Rich Dad Poor Dad by Robert T. Kiyosaki

LukeLewis

Active Member
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I recently got my hands on a book called Rich Dad Poor Dad by Robert Kiyosaki. I've already read this book about 10 or 15 years ago, but it's time for a refresher. I remember enjoying this book immensely when I was younger. Back then, I was much more wide eyed and gullible. Not that what's shared in this book shouldn't be believed, it's just that it should be looked upon with skepticism. As with everything else in life, there are good parts and bad parts. Well, I shouldn't say bad parts. What I mean to say is that at times the premise is off. I'll explain what I mean down below.

In this post, I'll cover the introduction, which was written by Sharon Lechter. I'm assuming this is or was a friend of Robert's. In subsequent posts, I'll discuss each and every topic of the book. I'll give you an overview of what's included in the book and then I'll offer some of my own opinion of what I just shared. From what I remember, I pretty much agree with everything Roberts says. It's just a few points at which I'm at odds.

Introduction

The introduction begins with a story written by Sharon. She describes how both she and her husband graduated from college with incredible degrees and both work high paying jobs. They followed their parents' advice and did as they were told. And because of their training from their parents, both Sharon and her husband are putting two of their three children through school. Their youngest isn't old enough for college yet.

A conversation ensued between Sharon and one of her children. Her son claimed that he was bored with school and that what he was learning wasn't applicable to the real world. "Look at Michael Jordan, Madonna, Bill Gates," he said. "They have minimal educations and they're filthy rich." This was the basis for her son claiming that there were more important things out there than schooling. More important things that could better prepare him for real life. Surprisingly, Sharon seemed to agree with her son. She reflected upon how one of her sons had already accumulated debt while in college and was now in trouble with credit cards. She lamented upon the lack of financial education offered in schools today.

And that pretty much summarizes the first part of the intro. And to me, there are so many things wrong with it. It's the premise that bothers me. I've heard the same thing so many times from such idiots that it makes my blood boil. Let me start from the beginning. When I'm finished here, I'll continue on with the remainder of the introduction.

First off, let's remember where we came from. It wasn't so long ago that most people on earth were starving to death every single day. It also wasn't long ago that major economies globally were tiny compared to the sizes they are today. For a parent to encourage a child to remain in high school and go to college wasn't a bad thing. It's still not a bad thing. I've got an advanced degree in business and it was one of the best things I've ever done. Yes, I could have quit like famous Bill Gates did, but compared to Bill Gates, I'm stupid. The man is so much more intelligent than I am. There's an implied cause and effect already going on in this book that needs to be dispelled. It goes like this: because Bill Gates quit college, he became a billionaire. Oh wait, let's not stop there. Let's talk about all the sports stars who never went to college or the uneducated pop stars who are now rich and famous. Yes, if you're seven feet tall and can play basketball like it's nobody's business, by all means, join the NBA and make your millions. But if you're 5'7" and can't even dribble, I suggest you stay in college. If you've got a voice that can make the young girls cry, yes, by all means, set off on tour. But if you sound like a dying chicken like the rest of us do, ummm, go hit the books.

Let's not fool ourselves. College has saved so many lives it's incomprehensible. There's only so much room out there for the truly talented and clever. Most of us are neither. To suggest that high school and higher education is a waste of time because they don't teach how to use a credit card is one of the stupidest things I've ever heard or read. Just to let you know, a 15 minute YouTube video can teach you pretty much all you'd like to know about credit cards. There's no need to take a class on it. Or quit college because of it, for that matter. And furthermore, the responsibility for educating your children about finances is up to you, the parent. Don't try to lay this on the school systems or colleges. After all, if parents don't teach their kids things, what in the world do they do? I love the implication that somehow schools are responsible for teaching all the gray areas of life. Think social studies, math, band. That's what school is for.

There's also another implication I've already noticed. It has something to do with how corporations and businesses for which we work are not worthy of us. They no longer give pensions and there's no job security. Do you realize how many families live off the earnings from these corporations? If it weren't for these big businesses, we as a society would be sitting in mud huts wondering why we're so cold. So it's disingenuous to apply today's standard of living and litany of complaints to the world that brought us all this cushion.

To lighten the mood, I'll approach the rest of the book as if only extraordinary and outstanding people are reading it. Sure, most of us are nine to fivers, but there may be a few of us out there who are ambitious and outgoing. Even entrepreneurial. It's for these people this book was written. I just wish it didn't start off with implying that somehow the system that was built for us by those extraordinary and outgoing individuals is somehow not good enough. It doesn't teach us how to use credit cards? Good lord.

What's the Rat Race?

Now this is true. I'll give Robert this. He's done a wonderful job of describing the lives so many of us live. I was part of the rat race for one year of my life and I can tell you that it was abominable. Absolutely abominable. The worst thing I have ever done. Let me explain.

