Here is an excerpt from ‘Rich Dad Poor Dad' written by Robert T. Kiyosaki on how your lack of knowledge about money gets you trapped in a rat race.

"A young couple have their incomes going up, they decide to go out and buy the house of their dreams. Once in their house, they have a new tax, called property tax. Then, they buy a new car, new furniture, and new appliances to match their new house. All of a sudden, they wake up and their liabilities column is full of mortgage debt and credit-card debt. They're now trapped in the rat race. A child comes along. They work harder. The process repeats itself. More money and higher taxes."

What do you understand from the above situation? Does it sound like your near future? If you are already in or think will be soon trapped in the rat race, just go through these points carefully to smartly skip or get out of it.

1. Rich people don't work for money, instead, they make the money work for them.

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Whereas the poor and middle-class work hard at their 9 to 5 jobs, the rich have their money work for them 24x7. It could be their investments, property, people running their business operation and more. Do you think everybody working in 9 to 5 set around you is rich?

2. There is something wrong with the school system and your education begins when you leave school. Not when you are in school.

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Robert says, “All of my uncles and my aunts, my grandfather and my father and my mother, they all went to school, but they are still poor. So I knew, there was something missing in school”

“You know a difference between a school teacher and an entrepreneur is that in school they punish you for making mistakes. Entrepreneurs know you are not going to learn anything unless you make a mistake” 

According to him, this zero financial literacy and an outdated school system are only teaching you to work hard. To invent money better, you need to work smart, take bold risks and should be financially literate.

3. The rich build assets while everyone else buys liabilities.

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Just go through the cash flow pattern of a rich and a middle-class person below.

"So an asset is something that puts money into your pocket whereas a liability is something that takes that money out of your pocket. Similarly,  buying a house is not an investment, it is not an asset, it is a liability, that is taking money out of your pocket. Your credit cards, mortgage, and consumer loans are liabilities."

4. You are probably not making more than enough money because you are not doing any of these things.

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"Businesses that do not require my presence. I own them, but they are managed or run by other people. If I have to work there, it's not a business. It becomes my job."

- You are not investing in stocks. 

- You don't own any bonds. 

- Your money is not in mutual funds. 

- You have no money invested in Income-generating real estate.

- You are not into getting royalties from intellectual property such as music, scripts, patents. 

- You are not into anything else that has value, produces income or appreciates and has a ready market.

- No one owes you any lOUs (I Owe You)

5. The rich spend after they have invested and saved and everyone else does just the opposite of that.

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You better buy that car as a luxury and not as a liability for which you will be paying monthly EMIs. You will savor it much more that way and if you didn't do it that way, it may put you in constant stress.

The rich invest their money for cash flow and treat appreciation like a topping on a cake. Do you get that? I hope you act on it.

You can learn more on why you should pay your debt last, how you can buy a house without making it as a liability and many more smart things rich people are practicing today.