For this review, I discuss another great book on financial education. The first book Robert Kiyosaki wrote, Rich Dad, Poor Dad, presents simple, but powerful lessons on managing personal financial affairs using simple stories and easy to follow concepts.
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not!
This book does the wonderful task 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 rich people. It also shows how from a strictly financial standpoint that it is the middle class cash flow pattern that is the absolute worst one to have.
But more than the accounting concepts, it discusses that rich people just think differently about money, how to use it, the powers of it and virtues of it. I have long observed that the United States is a country which craves success, but hates successful people. Too often, I have seen people vilified whose only crime is that they worked hard and achieved success and wealth. When I was younger, I, too, shared many of these opinions.
Granted, there are a few people, who act as leeches and make a living sucking the financial marrow out of the lives of others (pay day loan people and many sellers of financial product come to mind), but by and large, 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 on the side, the potential for reward is much higher as a business owner. In addition, as an employee, you serve the employer in a designed role. This means that, most likely, the role was not designed specifically for you and consequently, wasn’t designed to take advantage of your unique gifts and talents. It is only when you have the opportunity to craft a role just for you, will you have the best opportunity for success. Finally, when you work for a paycheck instead of profit and you can count on a safe and steady stream of income, you often subconsciously turn off part of your creative centers of your brain. When your financial well-being is tied to generating new ideas, you will be surprised how much more you can dream up and give life to. Unless you are trained to look for opportunities, you will pass them by.
The most vital learning to gain from this book is a realization that the employee mindset is a limiting one. The employee as is largely understood today is a relic from the industrial era and the factory culture. Prior to the industrial era, money was generally earned by farmers and tradespeople buying and selling the fruits of their labor. In effect, everyone was self-employed. In the 1800’s and much of the 1900’s, roles were designed for people to act as cogs in the manufacturing process. Tasks were developed by managers into established procedures and the last thing the managers wanted was for an employee to use their brains to redesign the system or dream up ways to change things. In exchange for doing things exactly the way the managers told you to do them, the employee was paid a wage. The belief in the infallibility of management decision making has thankfully gone away in most workplaces, modern management thinking is moving much more in the employee designed workplace that is paid based on performance and production. But the factory/employee mindset is still alive and well. It is very dangerous to have in economic climate of the 2000’s. To remain competitive in a global economy, you need to be able to leverage the talents and creativity of your people and the employee mindset is a real obstacle businesses need to overcome.
By rejecting the employee mindset and adopting a self-employed mindset (even if you are an employee) you are not only going to distinguish yourself to your employer, you are also going to continue to exercise and grow your creative muscles and your ability to identify and capitalize on opportunities.
Rich Dad, Poor Dad is a great book that brings you several great lessons.
If I have inspired you to pick up Rich Dad, Poor Dad, I encourage you to click on the links in this post or on my page. YouthFinancialEducation.com is not only a great place to learn how to succeed financially, it is also a place that I am constantly leveraging my creativity and skills to bring you value. By clicking on links from here, you help reward me for bringing that value to you.