After grad school, I felt as though I needed to get myself a white collar corporate job. It didn't take much for me to do and after sending out a few resumes, I landed a job at a consulting firm. At first (like the first day), it seemed okay, but as time wore on, I found myself loathing the office in which I worked. I can remember back to those days, pulling into the parking lot in my car, parking, and just sitting there looking at the building. So many times, I wanted to turn around and leave. I asked myself, "How did my life turn into this?" It wasn't until I was on the train, returning from a business trip that I realized how miserable I truly was. It was raining outside in December and everyone on the train was dripping wet in their black raincoats. It was one of the most miserable scenes I've ever engaged in. That week, I quit the job and my life has been so much better ever since. Good thing too, because the business I worked for sold a few years later and everyone was fired. So much for that.

So how does Robert describe the rat race? Like this:

A kid is born, is raised well, goes to school, graduates, goes to college, graduates, goes to grad school, and graduates. The child does exactly like he or she has been programmed to do. We'll say it's a he in this case, so I don't have to keep writing he or she. Anyway, because he did so well in school, he gets a nice professional job. He works in an office, is a doctor, or a lawyer. He begins spending his earnings and the bills begin to arrive.

The child, who is now a man, finds himself a wonderful girl and marries her. She's smart too because she's got a great degree. She works and he works. They do tons of work. As the script suggests, they decide to have a child. They do, which prompts them to move from their apartment into a house. They also need a larger car. As they continue to work, they make more money, which prompts them to have another child. And because of this, they need to sell their Honda Accord and purchase a new minivan. And a new and larger house. The thing is, now that the money is flowing and the kids are here, they need to buy big TVs to entertain everyone and take vacations because, well, that's what families do. Apparently these things cost tons of money, because the happy couple realizes that they need more of it to keep up their lifestyle. So they ask for promotions at work and get them. These promotions require more of their time. The couple also seeks additional training and education, which may help make more money in the future. They continue to work and have another child. Their incomes are rather high now, which puts them into a new tax bracket, one that takes a good portion of their earnings. The house also costs a lot in taxes. Their social security taxes rise. The tax on their new cars are high as well. So much higher than those older smaller cars they used to own. And now that their children are older, daddy needs to start saving for college educations and weddings. And everything else.

It doesn't take long for these parents to learn that much of their earnings goes to other people. Their labor goes to the companies they work for to make those companies rich, the taxes they pay go to the government, to make it (and the sleazy politicians and their friends) rich, and the interest they pay on their loans goes to the banks, which makes them rich. And the harder these two work, the more wealthy they seem to make everyone else. So what do they do? They train their children to do the same exact things they did. And they start teaching those children about colleges when they're young, just to warm them up to the idea.

This, my friends, is called the rat race. Almost everyone who is in it, hates it. But hardly anyone leaves because they've spent so much time burying themselves that they've got no other choice. They'll do it until they die and along the way, they'll teach others how to do it too. I've seen this a thousand times. It's a mentality that's difficult to figure out.

How to Escape the Rat Race?

To extract yourself from the rat race, there are a few things you need to do. Sharon mentioned some of these things in her intro, but I'll add a few more. She claimed that you'll need to learn about accounting and investing. I completely agree with her. I'll add to those though, you'll also need to learn about taxes and how to lose the guilty feeling of working less while earning more. This last one is the most important, in my opinion. I was personally raised to be a mule. A worker who never quit. If I wasn't working, I felt horrible. And believe it or not, I still do. One of my greatest enjoyments is being productive. I will tell you that I make most of my money while sleeping though. It took a long time to get used to that. I've gone away for weeks on end and had done hardly any work during that time. Upon return, I found piles of money sitting in my accounts. The trouble was, I didn't think I earned it. Somehow, I was doing something wrong. The truth is, I wasn't. It was how people made money when they weren't part of the rat race.

There are some great examples from different types of people in the introduction. These people were playing Robert's new game about finance and wealth. One of the characters was a business owner who claimed that he didn't need to learn about finance, taxes, or investing. He said that he had "people" who take care of that sort of thing. You know, accountants, consultants, and lawyers. To which Robert replied, "Have you ever noticed how so many real estate brokers, stockbrokers, and accountants aren't wealthy people?" He used the example of being stuck in traffic on the way to work and looking over to see your accountant stuck in the same traffic. It's the rat race. It's got almost all of us.

The computer programmer of the group claimed that by learning the software the professionals use, he could become rich, to which Robert replied, "You can purchase and learn as much software as you want, but that won't teach you how to apply anything to the real world." I'm paraphrasing Robert's words here and above, by the way.

