Rich Dad Poor Dad

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Rich Dad Poor Dad
Robert T. Kiyosaki
8. ASSETS BUY LUXURIES: The power of focus. A friend's child has been developing a nasty
habit of burning a hole in his pocket. Just 16, he naturally wanted his own car. The excuse, “All
his friends' parents gave their kids cars.” The child wanted to go into|
his savings and use it for a down payment. That was when his father called me. “Do you think I
should let him do it, or should I just do as other parents do and just buy him a car?”
To which I answered. “It might relieve the pressure in the short term, but what have you taught
him in the long term? Can you use this desire to own a car and inspire your son to learn
something?” Suddenly the lights went on, and he hurried home.
Two months later I ran into my friend again. “Does your son have his new car?” I asked.
“No, he doesn't. But I went and handed him $3,000 for the car. I told him to use my money
instead of his college money.” “Well, that's generous of you,” I said.
“Not really. The money came with a hitch. I took your advice of using his strong desire to buy a
car and use that energy so he could learn something.”
“So what was the hitch?” I asked.
“Well, first we broke out your game again, CASHFLOW. We played it and had a long discussion
about the wise use of money. I then gave him a subscription to the Wall Street Journal, and a
few books on the stock market.”
“Then what?” I asked. “What was the catch?”
“I told him the $3,000 was his, but he could not directly buy a car with it. He could use it to buy
and sell stocks, find his own stockbroker, and once he had made $6,000 with the $3,000, the
money would be his for the car, and the $3,000 would go into his college fund.”
“And what are the results?” I asked.
"Well, he got lucky early in his trading, but lost all he gained a few days later. Then, he really got
interested. Today, I would say he is down $2,000, but his interest is up. He has read all the
books I bought him and he's gone to the library to get more. He reads the Wall Street Journal
voraciously, watching for indicators, and he watches CNBC instead of MTV. He's got only
$1,000 left, but his interest and learning are sky high. He knows that if he loses that money, he
walks for two more years. But he does not seem to care. He even seems
uninterested in getting a car because he's found a game that is more fun."
“What happens if he loses all the money?” I asked.
“We'll cross that bridge when we get to it. I'd rather have him lose everything now rather than
wait till he's our age to risk losing everything. And besides, that is the best $3,000 I've ever
spent on his education. What he is learning will serve him for life, and he seems to have gained
a new respect for the power of money. I think he's stopped the burning of holes in his pockets.”
As I said in the section “Pay Yourself First,” if a person cannot master the power of self-
discipline, it is best not to try to get rich. For while the process of developing cash flow from an
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Rich Dad Poor Dad
Robert T. Kiyosaki
asset column in theory is easy, it is the mental fortitude of directing money that is hard. Due to
external temptations, it is much easier in today's consumer world to simply blow it out the
expense column. Because of weak mental fortitude, that money flows into the paths of least
resistance. That is the cause of poverty and financial struggle.
I gave this numerical example of financial intelligence, in this case the ability to direct money to
make more money. If we gave 100 people $10,000 at the start of the year, I gave my opinion
that at the end of the year:
80 would have nothing left. In fact, many would have created I greater debt by making a down
payment on a new car, refrigerator, TV, VCR or a holiday. 16 would have increased that
$10,000 by 5 percent to 10 percent. 4 would have increased it to $20,000 or into the millions.
We go to school to learn a profession so we can work for money. It is my opinion that it is also
important to learn how to have money work for you.
I love my luxuries as much as anyone else. The difference is, some people buy their luxuries on
credit. It's the keep-up-with-the-Joneses trap. When I wanted to buy a Porsche, the easy road
would have been to call my banker and get a loan. Instead of choosing to focus in the liability
column, I chose to focus in the asset column.
As a habit, I used my desire to consume to inspire and motivate my financial genius to invest.
Too often today, we focus to borrowing money to get the things we want instead of focusing on
creating money. One is easier in the short term, but harder in the long term. It's a bad habit that
we as individuals and as a nation have gotten into. Remember, the easy road often becomes
hard, and the hard road often becomes easy.
The earlier you can train yourself and those you love to be masters of money, the better. Money
is a powerful force. Unfortunately, people use the power of money against them. If your
financial intelligence is low, money will run all over you. It will be smarter than you. If money is
smarter than you, you will work for it all your life.
To be the master of money, you need to be smarter than it. Then money will do as it is told. It
will obey you. Instead of being a slave to it, you will be the master of it. That is financial
intelligence.
9. THE NEED FOR HEROES: The power of myth. When I was a kid, I greatly admired Willie
Mays, Hank Aaron, Yogi Berra. They were my heroes. As a kid playing Little League, I wanted
to be just like them. I treasured their baseball cards. I wanted to know everything about them. I
knew the stats, the RBI, the ERAs, their batting averages, how much they got paid, and how
they came up 1 from the minors. I wanted to know everything because I wanted to be just like
them.
Every time, as a 9 or 10 year-old kid, when I stepped up to bat or played first base or catcher, I
wasn't me. I was Yogi or Hank. It's one of the most powerful ways we learn that we often lose
as adults. We lose our heroes. We lose our naivete.
Today, I watch young kids playing basketball near my home. On the court they're not little
Johnny; they're Michael Jordan, Sir Charles or Clyde. Copying or emulating heroes is true