From the perspective of someone who has little knowledge of financial literacy like me, Rich Dad poor Dad (RDPD) is indeed really an eye opening - best of all, easy to comprehend.
RDPD was once labeled as "the book that rocked the financial world" by The Wall Street Journal (2001) because it completely explodes the myth that you need to earn a high income to become rich, challenge the belief that our houses are an asset & most of all showing the parents why they can't rely on the school system to teach their kids about money!
Sounds ridiculous right? That's what I thought before but as I finished up the whole 266 pages, I kind of like the very idea of money as narrated by Robert T. Kiyosaki.
True as it may be, there is - as Robert suspected - some similar pattern in how we (the average-educated, hardworking families) grow up. Here is a situation which sounds familiar to us...
"The child is born & goes to school. The proud parents are excited because the child excels, get fair to good grades, & is excepted into college. The child graduated & does exactly as programmed - looking for a safe-secure career. The child finds the job (doctor, engineer, lawyer etc. @ works for the government) The child is making money, credit cards start to arrive & the shopping begins - you know, ladies like!"
"Having money to burn, the child goes to places where other young people just like them hang out (you know best folks!) they date & when it fits in they got married. Life is wonderful now, nowadays, both men & women work. Gone are the days where woman's place is at the stove. Since there are 2 incomes coming in, they feel successful, the future is bright & they decided to have a house, cars, tv set, take vacations & have sweetie little children. Since the happy bundle arrives, demand for money is also enormous."
"The happy couple decides that their career is vitally important and begin to work harder, seeking better promotions & raises. The raises come, & so does another child & the need for a bigger house. They work harder, become a better employee, taking up some major specialized skills, having a second job in order to increase their income. But, as income increases, so does the tax bracket they are in! They get their large amount of paycheck but often wonder where did the money went"
"The happy couple born 30 years ago, is now trapped in the Rat Race for the rest of their working days & yet advising their children to 'study hard, get good grades & get a safe career' where they themselves learn nothing about money, except from those who profit from their naivete & working hard all their lives! The process repeats into another hard-working generation. This is The Rat Race."
Does this scenario rings a bell? The question is, how to get out of this Rat Race puzzle? RDPD is the answer.
Robert suggests that one should at least know 2 very basics of financial literacy i.e. what's the difference between an asset & liability & the habit of investing instead of saving.
According to him, an asset is something thats brings in money into your pocket while liabilities are the opposite. In short, if you wanna be rich, then, starting on today accumulate your assets!
Then, the notion that saving all our money is the wisest thing to do is currently obsolete. Why? Because the value of our money which we have been saving for years back will never be similar to the present current value of worth, as money value depreciates against time according to the inflation rate.
So, if ever you have money, it is wise for you to invest some of them into stocks, bonds, mutual funds etc. Let money works for us! Only then can we reap the benefit of all the seed we've been planting.
Of course, it's hard to suddenly alter our mindset overnight, and the risk is always there, but the good news is that as the popular Texas saying said "everyone wants to got to Heaven, but nobody wants to die" This is liken to most of us, we wanna get rich but terrified of losing money out of risk.
Till the next posting.
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