Page 84 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

Chapter 5

Financial IQ #3: Budgeting Your Money

My poor dad often advised, “Live below your means.”

My rich dad said, “If you’re going to be rich, you need to expand your
means.”
In this chapter, you will find out why living below your means is not a

financially intelligent way to become rich. You will learn about budgeting
and that there are two kinds of budgets. One is a budget deficit, and the
other is a budget surplus. The reason financial IQ #3 is so important is
because learning how to budget for a surplus is the key to becoming rich
and staying rich.

A Budget Is a Plan

One of the definitions of the word “budget” is: a plan for the coordination
of resources and expenditures.

Rich dad said a budget is a plan. He went on to say, “Most people use
their budget as a plan to become poor or middle class rather than a plan to
become rich. Most people operate their lives on a budget deficit rather than
a budget surplus. Instead of working to create a budget surplus, many
people work to live below their means, which often means creating a budget

deficit.”

The First Type of Budget: A Budget Deficit