Let me start by telling you about the story of Robert Kiyosaki from his book Rich Dad Poor Dad which is one of the best inventions of our generation in the field of Financial Literacy and Financial Education.
Robert says he had two fathers, a rich one and a poor one. Well, the rich dad was not yet rich and the poor one was not yet poor. So he called them Rich dad and Poor dad based on how they thought about money and how the handled their finances. Poor dad earned way more money than Rich dad, had a good job working for the government and was a very Educated man. Rich dad on the other hand had very little education, did not hold a job and lived in a smaller house compared to Poor dad.
Summed up in the story of Robert and his two dads are fundamental principles of Financial Literacy that i wish all of us could grasp, personalise and apply in our day to day lives. These are laws of personal finance that if followed properly can grant seemingly undeserving people what is now widely known as Financial Freedom or simply, Wealth.
Now, let's break down some of the common traits of these two dads and the effect that all that had on their individual lives and their families.
- Hard Working
It is important to note that both these men were hard working people in their respective field.
Note: Being hardworking does have an effect on how much you earn in your field but does not in itself grant you Wealth. Riches do not come from working hard. There are many hardworking poor people. A lot of us were at some point in time.
- Income
Both of these men earned substantial incomes in their respective fields. In other words, both these men were highly paid people. Yet one went on to become one of the richest men of his time leaving businesses and assets for his family when he died but the other one left bills to be paid upon his death.
This is a very sensitive part of Financial Literacy for me, particularly because i meet a lot of educated, highly paid and hardworking people whose lives are obviously like that of Poor Dad. I met a medical doctor one of these days while doing Financial Consultancy work with a firm i work with. I was amazed at how much financial intelligence this guy had. He was creating a financial life of utmost intelligence. But he told me of a fellow colleague of his, very educated and successful in the field of medicine. The guy worked at one of the most well established hospitals in the country, had one of the highest salaries in the country, ran his own surgery. Had everything many people admire about a Doctor. But when he retired and was too old to work, the guy could not even afford medication at the very Hospital he worked for. And he is not alone, there are many like that in different fields and Professions.
Note: Being Rich is not about the amount of Money you earn. You can earn a million and still remain poor. You can earn a basic wage and still become rich. Once you acquire this Financial Education it will all make sense.
- Straightforward and Honest
Both men were straightforward and honest in their dealings and were well respected.
Note: This is fundamental component of character that is important to have if ever you can become substantially wealthy. People only deal with those people they can trust. Crooks don't become rich. Crooks can steal millions but that won't give them wealth. People may deal with you for the first time when you don't know each other but never again if no trust is established. You need to be trustworthy. Even to yourself, you need to trust yourself in everything you do. Would you want to deal with someone like you?
- Education
Well, both men were educated. Not the same style or nature of education but were educated. Rich dad had very little scholastic education but was well educated in the ways of handling and accumulating wealth and devoted himself to continual education in that field. Poor dad on the other hand was a PhD holder in the field of Education making him one of the most scholarly educated men in his town.
Note: Yet Dr Poor dad remained poor in with his Phd while Mr. Rich dad became rich. The difference was not the level of education one had or didn't have but the type of education one did or didn't have. Learn a field of work, become a master at it and get well educated in it's craft. But do not forget to do the same or more for your financial education. Otherwise, Poor dad will become you.
That brings us to the end of this lesson. I hope you have learnt a lot. Leave us a comment and proceed to the next lesson. Time is money.
- Next Lesson: Don't Work For Money
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