Moneywise24 Personal Finance

As we grow up, we are often told by our parents and peer groups to go to school, get good grades, enjoy education and to get a good and secure job at a company. We strive to gain wealth by working hard, and fighting for promotions and salary raises. At the same time, we try to get ourselves comfortable lives: a nice apartment, a car, fashionable clothing, and good lifestyle in general. We use credit cards and loans to finance things for which we do not yet have money readily available, and often use out monthly salaries to pay off debt and mortgages. Then, as we grow older and our demands to life grow, we marry, get children, perhaps bigger estates, and we work even harder to keep up with the rising costs of living.

In his book Rich Dad, Poor Dad, Robert T. Kiyosaki calls this the rat race. Most people are so much taught during childhood and adolescence that this is the one and only way to achieve success and wealth, that this is the natural way to go for most people. At the same time time, each month when we receive our salaries we get disappointed; is this little salary all we get from hours and hours of hard work each month?

Robert T. Kiyosaki tells the story of aboy (himself) growing up with two dads; one “poor” dad, working his ass off for others and always struggling with financial problems his entire life, and a “rich” dad, who understands the laws of finance and making investments; whereas the poor dad works for his money, the money works for the rich dad.

Rich Dad, Poor dad is a well-written guide, in which the reader is drawn into the mind and way of thinking of an entrepreneur. The book discusses the basics of how income is earned and spent, and the differences of how the rich and the poor generate and spend money. Furthermore, the book offers a good introduction to the role of taxes, and what there is to do in order to escape the rat race and start leading a rich and fulfilling life.

The best about this book is the fact, that it does not focus on starting your own business, or anything similar. In stead, it focuses on how to correctly handle money, and how to develop the ability to identify business opportunities in its broadest sense. It is a highly motivating book, which will change the way you look at work and earning money for sure.

Update on 13 August 2010: Also read the related post Mind Your Own Business.

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Honestly, it costs me quite some effort and perhaps a bit of courage to write this article; finally, after having seen the book quite some times in my local bookstore but having ignored it due to its simple title, I decided to buy Rich Dad, Poor Dad - if it would have been called “an empiric study about the financial development of… ” I would have bought it sooner, in the end I currently live in Germany. I have still not read the entire book, and read through the first two chapters only yesterday. But still, I can say that those first two chapters have pretty much enlighted me. It is a funny thing, because many of what is written I know in some form of the other, but my entire life I have failed living it.

The book Rich Dad, Poor Dad is a story told by Robert T. Kiyosaki, who grew up in Japan. During childhood, he grew up with two ‘dads’: his real dad, a highly educated man with a good job, but constantly struggling with his financials, and the rich dad of his friend Mike, which is much like his second dad. Mike’s dad is a successful entrepreneur, and the main difference is how the two dad look at money, and the goals they pursue in life.

In the first chapter of the book, Robert T. Kiyosaki writes about how people are told during childhood and adolescence to get good grades, perform well through high school and university, in order to get a good job and a good salary. Thus, young adults graduate from college or university, obtain good jobs, and work hard on their career. They get themselves credit cards, they buy a fancy car, and with the first salary raise perhaps a home on a mortgage. People get married, get children, and as life gets more expensive, they work harder and take on second jobs… I do not want to lose myself in Robert Kiyosaki’s words, but the bottom line is that most people live in an illusion; the illusion of having a secure job, building a secure retirement, and that working hard for a large and well-known company is going to make them rich on the long-term. However, in the end these people end up working solely in order to be able to pay their bills and their liabilities.

In order to lead a truly fulfilled life (and I do not mean rich, simply fulfilled), it is necessary to find ways to let money work for you, in stead of the other way around. This means, for example, investing in stocks in order to see them rise in value, and to obtain dividend pay outs. It means investing in other forms of businesses, hire people to let them do the work for you. It means identifying opportunities, entrepreneurial opportunities, and be in charge. The biggest problem, however, is that most people are so caught up in their thinking of “education / good grades / getting a good job”, that these opportunities pass by without them even noticing.

I let the first chapter reflect for a moment yesterday, and the more I thought about it, the more I identified opportunities in the past, which I had let pass by due to my focus on making a career. I still remember vividly, that when I was 19 or so, I got interested in international trade. I bought some books on international trade, and how to become a trade agent, and in a newspaper I saw some offers from manufacturers of cellphones looking for agents. The costs for starting up an agency were extremely low, and it was a time at which cellphones were just starting about to hit the market… but I was discouraged by my family and friends, and unfortunately I listened to their advice, to get a job. One year later the cellphone business started booming for real…

Throughout my entire life, I have been looking for better jobs, better salaries, promotions, and the like. And I believe this will be one of my top priorities for 2010:

I pledge to stop focusing on making a career and losing myself deeper in the treadmill until I cannot get out. In stead, I will be on the outlook for business opportunities, aiming at gaining financial independence. And I will do anything, that is necessary.

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