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ntants and financial professionals do agree with the definitions; but these simple drawings were the start of strong financial foundations for two young boys。
To teach pre?teen boys; rich dad kept everything simple; using as many pictures as possible; as few words as possible; and no numbers for years。
〃This is the Cash Flow pattern of an asset。〃
The above box is an Ine Statement; often called a Profit and Loss Statement。 It measures ine and expenses。 Money in and money out。 The bottom diagram is the Balance Sheet。 It is called that because it is
supposed to balance assets against liabilities。 Many financial novices don't know the relationship between the Ine Statement and the Balance Sheet。 That relationship is vital to understand。
The primary cause of financial struggle is simply not knowing the difference between an asset and a liability。 The cause of the confusion is found in the definition of the two words。 If you want a lesson in confusion; simply look up the words 〃asset〃 and 〃liability〃 in the dictionary。
Now it may make sense to trained accountants; but to the average person; it may as well be written in Mandarin。 You read the words in the definition; but true prehension is difficult。
So as I said earlier; my rich dad simply told two young boys that 〃assets put money in your pocket。〃 Nice; simple and usable。
〃This is Cash Flow pattern of a liability。〃
Now that assets and liabilities have been defined thr
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