No. of Recommendations: 1
<<--net worth or cash flow? Does it matter which one he increases first?>>

Congratulations on finding and reading Mr. Kiyosaki's book "Rich Dad, Poor Dad". It is excellent.

Cash flow and net worth are two sides of the same coin since one can be converted to the other. Cash flow becomes net worth if it is not spent and net worth, to the extent that it exists, can be converted to cash flow if desired. I believe that you should always be working at increasing your net worth (or adding to your asset column as Kiyosaki would say) but you should do so in a way which insures that you have sufficient cash flow to meet ordinary living expenses and allow for a regular savings regimen of at least 10% of your income. Net worth can always be converted later to cash flow should you desire to do so.

I have always preferred to keep free cash flows to a minimum, consistent with my daily needs, and work constantly on my asset column. Excess cash has a way of dissappearing. Both real estate and stocks are excellent ways to build net worth. Real estate has the potential to get you where you want to go quicker, but you must invest a lot of time learning and looking. I would not venture into either of these areas until I had established a savings regimen and established some financial depth by accumulating a reserve fund deposited in safer vehicles like regular savings, CDs etc. This is necessary to be able to overcome personal emergencies such as job loss, and to deal with stock market declines or in the case of real estate; vacancies, evictions or major repairs.


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