Key Money Lessons the Rich Teach their KidsTHN
If you’ve read the Richest Man in Babylon which gives you a basic foundation for creating wealth that has survived ancient times, this one offers a more practical approach. In fact, if I’m not wrong, Robert recommends reading the Richest Man in Babylon first (inside this book) to better understand wealth.
That said, the core message here is basically, “understanding CASH FLOW,” which is wealth transfer.
It explains the concept of “cash flow” in four quadrants and why your job or career will not make you rich but keep you in the rat race. The cash flow quadrant, is divided into E for employee, S for Small business owner and/or your profession/career like being a doctor, lawyer etc, I for Investors, and at the very top B for Business/Corporations.
The only people who end up escaping the rat race (system) are those who belong to the I & B quadrants. But you can still be on the B & I quadrants even by being in the E & S as long as you understand CASH FLOW. There is even a board game (Cash Flow) for this where you play just like you do in the game “Monopoly” where you can practice the game of money without using real money.
In the book, Robert compares his friend Mike’s dad (Rich Dad) and his real father (Poor Dad). Mike’s dad left school at the fourth grade because he had lost his parents and could not continue his education. Robert’s real dad (Poor Dad) on the other hand, was highly educated, had a PhD and was even the head of education of the whole county in Honolulu, State of Hawaii.
Poor Dad always placed emphasis on attending school and getting a college degree. But Mike’s dad (Rich Dad) knew it was a hoax to get you in the rat race which is a dangerous financial cycle many people struggled with till death. This hasn’t started today, it goes back to ancient times as you will find true in the ‘Richest Man in Babylon.’
Robert always questioned his dad’s advice of going to school. One day he asked his dad about why school was so important yet they didn’t teach money. Money was also the reason his parents always quarreled in the house. His real father was so broke despite his high education and good salary, he used to stock food in the fridge whenever there was a discount.
In fact, Poor Dad banned the subject of “Money” in his home. But after Robert’s continued persistence in his quest for why Mike’s dad was rich but didn’t have a great education, his father finally conceded to the idea of Robert learning from Rich Dad. Rich Dad taught the right kind of education not taught in school (financial & self education).
From Rich Dad, Robert also learnt to work for the right kind of income. As Rich Dad put it, there are three types of income; earned, portfolio and passive income. The rich don’t work for money (earned income or salary). They understand CASH FLOW and so build portfolio and passive incomes, which basically means – money works for them.
If you’ve ever viewed school education as superior and others who don’t posses educational materials/status like high grades as failures in life, time to realize you’ve been wrong all this time. You don’t need school education (especially tertiary education/college) to be successful. Though Robert didn’t pass highly in high school, he went on to get his diploma, later joined the Air Force and fought in the Vietnam War flying fighter jets. Robert says, “nobody should go to college unless they know why it is important to be there, i.e, To gain relevant technical skills for what they want to do.”
But perhaps one of the most important question, “why was Rich Dad rich without a good education, how could he have managed his businesses or money without an MBA?”
Rich Dad unlike Poor Dad who thought of himself as intelligent, had many advisers. Throughout his life, he made friends with the right people. He surrounded himself with brilliant lawyers, accountants, partners and even married the right person. Robert still keeps his cirlce small and is friends with all the people he started with back in the day till date. Notable persons being Donald Trump and his own wife Kim.
This is what Warren Buffett calls having an economic moat. Which is basically surrounding yourself with the right people and keeping that circle tight. Warren Buffett states, “if you surround yourself with quality people, they force you to level up and you drift in that direction. So find the right people early.”
Like Robert, Warren Buffett never wanted to go to college but went because his father urged him so. He says his school education didn’t impact him greatly but a course he took on PUBLIC SPEAKING has proven to be his most valuable asset as he was always shy & introverted – a skill he uses today to address Berkshire Hathaway share holders. In short, find something you want to improve in and improve. The best investment is an investment in yourself. If you train, you become better like the top sports men and women.
This book also compares the spending habits of the poor, middle class and the rich. If you first read the Richest Man in Babylon then in this book, you find a real gem expanding your financial intelligence and your life will never be the same again. You will stop reasoning like the masses. This is what the Jews teach their kids in school & places of worship. You will never find them doing menial tasks in the hood like lawn mowing – they always hire the best people!
One of the few best books for those willing to better their financial knowledge and disentangle themselves from the nonsense they were forced to swallow in school by people who didn’t know what they were doing.
I highly recommend this book but just a quick review of what Robert prepared for the willing readers……
- Have a clear purpose in mind.
- Listening is more important than talking.
- Be in control over your emotions.
- Work to learn, don’t work to earn.
- Failure inspires winners and defeats losers.
- Do not aim for more income but instead aim for more assets.
- For most people their profession is their income. For rich people their assets are their income
- You’ll probably become what you study so it’s highly advisable to carefully chose your study materials.
This is a MUST READ. You need to read as many times as possible to grasp the core message. Time to UNLEARN 🤓
If you’ve read it, drop your core message in the comments. If not, I highly recommend it!