Financial literacy and security

Recently I read a book “Rich dad poor dad” by Robert Kiyosaki. The book highlights the importance of financial intelligence and security. The book is about getting on the road of personal wealth and living a life of financial independence.

It is, I think, a great book for everyone who yearns for financial security and freedom. I want to share a few insights from the book.

First, the author labels a job as a “rat race” in which we wake up every morning, prepare ourselves and go to office to earn a living. We work hard everyday, push ourselves to the limit and wait for a paycheck at the end of the month.

Some of us may be satisfied with the monthly paycheck whereas others wish for a raise, promotion, bonus or a “dream job”.  The author says this is a traditional system of making money.

With all our means we want to get rich. Yet sadly, the job we are doing doesn’t make us financially secure. Our job gives us a monthly paycheck – a short-term security.

But to own significant assets, it takes decades of saving. We have to work into our 70s and we won’t have time and money to enjoy life. Parents encourage child to excel in school and college and to join big corporations “to be a part of the rat race”. He encourages us to have a job to learn new skills rather than to earn money.

Second, as a solution to the rat race, the author says: “mind your own business”.

In a job, we are minding other’s business, and we are making other people rich. When you start minding your own business you will think and look for opportunities and work for yourselves.

Third, the author warns of “the luxury trap”. Everyone wants a luxurious and comfortable life. Everyone wants to live in a big house and drive a new car. How to get those? The easiest and commonest way is to borrow money from the bank. In short term, it will make you happy, but in long term it’s a financial burden.  The author encourages us to build assets first and enjoy luxury as a reward of the asset.

Finally, the author encourages us to develop financial intelligence by reading books. He encourages investing on real estate, stock market and bonds.

Overall, I found the book very inspiring. But that said, the book has also met with fierce criticism, with some tearing the author apart, saying the book is full of factual errors and a waste of time. Each to their own!