HOW MONEY WORKS? (Pinoy Edition)

Summary

This video discusses the impact of inflation and savings on personal finance, emphasizing the importance of investing rather than relying solely on savings. It explains the difference between employment, self-employment, and business ownership, highlighting how leveraging assets and investments can lead to financial success. The speaker encourages viewers to adopt a wealth-building mindset, mentioning Robert Kiyosaki's principles and the importance of shifting from traditional work to business and investment opportunities. The video promotes financial literacy and the power of leveraging to achieve long-term wealth.

Takeaways

• 💡 The inflation rate last year was 4.17%, which affects the value of money saved in the bank, leading to losses when compared to inflation.
• 💸 Saving money is important, but due to inflation, relying solely on savings can lead to financial loss over time.
• 📊 It’s important to move from the mindset of solely earning through employment and self-employment to investing and running a business.
• 📈 Only 5% of people engage in business and investment, yet they control 95% of wealth, while 95% of people rely on employment or self-employment, controlling just 5% of wealth.
• 🏢 Wealthy individuals leverage businesses to create passive income, rather than relying on direct work for income.
• 💼 Moving from employment to leveraging assets (like businesses or investments) is key to financial growth, as it allows money to work for you instead of you working for money.
• 📉 The concept of ‘law of singleness’ explains that relying on a single source of income limits financial growth and opportunities.
• 🏠 Focusing on building assets, not just income, is crucial for long-term financial stability, as liabilities (like expensive lifestyle choices) can drain wealth.
• 🔧 Leveraging business models, such as franchises or investing in scalable ventures, helps create sustainable income without active involvement in daily operations.
• 🧠 Shifting your mindset from traditional employment to business ownership and investment is vital for financial success, as taught by mentors like Robert Kiyosaki.

Q & A

What is the main topic discussed in the video transcript?

The video primarily discusses financial literacy, focusing on inflation rates, the importance of investing, and leveraging assets for financial growth.

How does inflation impact savings according to the speaker?

Inflation diminishes the value of savings because if the inflation rate exceeds the interest earned on savings, the real value of the savings decreases over time. For example, if the inflation rate is 4.17% and the bank offers only 1% interest, the actual value of the savings decreases by 3.17%.

What financial advice does the speaker give regarding savings?

The speaker advises against relying solely on savings due to the impact of inflation. Instead, they suggest focusing on investments and business ventures that can generate higher returns and build wealth.

What does the speaker mean by 'the law of singleness'?

The 'law of singleness' refers to relying on a single source of income, typically through employment or self-employment. The speaker argues that this limits financial growth because income is dependent on continuous work. If one stops working, the income ceases as well.

How does the speaker describe the importance of 'leverage' in business?

Leverage in business refers to the ability to earn money without directly working for it, by utilizing systems, employees, or investments. The speaker uses the example of a business owner like Lucio Tan, who earns through the work of thousands of employees, rather than relying solely on his own efforts.

What is the significance of 'assets' according to the speaker?

Assets are described as money-making machines that generate income even when the owner is not working. The speaker stresses the importance of building assets to achieve financial freedom, as opposed to spending money on liabilities, which drain resources.

Why does the speaker emphasize the difference between the financial statements of the rich and the poor?

The speaker points out that the rich focus on accumulating assets that generate passive income, while the poor often focus on increasing their income without building assets, which puts them at risk if they stop working.

What role does mindset play in achieving financial success according to the speaker?

Mindset is considered crucial for financial success. The speaker suggests that a growth-oriented, entrepreneurial mindset is key to creating wealth, while a 'poor mindset' limits individuals to traditional employment and self-employment without leveraging opportunities for business and investments.

What examples of investments does the speaker mention?

The speaker mentions various investment opportunities such as franchise businesses, internet shops, and water filling stations. They highlight that large franchises like Jollibee require substantial capital (e.g., 40 million pesos), but the speaker argues that businesses offering leverage are the most profitable.

What financial principle from Robert Kiyosaki does the speaker reference?

The speaker references Robert Kiyosaki's principle that if your house is your biggest investment, you're in financial trouble. This is because a home is typically a liability rather than an income-generating asset. Instead, Kiyosaki advocates for investing in assets that provide passive income.