Assets refer to items of value that one owns, such as real estate, stocks, or businesses, that can generate income or appreciate in value over time. Kiyosaki emphasizes the importance of building wealth by acquiring income-producing assets. Moreover, one of the book’s central messages is that focusing on assets, rather than relying solely on earned income, is key to financial success. By understanding and acquiring assets, individuals can escape the Rat Race, which allows for a clearer path for achieving financial independence.

Liabilities are financial obligations or debts that one owes, such as mortgages, loans, or credit card debt, that drain their financial resources. Kiyosaki distinguishes between good debt, which supports asset acquisition and generates income, and bad debt, which results from unnecessary expenses. This differentiation is crucial in his financial philosophy, as recognizing and minimizing liabilities while maximizing assets is vital for financial well-being.

Cash flow is the movement of money in and out of one’s pocket or bank account. Positive cash flow occurs when one has more money coming in than going out. Kiyosaki emphasizes the importance of maintaining positive cash flow by having more money coming in than going out, as positive cash flow allows individuals to invest in assets.