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By understanding the tax code and the legal system, the rich stay one step ahead of the systems designed to rein them in.

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When Robert was back in school, one of his favorite stories was the tale of Robin Hood and his band of Merry Men – the pack of traveling vagabonds who stole from the rich to give to the poor. It was a thrilling story, he thought – but his rich dad disagreed. To him, Robin Hood seemed like a crook. You see, rich dad blamed the Robin Hood fantasy for inspiring the tax system he despised. Just as Robin Hood took money from the rich and gave it to the poor, so too did the government try to take from the rich to give to the needy. But, as rich dad explained, they didn’t actually succeed.  The way rich dad saw it, it was the middle class that ended up shouldering the burden of taxation, not the rich. The rich were far too clever and well-equipped for that, and deflected tax with sophisticated tools. One of the tools that the rich use to shelter themselves from tax is the corporation. A corporation is allowed to spend pre-tax dollars, after all, and is only taxed on what remai...

Mind your own business: make money for yourself, not your employer

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At this stage, you might feel like objecting. Sure, it’s easy to criticize secure, “rat-race” jobs while telling people to acquire assets – but how can you afford to buy those assets if you don't have a job in the first place? Is the money meant to fall from the sky? Nope. No one’s telling you to quit your day job – not yet, at least. What Kiyosaki does stress, though in his third lesson, is the importance of “minding your own business”.  Now, that doesn’t mean keeping your nose out of other people’s lives – not in this context. It simply means tending to your own finances, and making money also for yourself, not only your employer. In other words, minding your own business means making money through your portfolio of assets rather than through promotions, bonuses and raises. When it comes to personal finances, though, there’s a difference between your profession and your business: Your profession is whatever you do 40 hours a week to pay the bills, buy groceries, and c...

Successful people have an unwavering faith in themselves.

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Having an unwavering faith in yourself is a way of making sure that you can – and will – achieve your goals. You can only achieve success if it’s based on self-confidence and an unwavering faith in yourself: no wealth has ever been acquired, no faraway continents ever discovered, nothing ever invented without this faith as its basis. One paradigmatic example of the power of faith was Mahatma Gandhi. Even without access to the typical instruments of power – like money or the military – he managed to defy British colonial power and lead his country to freedom. The only backing he had was his unbending belief that he could exercise an influence so great upon his fellow countrymen that they would stand up for their common goals. Our own faith in ourselves has an enormous influence on our self-image and way of life. It can – in the truest sense of the word – help us move mountains. 

Goal setting and detailed planning are the basis of every achievement.

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Every success story begins with people who know what they want to achieve. So before you begin chasing after any old dream, you should start by defining your own personal goal as precisely as you can. For example, if you want to get rich, you should decide precisely how much money you want to make. Additionally, you must have a clear understanding of when you want to achieve your goal and what you’re prepared to invest to accomplish it. Because setting a specific goal is pointless if it’s floating in some indeterminate future where you’ll only ever be able to pursue it halfheartedly. It’s also important to come up with a plan that outlines every step you’ll need to take until the realization of your goal. And once you have a plan, get cracking! Don’t waste another minute. The following method comes in handy if you want to make sure that your desire for success is anchored deeply enough in your own thoughts and actions. First, write down your goal and your detailed plan for ...

Educate yourself about finances, identify real assets, and invest in them

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The rich become rich by making their money work for them. Instead of spending all their income on fripperies and luxuries, they invest a portion of it in assets of various types. And then, rather than working for money, they let their assets make money for them.  But let’s not get ahead of ourselves – when we left off, Robert was still just a kid, and the word “asset” didn’t belong in his vocabulary. But Mike’s dad, the rich dad, was about to change all that. One day he sat the boys down and explained to them that the rich buy assets, whereas the less well-off buy liabilities – often in the mistaken belief that it is, in fact, assets they’re acquiring. In truth, he explained, an asset is anything that adds money to your wallet. A liability, on the other hand, is something that takes money away. This differentiation is very important, and not many people get it right. So let’s look at an example. A house is often considered an asset, right? But actually, it’s one of the ...

