Real Estate Investor Magazine South Africa Real Estate Investor Magazine - July 2017

MASTER INVESTOR #3 Financial IQ - Budgeting your money Budgeting your money is measured by how much money you have left after expenses. You need to be able to live well and still invest no matter how much you earn. There are two ways to solve a budget crunch: decrease your spending or increase your income. Both will erase a budget deficit, but in the long run, increasing income is a better solution. Kiyosaki says that it’s important to think of a budget surplus as a fixed expense. Pay yourself first. If you decide to save 10% of your income, then make this ten percent a fixed item in your budget. Treat it just as you would any other expense. You can tell a person’s future by looking at what they spend their time and money on. Time and money are very important assets so spend them wisely. Kiyosaki notes that when the going gets tough, people tend to cut back rather than spend. If they simply prioritize their spending, they could actually improve the situation. Yes, spend less on alcohol and takeaways, sure, but spend more on continued education and self-promotion. He says you must refuse to live below your means and instead, increase your means. #4 Financial IQ - Leveraging your money Leveraging is borrowing money to increase the power of your own cash, which is measured by return on investment. How well do you make your budget surplus generate more money? To leverage your money, you must have control of your investments if you want to reduce risk and get proper leverage. If you’re not in control of the investment, then leverage is risky. Most of the people hurt by the real estate meltdown are people who were counting on the real estate market to keep going up and increasing the value of their homes. They borrowed against their home’s inflated value, had no control over whether the housing market rose or fell. Kiyosaki uses the example of a 300-unit, $17 million apartment complex in Tulsa, Oklahoma that he purchased. This is a good investment to use leverage with, because you have control over the operations, and the operations determine the value of the investment. #5 Financial IQ - Improving your financial information Improving your financial information doesn’t just mean acquiring knowledge of basic financial concepts; it is acquiring detailed knowledge of the investments you make. 5 STEPS - DEVELOP YOUR FINANCIAL GENIUS - - - - Prepare & evaluate regular personal financial statements Ensure your financial actions are in line with your beliefs Manage your psychology of money constantly Give special attention as to how you deal with fear and failure - If you want to become richer and more successful it is critical to find an environment that allows you to grow and develop. RESOURCES Rich Dad, Improving your Financial IQ, The Real book of Real Estate Dont’t miss interview with ROBERT KIYOSAKI on REIMTV Visit REIM TV for more in depth real estate investment insights 12 JULY 2017 SA Real Estate Investor www.reimag.co.za

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