The Only Thing You Need to Know to Get Rich

Achieving financial freedom is probably a goal for everyone! Surely, you wouldn’t want to work all the way to your sixties or seventies, right? When money is no object, you’re able to pursue your passions and live with less anxiety.

The reason many people struggle financially is because they’re financially illiterate. To achieve financial freedom, you must first have some financial intelligence.

Being financially literate will help you know what to do with the money once you make it, how to keep people from taking it from you, how long you keep it, and how hard that money works for you.

When I was younger, I didn’t know a thing about managing finances. I was setting myself up to work hard as an employee all my life until retirement.

Back then, I was living within my means: if I earned 10,000 pesos, I’ll spend 10,000 pesos. I was not in debt, so I thought I was in the clear. Unfortunately though, and it took me a while to realize this, I didn’t have any savings.

You see, “living within your means” is a big misconception, and it’s misleading a lot of people. If you earn 100,000 pesos and spend 100,000 pesos, you’re still broke! The person who earns 4,000 pesos and saves a thousand is still richer than you.

You must learn to live below your means (i.e. spend less than you earn).

So, what’s the only thing you need to know to get rich?

It’s differentiating assets and liabilities.

Accountants may give you complicated definitions for these two terms, but to dumb it down, assets bring money into your pocket and liabilities take away money from your pocket.

Assets = money in; liabilities = money out.

You must accumulate assets and minimize liabilities – that’s how you get rich!

According to Robert Kiyosaki, “Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets“. This is the reason why you need to correctly “differentiate assets from liabilities” because you may be accumulating assets that are actually liabilities.


Examples of Assets

  • Cash on-hand – money you have in your pocket.
  • Savings – money in the bank.
  • Deposit investments
  • Intellectual property – this article 🙂
  • Land assets or properties
  • Paper investments
  • Money lent
  • Equipment used to generate income
  • Stocks

Examples of Liabilities

  • Money Out
  • Debt or money owed
  • Daily expenses or commodities (food, rent, clothes, entertainment, transportation, etc.)
  • Bills
  • Tax

Let me show you how the rich get rich, and why the poor stay poor, by showing you the following income statements.

Below is how a poor man’s income statement looks like. You’ll see that they have little-to-no assets, and have plenty of liabilities. They earn to spend.

People think that earning more money will solve their financial problems. Unfortunately for many people, as income goes up, expenses also go up to match their income. Their assets don’t increase, but liabilities do.


Here is how a rich man’s income statement looks like. You’ll see that they have plenty of assets and only a few liabilities. They earn to save and invest.

Rich people use their profits to generate more assets.


Now it’s your turn to identify your assets and liabilities…

If you don’t have a lot of assets right now, that’s alright! The important thing is that you now know that you have to change it, and that you’re willing to do the work!

Remember: if it takes money away from your pocket or if it depreciates in value, it’s a liability. You may think your car or your house may be assets, but they’re actually liabilities (unless they generate income for you), so be careful what you put in the columns above!

Start accumulating assets today!

Written by Chris Acebu

Chris, aka The Productivity Geek is a nurse-turned-freelancer who loves geeking about productivity. He’s passionate about food, travel and music, and on his free time, he likes playing the piano and reading books. He runs his own blog, www.theproductivitygeek.com.

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