Kiyosaki: The Law of Compensation

UPDATED: August 9, 2010
PUBLISHED: August 9, 2010

Most of us have heard the saying Winners never quit and quitters never win. Yet, few of us have heard of the law of compensation.

I explain the law of compensation like this: Returns are minimal in spite of massive effort at the start, yet returns can be massive with minimal effort over time. I’ll use two personal examples to further illustrate.

The first example is health. It was easy being healthy when I was young. I was full of energy, so sports and physical challenges were fun. But as I got older and the spring left my step, exercise became harder, and eating, drinking and watching TV became easier. By the time I was 50, I’d put on 50 pounds.

During those years, I would make a resolution to get healthy, and begin working out and eating less. By the following week, however, I’d lost no weight, and I was hungry and ached all over—so I quit because I’d put in a lot of effort for very little return.

Finally, after realizing I needed help, I hired a coach to get through the initial period of maximum effort and minimal returns. After two years, the law of compensation kicked in. My health and strength returned, and I could exercise less, still gain strength, and eat and drink what I wanted.

Unfortunately, I went on a two-month vacation, kept eating and drinking, stopped exercising and gained 20 pounds back. I’m currently with the same coach, once again going through a period of maximum effort for low returns.

My second example of the law of compensation has to do with wealth. In 1978, I lost my first major business, which shot up like a rocket—and came down like a rock. I struggled to regain my momentum, and lost another business two years later. I was down for about four years, working hard for very little return. But by 1994, I retired financially free at the age of 47.

In 1996, my wife, Kim, and I launched our financial education board game, CASHFLOW 101. I wrote Rich Dad Poor Dad in 1997 and self-published it after every publisher turned it down, and for three years Kim and I worked hard explaining the game and promoting the book. In 2000, Rich Dad Poor Dad made The New York Times Best-Seller List. In 2000, I appeared on The Oprah Winfrey Show, and the rest is history.

Today, when it comes to health, I’m paying the price for disobeying the law of compensation. I’m glad I caught myself at 20 pounds rather than 50 pounds. When it comes to wealth, I am reaping the benefits of following the law of compensation. Today, with very little effort, my returns on my years of investment are phenomenal—even in a bad economy.

I write this article for those of you who are struggling with success. Press on even though your returns on investment are small. If you quit, like I did with my health program, you’ll have to go through the same crummy period of maximum effort with minimal gains again.

Remember that winners never quit. Success is not a stop sign. Obey the law of compensation.