Flipping the switch: introverts can also act like extroverts.

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Time and time again, every ambitious introvert ends up in situations where being extroverted is a must. Take a college professor as an example. Imagine that this professor is shy and reserved, but also wants to fill her students with enthusiasm for her subject matter. Even if she has an introverted temperament, this does not prevent her from switching into extrovert mode. By reflecting upon herself and others, she can learn to adapt her manner to various different situations, and to flip the extroversion switch at just the right moment. So what does she do while lecturing? She displays typically extroverted behavior: she takes long strides when she enters the room, speaks clearly and precisely during the lecture and maintains a nonchalant, relaxed posture. She can thus accomplish her goal; her students are captivated by her lectures and bombard her with requests for letters of recommendation. Classes proceed far more smoothly for her this way, too. After completing the miss...

The ideal of the successful extrovert prevails in the Western world.

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Who would you consider more competent: an extrovert who captivates other people’s attention and sets the tone, or an introvert who sits quietly in the corner and listens? Western society has a very clear answer to such questions. Extroverts are not only considered more qualified and intelligent because of their sociability but also more interesting and cooperative. Extroverts are often seen as being more physically attractive and nonchalant. The introvert prototype, on the other hand, is pale, nondescript and awkward – maybe even has bad skin or seems to be from a different planet. Based on this way of seeing things, extroversion is considered favorable for success in the Western world. This is highlighted by the author’s trip to a seminar by motivational speaker Tony Robbins. The event exalted extroversion above all else, calling it the key to standing out of the crowd in a competitive world. This trend is why professors at the Harvard Business School make it their mission...

The difference is cerebral: introverts’ brains show a stronger response to external stimuli.

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We all feel comfortable in different situations. Some people can think of no greater pleasure than sitting in a library; to them, even the thought of going to a techno club is unfathomable. Others are the polar opposite: there is no place they feel more at home than among a throbbing mass of people, and it would drive them crazy to spend a single afternoon in the library. Why are these stark differences? In an attempt to answer this question, psychologists and other researchers observed how infants responded to certain stimuli. In one experiment, they held cotton swabs soaked in alcohol under the infants’ noses while simultaneously playing a recording of balloons popping. The reactions of the children displayed two very distinct behavioral patterns: 20 percent of the children fell into the high-reactive category, that is, they reacted to the stimuli by screaming and kicking violently. Their pulse and their blood pressure also increased sharply. 40 percent of the infants wer...

Many introverts are highly sensitive, often responding strongly to their environment.

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The vast majority of introverts have yet another personality trait in common: they are highly sensitive. Extroverts, on the other hand, rarely exhibit this characteristic. People who are highly sensitive process information from their environment in an unusually thorough way. For instance, if they are told to search for images in picture puzzles, they will take more time observing and get more involved with the photos than those who are not highly sensitive. As a result of this complex way of perceiving, highly sensitive people find profound conversations about values and morals far more stimulating than the superficial anecdotes of a colleague’s recent vacation. While extroverts engage in small talk, introverts discuss climate change. Highly sensitive people’s intense processing of information is also noticeable in their sympathetic nature. Tragedies and cruelties have more of an emotional impact on them. Their skin seems to be thinner, giving them less protection from the...

By using auto-suggestion, our subconscious can influence our behavior.

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Unwavering faith in yourself is not necessarily something you’re born with or that falls from the sky: anybody can develop it, bit by bit, through auto-suggestion. Auto-suggestion describes a way of influencing yourself by thinking very specific and purposeful thoughts or ideas. You can use it to convey certain commands or positive goals to your own subconsciousness and, in doing so, to increase your own belief in yourself. In general, auto-suggestion consists of persuading yourself that: you can reach your goals; your thoughts can be transformed into reality and; you must go your own way with confidence. The more you use auto-suggestion, the likelier it is that it will help you achieve success. If you impress your desires and goals in your unconsciousness, it will steer all your thoughts and actions towards making them come true. 

