One of the best-selling personal finance books in recent memory is Rich Dad Poor Dad by Robert T. Kiyosaki. The cover even proclaims it to be “the #1 personal finance book of all time!” It was first published in 1997 and is estimated to have sold over 40 million copies. It is currently the 6th best seller in this category on Amazon.
The poor dad in the title is Kiyosaki’s biological father. He went to college, valued safe investments, and encouraged Robert to work for others for pay and benefits. Rich dad was the father of his friend, and he brought Robert under his command. He doesn’t want to work for money. He wants his money to work for him.
Because of these exact attitudes and philosophies about money, Kiyosaki explained, his poor dad was poor and his rich dad was rich. He lists examples of financial changes for each father throughout the book.
Kiyosaki answered perhaps the most popular financial question of all time: “How do I get rich?” His answer was to understand the difference between assets and liabilities before buying assets. In his view, the poor are poor because they spend their money on debts such as houses, cars and furniture. These are things that cost money to maintain or depreciate over time.
For example, the wealthy buy income-generating assets that pay their bills, such as stocks, bonds, real estate, and businesses.
Clearly one of Kiyosaki’s favorite assets to buy is real estate, and he devotes a large portion of his book to explaining how to invest and profit from it.
He wrote about how he bought and sold properties within days without spending a penny. He also explains how he makes money by flipping homes and finding good real estate deals for others, and how he legally avoids or delays paying taxes on his profits.
One of his observations that I think is worth mentioning is that many people “trade” their homes as soon as they can afford them. “This model of viewing your home as an investment, and the idea that a higher salary means you can buy a bigger home or spend more money, is fundamental to today’s heavily indebted society,” said Kiyosaki.
Whether you agree with him or not, it’s worth taking a look at your current housing situation. Are you just because the bank says you can buy a much bigger house than you need? Are your mortgage payments so large that you can’t meet your other financial goals?
What if you could free up $400 a month by selling and moving to a smaller, cheaper house? Is it worth moving for that little bit of monthly savings? This is something to consider.
While I agree with most of his philosophy on money, I was a little disappointed by the book because I felt misled by the subtitle: “The Rich Teach Their Children Something About Money – The Poor and Middle Class Don’t!”
Although much of the book revolves around the finance lessons Kiyosaki took from his two “dads”, I feel the book’s target audience should not be parents, but those interested in investing in real estate adults.
Learning how to invest in real estate and how to reduce profits lost to taxes is not money knowledge that today’s kids need to know.
Let’s make sure the younger generation learns how to budget, save and invest first and foremost to live within their means and avoid going into debt. Once they have a solid understanding of these financial skills, they can move on to more advanced and complex topics such as tax law and buying real estate.
So if you’re looking for help teaching your kids about money, I would recommend Rich Dad Poor Dad. There are many more books for you. However, if you are interested in buying and selling real estate, this is a great read.
Dave Kinzer is a music teacher and financial coach in Springfield.Contact him at www.davekinzer.com. His column appears here every other Wednesday.