Money Flow Patterns
The diagram below from Robert Kiyosaki’s book Rich Dad Poor Dad is worth understanding. This shows how the poor, middle class and wealthy (rich) handle their money.
The Poor
The Poor have an income from a job and immediately spend it all. As soon as they stop working the money dries up.
The Middle Class
The Middle Class have a higher income that they use to access credit and purchase liabilities such as fancy cars, bigger TV’s, etc. As soon as they stop working the income stops but their expenses don’t!
The Rich
The Rich first purchase assets which generate an income that pays for the expenses. When they stop working the income continues to come in to service their expenses. This is where you want to be!