Put your past in order and gain clarity about the future you want.

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Have you ever gone through your yearly spring clean only to find something which means the world to you, that you’d forgotten you still had? Tidying is more than just keeping a clean house: in the process of tidying, you can use the stuff from your past to help guide you into the future. Keepsakes from your past should bring you joy when you look at them. It’s worth keeping the ones that capture happy or exciting memories. When you begin the process of tidying, start with the easiest categories, e.g., clothes, books, documents, miscellaneous items, etc., and end with your sentimental items. Photos are the most difficult because of the sheer volume and emotional value. Be sure to keep the ones you remember taking and relive the excitement of that moment. But what do you do with sentimental items that you no longer want? Too many people look to their parents’ homes as a place to dump their junk. But it’s wrong not to consider their feelings when getting rid of sentimental tri...

A tidy home will improve both your body and mind.

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The purpose of tidying isn’t just to keep things clean and organized. Rather, your goal is to create a space that improves your body and mind. To do this, you should organize your living space in a way that feels most natural to you. When you’re sorting through your things, for instance, you’re also evaluating their purpose and usefulness to you. Letting go of something that no longer serves a purpose – and welcoming something new in its place – can be deeply therapeutic. As you are sorting, focus on what you want to keep, not what you want to throw out. Arrange your belongings by category, closely examining each one with your eyes and hands. Ask yourself: “Does this make me happy? What is its purpose?” For example, that loud jacket that was thrilling to buy but not to wear has already served its purpose, and now only collects dust. Let it go with gratitude, and move on. In this way, tidying ceases to be a cold, calculated process, and instead both comes from and heightens ...

Spend your time on the most important tasks instead of focusing on time management.

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You’re probably not a stranger to the concept of time management, often promoted by self-help books. The basic idea is to help you achieve more in the time you have, and this technique is proven to work: it increases productivity by around 15 to 25 percent. But there is an even better way to get efficient. In time management, the goal is to increase efficiency by fitting more tasks into a given period of time. It is aimed at executives who already have a busy schedule and the first step is to categorize one’s daily activities according to priority. This is where the problems start: most people don’t know which of their tasks are the most  important, and wind up defining some 60 to 70 percent of their to-do list as “high priority.” The result? They end up with jam-packed schedules and longer working hours. Clearly, forcing even more tasks into an already-full schedule is not a good solution, as you can easily become overworked and, in the worst case, suffer burnout. As a...

Apply the 80/20 principle to your daily life by changing the way you think.

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As you saw in the business examples, the 80/20 principle is normally applied by analyzing which 20 percent of inputs generates 80 percent of outputs. But in your daily life, it is difficult to perform an analysis like this. This means you need something else: 80/20 thinking. Conventional thinking is linear and assumes that all causes and inputs are equally important. For example, as children we are taught that all of our friends are equally valuable to us. In this scenario, 80/20 thinking would acknowledge the fact that actually not every relationship is as valuable. Some of our friends are more important than others, and the relationships we have with them are more meaningful. You could say that 20 percent of your friendships produce 80 percent of the “value,” meaning, for example, the feelings of joy and camaraderie that you get out of those relationships. The key difference between an 80/20 analysis and 80/20 thinking is that the analysis would require you to collect dat...

You can apply the 80/20 principle to any aspect of your business, from negotiating to targeting marketing efforts.

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Now you know how you can apply the 80/20 principle to narrow your product range and increase profitability. But what about all the other areas of business? Luckily, the 80/20 principle is so versatile that you can use it in virtually any area or function of business to increase the likelihood of success. For example, negotiations are an important part of any business, whether it’s with customers, suppliers or partners. Typically in a negotiation, the points to be discussed are often well prepared in advance, but there are far too many of them. An 80/20 analysis would probably reveal that only a few of the points actually really matter to your company, so you should focus on winning them rather than trying to argue for all points to go in your favor. Another example of putting the 80/20 principle to use is in targeting your marketing efforts. If some 20 percent of your customers generate 80 percent of your business, you should concentrate on identifying them and convincing t...

