“…E’s and S’s [employees or self-employed] work for money….B’s and I’s [business owners and investors] work for assets.” — Robert Kiyosaki, Increase Your Financial IQ

First of all, let’s define what that even means. Robert Kiyosaki defines an asset as “anything that puts money in your pocket.” That is, there are things you can own (like shares in a corporation, or rental real estate, or royalties on a hit song) that just give you money.

But that makes the distinction seem kind of trivial. I mean, an asset is something that gives you money. So if you work for an asset, you get money. Sounds a lot like working for money, eh?

Ah, but here’s the important difference: an asset is permanent. When you stop working, it keeps putting money in your pocket (as long as the corporation makes money, people rent your real estate, or people keep buying your song). Whereas a job, as I’m sure most of you know all too well) is a one-shot, but-what-have-you-done-for-me-lately kind of deal.

Simplified Example

Suppose someone came up to you and said, “I’ll give you $1000/month for the rest of your life.” Would you take it?

    Obviously, yes

Suppose they said, “If you give me $10,000 right now, I’ll give you $1000/month for the rest of your life.”

    Assuming your life expectancy is greater than 10 months, you’d obviously take it

Suppose they said, “If you give me $10,000 right now, and do 80 hours of work, I’ll give you $1000/month for the rest of your life.”

    Still good. It might take you a few weeks to get your 80 hours in, but it’d be worth it

Suppose they said, “If you give me $10,000 right now and do 80 hours worth of work, I’ll give you $1000/month for 10 months out of the year, for the rest of your life.”

    Now you’re going to have to be a little smarter…. you don’t know which two months you won’t get the money, so you’ll want to be careful about how much you spend month to month. But it’s still obviously a great deal.

Suppose they said, “The work I need you to do is pretty technical, and it will take you several years to learn how to do it; I won’t pay you for that time. But if you

  • learn how to do that work
  • Do 80 hours worth of work
  • give me $10,000

I will give you $1000/month 10 times a year, and I will make this deal as often as you want.

    …?

What Rich Dad, Poor Dad wants you to know is that the last example is a pretty accurate model of reality. If you learn how to value real estate, how to spot a good deal, how to make offers, assess rent potential, raise funding, find a good property manager, etc, you can buy a house or condo or duplex that you can rent out for $1000/month. You don’t get paid for the time you spend learning, and you have to put in time to find the good deals, negotiate prices, etc. But thereafter you get “passive income” — income that happens whether you’re at your desk working or on a beach in southern France.

Or you could spend a couple of years learning how to make fantastic websites with lots of traffic, how to write content, where to host a website, some html, how to make an RSS feed, how to build a newsletter list, who has the best affiliate programs, how to build an e-goods store, and so on. Then build a website with thousands of visitors per month and an average monetization of $1/visitor. You wouldn’t even need $10,000 down.

That’s what working for an asset means: having money come in even if you’re injured, or too old to work, or just don’t feel like coming into the office today.

Is it worth the effort? Only you can decide. It is a lot of work. But it still sounds like a good deal to me.

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