For this review, I discuss another great book on financial education. Robert Kiyosaki’s first book, Rich Dad, Poor Dad, presents simple yet powerful lessons on managing personal financial matters using simple stories and easy-to-follow concepts.
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Don’t!
This book does the wonderful job of explaining such dry accounting concepts of income statements and balance sheets in a very readable and understandable format. It shows the cash flow patterns of poor people, middle class people, and wealthy people. It also shows how, from a strictly financial point of view, the cash flow pattern of the middle class is the worst you can get.
But more than accounting concepts, he discusses that rich people simply think differently about money, how to use it, its powers and virtues. I have long observed that America is a country that yearns for success, but hates successful people. Too often I have seen people reviled whose only crime is that they worked hard and achieved success and wealth. When I was younger, I also shared many of these views.
Granted, there are some people who act like leeches and make a living by sucking the financial marrow out of other people’s lives (payday lenders and many financial product salesmen come to mind), but overall , most people who have achieved wealth have done so through hard work and being of service to others.
One of the most powerful concepts is the fact that you will only earn so much by working for a paycheck. It is possible to get rich working for others if you start early and manage your cash flow well. However, if you open your own business, the reward potential is much higher than owning a business. Also, as an employee, you serve the employer in a designated role. This means that, most likely, the role was not designed specifically for you, and therefore was not designed to take advantage of your unique gifts and talents. Only when you have the opportunity to create a role just for yourself will you have the best chance of success. Finally, when you work for a paycheck instead of a profit and can count on a steady and secure stream of income, you often unconsciously turn off part of your brain’s creative centers. When your financial well-being is tied to generating new ideas, you’ll be amazed at how much more you can dream and bring to life. Unless you are trained to look for opportunities, you will pass them by.
The most important lesson to be learned from this book is to realize that the employee mindset is limiting. The employee, as it is largely understood today, is a relic of the industrial age and factory culture. Before the industrial age, farmers and merchants generally made money by buying and selling the fruits of their labor. In effect, they were all self-employed. In the 1800s and much of the 1900s, roles were designed for people to act as cogs in the manufacturing process. Managers built tasks into established procedures, and the last thing managers wanted was for an employee to use their brains to redesign the system or come up with ways to change things. In exchange for doing things exactly as the managers told him to do them, the employee received a salary. The belief in the infallibility of managerial decision making has thankfully Gone in most workplaces, modern management thinking is moving much more into the employee-designed workplace that is paid based on performance and production. But the factory/employee mentality is still alive and kicking. It’s very dangerous to have in the economic climate of the 2000s. To remain competitive in a global economy, you need to be able to harness the talents and creativity of your people, and the mindset of employees is a real hurdle that companies need to overcome.
By rejecting the employee mindset and adopting a self-employment mindset (even if you’re an employee), you’ll not only set yourself apart from your employer, but you’ll also continue to exercise and grow your creative muscles and empathy. and take advantage of opportunities.
Rich Dad, Poor Dad is a great book that brings you several great lessons.
If I inspired you to choose Rich Dad Poor Dad, I encourage you to click the links in this post or on my page. YouthFinancialEducation.com is not only a great place to learn how to be financially successful, it’s also a place where I constantly tap into my creativity and skills to bring value to you. By clicking links from here, you help reward me for providing that value to you.