Simplify and reduce complexity in your business to succeed.

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As everyone knows, big companies are often very complex. This means managers must be adept at managing complexity, and they often even enjoy the challenge and intellectual stimulation it provides. But is accepting or even inviting complexity really the best way to become a successful company? Most people believe that size and a broad product portfolio are advantageous for a company, because the more products a company sells, the more profit it is supposed to generate. But in fact, internal complexity has huge hidden costs. A broad range of products requires, among other things, more complicated logistics, more training for salespeople and a lot more administrative work than a narrow range. These factors increase the overall cost to the company – possibly even more money than the additional products bring in. On the other hand, simplifying your business reduces costs. If you narrow down and focus your product range, everyone in the company will be able to devote their full a...

To increase profits in business, use the 80/20 principle.

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Now you know how to apply the 80/20 principle to your own productivity, but you’re probably wondering how you can apply it in a business. In fact, there are multiple ways you can do this, but perhaps the most important is optimizing the product range of your business. To do so, you must first analyze which of your product groups are generating the most profits. Simply rank all your products by profit and sales figures, and you will probably find that while the top products only account for 20 percent of sales, they generate 80 percent of the profit. For example, the author conducted a study at a company producing electronics and found that the top three products accounted for 19.9 percent of the total sales but brought in a whopping 52.6 percent of total profits. Once you have identified the 80/20 split in your company, the second step is to leverage and amplify the potential of that profitable 20 percent. Prioritize these products and focus your resources on selling more o...

Usually, the largest share of the results (output) is produced by just a small part of the work (input).

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Have you ever looked back on a project you worked on and found that most of your work was done right before the final deadline? Perhaps in the few days when you were almost out of time you achieved more than in all the previous weeks put together. In fact, similar imbalances between effort and reward can be observed in a variety of different settings. For example, many businesses have found that 20 percent of their product range actually accounts for 80 percent of their profits. Similarly, 20 percent of motorists cause 80 percent of accidents. Most motorists drive carefully, while a small minority is careless and causes the majority of accidents. This phenomenon is better known as the 80/20 principle: roughly 80 percent of work results – or output – are produced by 20 percent of the work effort, or input. Why is this ratio not more balanced? Because not every cause has the same impact on results. In fact, causes can be roughly divided into two categories: a minority that ha...

Willpower is the most important keystone habit.

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In the 1960s, researchers at Stanford conducted what would become a very famous study. A large group of four-year-olds was brought, one by one, into a room. In the room, there was a table with a marshmallow on it.  A researcher gave each child a choice: either eat the marshmallow now or wait a few minutes and have two marshmallows instead. The researcher then left the room for 15 minutes. Only about 30 percent of the children managed not to devour the marshmallow in the researcher’s absence. But here’s the interesting part. When, years later, the researchers tracked down the study’s participants, who were now adults, they found that those who had exhibited the greatest willpower and waited the full 15 minutes had ended up with the best grades in school, were more popular on average and were less likely to have drug addictions. Willpower, it seemed, was a keystone habit that could be applied to other parts of life, too. More recent studies have shown similar results. For...

Habits stick because they create craving.

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Imagine this scenario: every afternoon for the past year, you’ve bought and eaten a delicious, sugar-laden chocolate-chip cookie from the cafeteria at your workplace. Call it a just reward for a hard day’s work. Unfortunately, as a few friends have already pointed out, you’ve started putting on weight. So you decide to kick the habit. But how do you imagine you’ll feel that first afternoon, walking past the cafeteria without indulging? Odds are, you will either eat “just one more cookie” or you’ll go home in a distinctly grumpy mood. Kicking a bad habit is hard because you develop a craving for the reward at the end of the habit loop. Research from the 1990s conducted by the neuroscientist Wolfram Schultz shows how this works at the level of the brain. Schultz was studying the brain activity of a macaque monkey named Julio, who was learning to perform various tasks. In one experiment, Julio was placed in a chair in front of a screen. Whenever some colored shapes were shown ...