Earlier this year I read the book Rich Dad Poor Dad by Robert Kiyosaki. The book has been a bestseller for over 15 years, so some would say I’m a bit behind, but better late than never nonetheless, as it was a good read.
First of all, I think the book should come with a warning that ‘this book will make you hate your job!’ I read it. So I convinced my husband to read it. We both feel like we’ve been wasting our time working hard on our careers for over a decade…but then we realize that’s not true and all is not lost…and I’ll explain why.
The main points of the book are that the rich find ways to make their money work for them, rather than the other way around (work for money). Kiyosaki also discusses how ‘financial literacy’ and understanding of money takes place not in the formal education system, but at home, and that is why the rich stay rich and the poor stay poor, because that’s all. . they know.
Make your money work for you
The book explains that the conventional route for most people is to study hard in school, with the goal of securing a ‘good job’, and then spend a lifetime working hard for pay raises. We become dependent on our employers as we build our lives and spend most of our income on consumption and debt (mortgages, etc.). The poor and middle class trade their time for money this way, they get caught in the ‘rat race’ because as their incomes rise, so does their consumption (better cars, clothes, and vacations) and they get more in debt ( bigger house, bigger mortgage).
Isn’t that what we all do, I hear you ask? No. The rich send their money out into the world and expect it to bring more money! Obviously there is a trick to this. Kiyosaki says that, fundamentally, it is about understanding a liability and an asset. The difference that is defined as an asset is something that generates cash for you. Take property for example. If you invest in a rental property and the monthly rent is more than the monthly costs, you are making a good profit. You are not trading your time to achieve this monthly income, so this is an income generating asset. There are many other ways to invest in income-producing assets, for example, business investments, stocks… the goal is to accumulate assets, while minimizing liabilities (a liability includes, you may be surprised to hear, the mortgage on the house in the one who lives). in)
financial education
He argues that we should educate ourselves (and, in turn, educate our children) about financial literacy; he refers to this as “mind our own business.” This does not mean that we all start studying accounting degrees or that we quit our jobs and become self-employed. It’s about learning the options and opportunities to manage our money. We must not be impatient on our journey to wealth, but we must learn to build a foundation, and that foundation will eventually allow us to have multiple streams of income, without relying on our paycheck. We must invest in ourselves, whether it be reading books, attending seminars, training courses, memberships in professional or training communities… if it is true that ‘we are what we learn’, then we must think about it!
conclusion
In general, the book made me think. Much. It made me think about work, money and the decisions that are made in life. It made me realize that I should think more long-term when it comes to money and investments. It got me thinking about calling off the search for our next, slightly bigger house when we can afford it…or our next, newer (and if my husband has the word, sportier!) because, because that’s really what What we want. should we spend our money on… the answer is no. We should look to invest in assets that give us an income, and use that income to pamper ourselves from time to time.
It also made me realize the importance of looking beyond employment to generate income. In fact, it was reading this book that inspired me to become a member of the SFM/Digital Experts Academy. I decided to invest in myself and my learning outside of work…something I haven’t done since college. I decided to learn how to start my own business, no longer working for ‘the man’ but working for myself, and most importantly (since I still had my full time job), I learned how to generate a relatively passive income. of my business I hope Kiyosaki is proud!
Perhaps one downside of the book is that it focuses heavily on real estate investing. These are not necessarily easy investments for beginners. Also, while there is a lot of general negativity towards traditional employment, we all need to earn our money somewhere so we can make investments in the first place!
Rich Dad Poor Dad is not a get-rich-quick recipe; is a great book to get you thinking about financial education and a way to challenge your thinking about work and money.