I agree with Robert wholeheartedly when he says that one of the greatest disservices you can do for a child is to send him off to college to learn random topics in random classes or to learn specific skills for specific professions. He believes in a much more general (and financial) approach. Now, I have to interject here because, yes, if you would like to become a computer programmer, you'll need to take classes specific to that. Or a doctor. Or an engineer. Again, this book is targeted specifically to those who are entrepreneurially inclined. And to those who would like to become wealthy. I've never heard of a wealthy computer programmer who stayed a programmer for his entire life. It's always those who break out of the programming field to join the investing or business fields who make it rich. But really, you're not doing your child any favors at all by sending him or her to college to major in the history of Budapest between the years of 1810 and 1941. This is the type of thing they can study on their own after leaving school. There's no reason in the world to waste all that money for housing and tuition and the opportunity to learn under talented instructors for something like that. Unless, of course, your child is planning on staying in academia forever. But even that is risky. There's not much of a demand for that type of person. Employment in academia is changing rapidly. Today, one professor can teach algebra to an entire nation online. There's simply no need for 3,000 different algebra professors.

Have you ever heard anyone complain about their job? I'm guessing your answer to that question would be a resounding yes. I've heard just about everyone I've ever met complain about their jobs. They complain about all different aspects of them, but when I cut through the noise and really delve into what it is exactly they're complaining about, it always ends up being the same thing. Control. These people have absolutely no control over their destinies. They have no control over their employment either. I worked for a company once for five years and every single day I entered the building, I expected to be fired. The reason for this was that I saw a lot of people fired from their jobs in the same building. About two years in, I began using the extra time I had at my desk to build out my own business. By the time I was five years deep, I was earning multiples through my business of what I was getting paid for my regular job. That's when I quit and in over 15 years, I've yet to return to an employment position. And believe me, I've made a lot of money through the years. I would never have made close to the money I've made working for myself, working for someone else. Never.

Let me ask you a question. Why is it that some parents make every effort to send their child to college while other parents don't care that much? Sure, some parents know their children aren't college material. For these kids, either no education at all is just fine or perhaps sending them to a trade school would be beneficial. But for the parents who send their children to the best colleges possible, why do they do that? What's the primary goal? If you can't figure it out, I'll tell you. It's to find a good job when they graduate. Period. There's no other reason. If the reason was merely to become educated, we all know there are many different methods for achieving that. There are online classes today, thousands upon millions of books, tutors, apprenticeships, many things. The reason parents and children alike compete like mad to get into the very best schools is to raise employment prospects after school. And the reason they're trying so hard to get a good job is for the money. Trust me when I say this, no child who just inherited a billion dollars is going to try very hard in college, or even attend at all. I don't care who they are. So we need to be honest with ourselves when we say that kids go to school for the ultimate reward of money. And that's fine for most people, but what if your child is special? Maybe they're especially gifted and ambitious. What if they've been mowing lawns and shoveling the snow off neighbors' sidewalks since they were ten years old? What if they acquired the taste of money at a very young age? What if you see promise in them that would lead them towards wealth in the future? Real wealth. What if they're a teenager and they're already earning more than you are? Would you still send them off to college or would you seek out better training somewhere else?

The Answer

I have a challenge for you. If you've got a child in elementary or high school, have them go to school tomorrow and have them ask as many of their teachers as possible how to become wealthy. See what they come back to you to tell you. If you've got a kid in college, have them ask their professors the same thing. Heck, the next time you go to work, ask your boss and your colleagues. Ask every friend you come across. See what everyone has to say. I'll bet you $10 that you won't get one piece of realistic advice that will lead your child or you toward any type of real wealth. That's striking, to say the least. Do you know what this tells you? For all the emphasis we put on money in this world, hardly anyone knows how to make any of it other than trudging off to work every day to earn theirs through a job they most likely hate. That's pathetic, in my view. So while we see millionaires sailing around on boats and flying around on private jets, we get to sit here seething with jealousy and envy. That's no way to live.

I bet hardly anyone you ask this question to even knows what tax bracket they're in. Or what an LLC is. Or what a write-off is. Or why you'd want to start a business from home even if you've got a regular full time job. Yes, you'll get answers that come close, but nothing real. People in the rat race don't know anything about business. Now, go off and ask the shop owner on Main Street these questions and you'll find very different answers. Very different indeed.

So what's the answer? To seek out and obtain financial intelligence. Did you know that most people work from January to mid-May every single year to just pay their income and employment taxes? Did you know that taxes are the greatest expense for most people working today? Do you think it would be wise to figure out a way to lessen the tax burden on the individual? If you think you have an accountant to take care of this for you, ask yourself, why isn't he or she rich? Why isn't your lawyer already retired? Why does your doctor work such long shifts? These are all great questions and these are the things Robert discusses in his Rich Dad Poor Dad book.

I'm glad I read this book in the past and I'm very happy to be reading it again. It's good to re-motivate myself in this regard. While I'm already familiar with many of the principles Robert discusses and while I've already put many of them in action, there's always room for improvement. It's true when he says that 95% of people in the world play by one set of rules and the remainder plays by another. The trick is to learn the other set of rules. I mean, they're sitting right in front of us. We can learn them at any time.

Follow the threads and posts in this forum to stay on top of what I write next. I'll be discussing the entire book.
 
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