out of fear (ego) or love. Fear is the energy that causes us to shut down, hide and silently suffer. Love is the energy that pushes, heals and allows us to open up. Fear of the unknown, fear of failure, fear of rejection and fear of judgment often holds us back. But if you don't fight through that very same fear then you’ll never know what you are capable of.

The Self-Sabotage Test

Now, do any of these classic self-sabotage situations sound familiar? If so, I’d like for you to humor me and take a few moments to do this quick exercise in creativity and overcoming assumptions:

Step 1: Divide a piece of paper into three columns.

Step 2: In the first column, brainstorm a list of all the things you’d do, if only they were possible.

Step 3: Then in the second column, next to each “want” write the obstacle that makes it “impossible.”

Step 4: Then in the third column, brainstorm a list of ways to get around these obstacles. As you’re doing this, remember: You don’t have to limit your solutions to things you can do personally—think of ways to leverage the abilities of others!

Step 5: Now, look at your list. What did you come up with? Do some of these situations now seem less “impossible?”

I’m here to tell you that we are more resilient than we think. Don’t let your own fear, negative self-criticism or comfort zone keep you down. Sure, you may try something new and fail. But I firmly believe we will never regret the things we’ve done, only the things we never tried.

And now that you’re more aware of this phenomenon, keep your ears open to instances when other people say things like, “If only I could…”, or “That’s impossible…”, or “I can’t because…”. When you hear these sorts of comments, ask yourself, “What could solve this person’s problems? How could a business be built around solving this problem for people?”

You may discover a great business idea or opportunity that you can leverage into wealth. At the very least, it will get your mind in the habit of thinking like an entrepreneur.

Source