Blog | Paper Assets, Personal Finance

Mastering Money: The Key to Achieving Financial Freedom

How the rich use self-discipline to make money work for them

the online game that increases your financial iq - play now


  • Being a master of money is the only way to achieve financial freedom

  • Mastering money requires self-discipline and financial education - leave the excuses at home!

  • These are the tips to achieving financial freedom by mastering money

Achieving financial freedom is virtually impossible if you don’t have the tools - and knowledge - to master your money.

There’s no denying that money is a powerful force in our lives. In fact, despite the general desire to get rich, it’s this force that drives people into the vicious cycle of the rat race; working 9-5 at a “secure” job, that takes an unreasonable amount of your money away for taxes, and, by the way, can let you go without any warning. The paycheck fools you into thinking that money will consistently come, driving you to work til retirement only to discover you have nothing left.

Pretty sad.

But that doesn’t have to be everyone’s story. If you pause to look at the rat race you're in just long enough to realize it’s a trap, you can begin to understand there is a different force behind money - not only the one that’s driven by misinformation and desperation.

Achieving money mastery is about making, spending, and using your money in a way that actually contributes to your own financial being.

It takes self-discipline to get rich

If you can't learn to develop (and strengthen) self-discipline, you'll never master money - which means you’ll never be financially free.

Developing cash flow from the asset column seems easy in theory, but in practice it takes mental fortitude to direct money to the correct use. In today's world, it's much easier to simply blow money in the expense column than direct it in the asset column.

When you have no self-discipline, your money will flow through the path of least resistance. That is the cause for most people's financial struggles.

The 4% Rule

The following is an example of the 4% rule.

If we give 100 people $10,000 at the start of the year, here’s the Rich Dad theory about what the end of the year would look like:

  • 80 would have nothing left. In fact, they probably would have more debt by using the money for a downpayment on a new car or some other fun toy.

  • 16 would probably have increased that money by about 5-10 percent.

  • 4 would have increased it to $20,000...or more.

Most people go to school to learn a profession so they can work for money. However, at Rich Dad, we would argue that it's just as important to learn how money works for you. Only about 4% of the population are true masters of money..and they're rich because of it. YOU want to be in the 4%. Here’s how:

Buy luxuries with:

Cash flow

A major lesson you’ll learn on your way to mastering money, is the power of using assets to purchase luxuries.

Everyone loves luxuries - that’s no secret. The difference is that the rich don't buy them on credit like most do. That's the keep-up-with-the-Jonses trap. Instead, if they want something nice, they focus on generating enough income in the asset column to cover it.

The rich, as a habit, use their desires to consume as inspiration and motivation to invest. They focus on creating money for toys rather than borrowing money for them. That takes self-discipline, but it's more than worth it.

Stop looking for instant gratification

Once you’re clear on your goals to actually master your money, you’ll realize the reward that lies in delayed gratification. For example:

  • Less money spent on “things” and more money available for investments. Stop spending money on frivolous things that give you that temporary rush, and instead, think about how to use your money so that it will grow time and time again in the long run. The rush is still there (we promise), it just comes later.

  • More time to think and make better financial decisions. With delayed gratification, you’re no longer making impulse purchases. In time, you’ll reduce overspending and unnecessary debt.

  • Increased financial discipline: by practicing delayed gratification, you’re building your discipline, self-control, and overall skills as an investor. These traits ultimately help you stick to a strategic - not rigid - financial plan that encourages your long-term financial goals.

Become a master

The earlier you can train yourself and those you love to be masters of money, the better. Money is a powerful force. Unfortunately, people use the power of money against themselves.

To be a master of money, you need to be financially intelligent. There is no room for excuses, only constant growth. This starts with financial education and self-discipline, and ends with knowing how to make money work for you, i.e., using assets to purchase liabilities.

Begin the path to making money work for you today, not the other way around. Check out Rich Dad’s free, financial education community here for more information.

Original publish date: March 05, 2013

Recent Posts

Building a Successful Business

Beyond the Idea: Building a Successful Business in Today's Competitive Market

Find your purpose, give it shape through the B-I Triangle, and learn as much as you can along the way. In this way, you can be both successful and happy.

Read the full post
Emergency Savings
Personal Finance

Emergency Savings: The Realistic Approach to Financial Security

Starting to saving today in a financially educated way is the surest way to make sure you don’t end up as a financial loser.

Read the full post
market meltdown
Paper Assets

Market Meltdown: How to Protect & Rebuild Your Wealth After a Market Crash

Stick to sound investment strategies and plans for the downside can reduce that risk.

Read the full post