The first book on money I read was the classic Rich Dad, Poor Dad by Robert Kiyosaki. There is some controversy surrounding Robert Kiyosaki, but that does not change the fact that this book radically changed the way I looked at money. For this reason, I think it the perfect book to start with.
I was raised to see money as something you worked hard for. My parents always struggled financially, but they worked hard and were able to send me to one of the best private schools in my city. I believe that seeing my parents struggle financially, whilst at the same time attending a school with a lot of wealthy kids, was what gave me my interest in money and finance (I have a Commerce degree and currently work in Business Banking).
The first big insight in Robert Kiyosaki’s book is the following:
The poor and the middle class work for money.
The rich have money work for them.
For me, the power of this insight came from the realization that a high paying job does not necessarily make someone rich. Rather, wealthy people generate a large proportion of their income from assets. It is also important to distinguish assets from liabilities. Assets are something that puts money in your pocket. A liability is something that takes money out of your pocket. As Robert Kiyosaki writes:
Rich people acquire assets. The poor and middle class
acquire liabilities, but they think they are assets.
The poor an middle class often incorrectly consider their new car or family home to be assets. This is not so as they will both take money out of your pocket! To better understand an asset consider the following: a business, a website, a share portfolio or an investment property. Each of these has the potential to put money into your pocket. Furthermore, they have the potential to generate income for you 24/7. This is what is meant by having money work for you.