I’m not sure how to start this post.
I originally wanted to write a review of the Rich Dad, Poor Dad series by Robert Kiyosaki and detail all the pros and cons that I have found throughout the book and series. As I read more articles, and found a growing skepticism of Kiyosaki and his work, I started to analyze my own thoughts on what I’ve learned from the books.
One article that really changed my direction is a scathing review of Kiyosaki, his Rich Dad, Poor Dad series and his entire history. You can read it (please set aside 30 minutes or more) at johnreed.com/kiyosaki.html.
To give you a quick summary, Reed writes:
There are probably many ways to became a financial genius, but Kiyosaki has certainly chosen an unlikely route:
* flunked sophomore year of high school and had to repeat
* U.S. Merchant Marine Academy
* 3rd mate oil tanker (or was it “Love Boat” type cruise ship as he said in one of his books?)
* Marine helicopter pilot (or was it fighters?)
* refused to return to ship when it was ordered to return to combat (or just missed the boat)
* Xerox salesman
* failed businessman (nylon surfer wallets)
* failed businessman (rock and roll memorabilia)
* failed author (1993 book If You Want to Be Rich & Happy, Don’t Go To School?)
* failed MBA applicant
* homeless person
* bankruptcy (or maybe not)
Kiyosaki tries to make a virtue from all his failures and false starts—saying that’s how you learn and you have to get back up and all that. Fine. But couldn’t we see a little more actual success after all these great lessons were learned? And how did all this screwed-up stuff happen to a guy who had the benefit of “Rich Dad’s” brilliant wisdom back at age nine?
Investment Advice Means More At Different Times
I’ll admit that I’ve read most of Rich Dad’s early books. At the time that I was reading them, I still had a limited financial education and these books seemed to say exactly what I wanted to hear – get rich quick, book smarts make you poor (although I hold a Bachelor of Commerce degree), working will never make you rich. Maybe it’s just because I’m on the cusp of Generation X and Y but not working hard for a lot of money sounded pretty good straight out of school!
Over the past few years, as my financial education level has grown, I’ve quit reading the Rich Dad books because I realized that much of the same information is being recycled in each new title. In fact, many of the same stories are repeated through a number of different books. As you know, I have a strict requirement for adding value to what I do. Telling me a story that I’ve already heard twice is not adding value. It wastes my time and money.
I also began to realize that the advice that I was getting was not always in the best interest of me or my family. Although I agree that the education system in North America needs to implement a much better personal finance and wealth management aspect, I will never agree that working for a university or college degree somehow makes you less likely to become wealthy. According to Kiyosaki, I’m already a lost cause because I have a degree!
The Lessons Are Written Between The Lines
Although it looks like there is evidence that Kiyosaki may be a bit of a fraud, I still don’t want to discount everything that I learned from reading his books.
Prior to my financial awakening (Changing My Belief Systems) I thought nothing of spending everything I had and using the credit card to supplement my lifestyle. I no longer believe that. I now know that in order to have a successful life you need to have plans and live within your means. What that means is up to you. For me, it’s saving 10% of my income for early retirement.
What the Rich Dad books gave me was a push in the right direction for the investment portion of my plan. The entire series is basically focused around one theme (as I see it):
- Assets are things that make you money, Liabilities are things that cost you money.
- Focus your efforts on buying Assets and do your best to reduce the Liabilities.
It’s that simple. If you disregard everything else that he writes about the limited value of school education, mutual funds being a poor person’s investment or the repetitive stories about his childhood memories, this rule still holds value.
Buying assets just makes sense. Whether it’s in stocks, mutual funds, notes or real estate, buying things that will create wealth for you is crucial for a secure financial future. If you are able to filter out the rhetoric within the books I think that you will find some stories that can motivate you and information that will help you succeed.
The Story I Still Enjoy
One Rich Dad story that I think is valuable is the one about his new Porsche purchase. As the story goes, Kiyosaki found a Porsche that he really wanted to buy. On the advice of his wife, rather than simply buy the car outright, he bought an asset that would create the monthly cash flow to support the car.
Although I would much prefer an Audi R8 I still like this story as a way to think about wealth. If you create an entire life plan for yourself, you will be able to make decisions from a position of power and know how each decision will affect your future. Knowing your financial goals, your personality and your family expectations is important as you make these decision. It also helps to track where your money is going and what it is costing you to spend it on material things.
Back To Rich Dad
The more I read, the more I believe the negative press on Kiyosaki; however, I still think that his original Rich Dad, Poor Dad book is an important read. Grasp onto the pieces of information that will help you move forward in your financial education and leave the rest behind. If you’re serious about one of the strategies that Kiyosaki talks about, do a lot more research and find out what will work for you. If nothing else, you can speak intelligently to the millions of other people who read and follow his teachings.
Do It On your Terms
One last piece of advice is this: Don’t quit your day job on someone else’s terms. If you’re ready to exit the rat race to start your own venture then only do it once you are totally confident in your prospects and your family is ready for the change. If you blindly follow the advice of an author, mentor or colleague you are living according to their situation, not yours. They may be financially secure, completely comfortable with risk or any number of different things. You need to make decisions based on your own goals so you succeed. Simply use the advice from the rest as a way to move forward.
If you would like to buy this book, please visit Rich Dad, Poor Dad
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