In this post: Justification for taking a cautious eye towards this book. A helpful starting point for the mindset of financial literacy but a lightweight in the many topics it mentions, such as investing, accounting, and budgeting. Readers with compassion, beware.
Category: Money
Ramiah Recommended?
Yes. I place no particular exclamation on reading this book, but odds are you have heard it and the numerous recommendations to read it. It is quoted as one of the must-read money books and, as you can see from the title, is the number one 'personal finance book of all time.' I learned many things in this book, but I would practice caution with some of what it preaches. Let me tell you why.
This work, although recently updated in 2017, does focus much on Kiyosaki's path to success. Kiyosaki began investing before the internet boom and crash and relishes much of his success in the real estate market, however, the strategies he describes in detail (much similar to flipping houses in the US, such as Phoenix, AZ) are strategies that one cannot do as easily today. He was very fortunate to invest when he did, but the market today is much different, and arguably more difficult to get into because much more development has occurred since Kiyosaki began investing and first writing this book). Kiyosaki even shared tales of buying houses with IOUs and no money down, and while he does not explicitly encourage people to do the same, he does stress his experiences serve as examples for financial intelligence others can have. Sounds impossible in today's economy? Yeah, I thought so too. No matter how open a mind I tried to have, I treated his real estate strategies with skepticism.
Also, his 'rich person mindset' can be offensive and self-serving at times. Readers learn financial intelligence through the same process Kiyosaki endured: Rich Dad. Rich Dad is a self-made millionaire who believes in and prescribes specific habits to build and retain that health. These habits regard people who work for others and not themselves as losers and the government as a mechanism that steals money from its citizens. In one example,
'Or if you're the kind of person who has no guts, you just give up every time life pushes you. If you're that kind of person, you'll live all your life playing it safe, doing the right things, saving yourself for some event that never happens. Then you die a boring old man. You'll have lots of friends who really like you because you were such a nice hardworking guy. But the truth is that you let life push you into submission. Deep down you were terrified of taking risks. You really wanted to win, but the fear of losing was greater than the excitement of winning. Deep inside, you and only you will know that you didn't go for it. You chose to play it safe.' - Rich Dad, (pgs 18-19)
In another:
'The tax man will always take more if you let him' - Rich Dad (pg 79)
Even if these are true, it easily creates an antagonistic line of thinking between the reader and the government, or the reader and employees, companies, and the like. This harshness will not jam with everyone. I was one of those people.
Also consider there is a lot of shameless promotion for other books in the Rich Dad, Poor Dad series and Kiyosaki's card game, CASHFLOW. Much of the book is repetitive within the same chapter and Kiyosaki's retelling of his personal experiences are very roundabout - maybe skip ahead in a few areas to get to the point of the anecdote quicker.
All this aside, I did learn loads from this book. As one of the few money management or personal finance books I have read so far, it has given me many insights to think about, especially concerning accounting and wealth building. The 'rich' way of using assets to fuel income and pay off expenses, and the accompanying images used to visually explain this, was worth reading every harsh dialogue from Rich Dad and Kiyosaki alone.
Rich Dad, Poor Dad is a good primer to financial literacy and perhaps accounting, but if you want a guide for budgeting, investing, and business, I suggest looking for more thorough resources elsewhere (such as Millionaire Teacher, you can find my review of that book here).
Ramiah Reflects
My New Favorite Life Quotes:
"Proper physical exercise increases your chances for health, and proper mental exercise increases your chances for wealth" - Robert Kiyosaki
"'I'm a rich man, and rich people don't do this… there's a difference between being poor and being broke. Broke is temporary. Poor is eternal.'" - Rich Dad
"'You see, true learning takes energy, passion, and a burning desire. Anger is a big part of that formula, for passion is anger and love combined. When it comes to money, most people want to play it safe and feel secure. So passion does not direct them. Fear does.'" - Rich Dad
"Intelligence solves problems and produces money. Money without financial intelligence is money soon gone." - Robert Kiyosaki
"It's not how much money you make. It's how much money you keep." - Robert Kiyosaki
"You want to be the kind of person who creates your own luck. You take whatever happens and make it better. Few people realize that luck is created, just as money is." - Robert Kiyosaki
"Sometimes you win and sometimes you learn." - Robert Kiyosaki
"It is what you know that is your greatest wealth. It is what you do not know that is your greatest risk. There is always risk, so learn to manage risk instead of avoiding it." - Robert Kiyosaki
Questions to Ask Yourself (and answer!):
Are you in the rat race or beating the rat race? Do you pay yourself first?
How do you determine assets and liabilities? Is (or will your) house and mortgage be an asset or a liability?
What can you do to change your thinking about or behavior with money?
Food for Thought:
So, all his shameless promotion has gotten to me. Cashflow, Kiyosaki's teaching tool for learning how money works, may be worth checking out.
What seminars can you participate in your area? What about weekend classes? Newspapers are a good resources
What are some ways for you to invest in assets that drive your income column? Think of side hustles that can add income that you can then use to invest in assets (i.e. the stock market, intellectual property, or real estate).
Ramiah's Re-read When
Re-read when:
You need a reminder to control your emotions (I'm looking at you, greed and desire), not be controlled by them
You need to be scared straight into using your money wisely.
You need comparisons in accounting style of how the rich spend their money vs the middle class and poor
You want reminders of spending behavior and financial behaviors to avoid
You need a reminder of the importance of financial literacy
You need a reminder of the differences between the public and private sector
You need a history of taxes
You need a reality check on 'tax the rich' and how resourceful the rich are
You need a reminder to mind your own business - own a corporation and build asses that make money work for you
You need a reminder to be bold
You need a reminder to be financially intelligent or how to define it
You want examples (albeit outdated examples) to create money in real estate
See below for my book notes:
Check out my other posts and book notes here.
Until next time!
Montana Houston
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