This post will consider Chapter 2 of Rich Dad Poor Dad by Robert Kiyosaki. The chapter is entitled, "Lesson 2: Why Teach Financial Literacy?"
For this discussion, I will post five excerpts from the chapter that I liked. Please use the excerpts to start discussion of the chapter, or please feel free to share your own favorite passages. Thanks.
1. In 1923 a group of our greatest leaders and richest businessmen held a meeting at the Edgewater Beach hotel in Chicago. Among them were Charles Schwab, head of the largest independent steel company; Samuel Insull, president of the world’s largest utility; Howard Hopson, head of the largest gas company; Ivar Kreuger, president of International Match Co., one of the world’s largest companies at that time; Leon Frazier, president of the Bank of International Settlements; Richard Whitney, president of the NewYork Stock Exchange; Arthur Cotton and Jesse Livermore, two of the biggest stock speculators; and Albert Fall, a member of President Harding’s cabinet.Twenty-five years later, nine of these titans ended their lives as follows: Schwab died penniless after living for five years on borrowed money. Insull died broke in a foreign land, and Kreuger and Cotton also died broke. Hopson went insane. Whitney and Albert Fall were released from prison, and Fraser and Livermore committed suicide.
2. I am concerned that too many people are too focused on money and not on their greatest wealth, their education. If people are prepared to be flexible, keep an open mind and learn, they will grow richer and richer despite tough changes. If they think money will solve problems, they will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.
3. Rule #1: You must know the difference between an asset and aliability, and buy assets. If you want to be rich, this is all you need to know. It is rule number one. It is the only rule. This may sound absurdly simple, but most people have no idea how profound this rule is. Most people struggle financially because they do not know the difference between an asset and a liability. “Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets," said rich dad.
4. Mike and I learned more sitting in on his meetings than we did in all our years of school, college included. Mike’s dad was not book-smart, but he was financially educated and successful as a result. He told us over and over again, “An Intelligent person hires people who are more intelligent than he is.” So Mike and I had the benefit of spending hours listening to and learning from intelligent people.
5. So while I’m not yet rich, I am wealthy. I now have income generated from assets each month that fully cover my monthly expenses. If I want to increase my expenses, I first must increase my cash flow to maintain this level of wealth. Also note that it is at this point that I’m no longer dependent on my wages. I have focused on, and been successful in, building an asset column that has made me financially independent. If I quit my job today, I would be able to cover my monthly expenses with the cash flow from my assets.
Most people struggle financially because they do not know the difference between an asset and a liability.
This book was a game changer! It was the subtitle that made me pick this book up: "What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!".
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