Financial Intelligence

The difference between those who find it to be the best of times and those who find it to be the worst of times is simply knowledge and financial IQ. The great failure of our education system is that it does not teach people about how money really works, and what it does teach is antiquated and obsolete—the old rules of money. They teach you how to balance a checkbook, but they don't teach you how to grow a balance sheet—or even read one for that matter. They teach you to save your money, but they don't teach you about inflation and how it steals your wealth. They teach you how to write a check, but they don't teach you the difference between assets and liabilities. One wonders if the system is intentionally designed to keep you in the dark.

In today's world, you can be an academic genius but still be a financial imbecile. This goes against the conventional wisdom, especially when we equate people who have high-paying jobs like attorneys or doctors with being financially and academically smart because they make a lot of money. But as we've seen, making lots of money doesn't mean you are financially intelligent, especially when you spend and invest that money unwisely—or turn your money over to people who do not care if you make or lose money. Always remember there is big difference between job security and financial security, and true financial security requires a sound financial education based on the realities of the real world of money.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

Today, financial information is coming at us from all directions. Without financial education, a person is less able to process financial information into personal meaning. For example, when someone says a stock has a P/E of 6, or that a piece of real estate has a cap rate of 7 percent, what does that mean to you? Or when a financial planner says the stock market goes up an average of 8 percent a year, what docs that make you think? Maybe you ask, "Is that information true, and is 8 percent a year a good or bad return?" Again, without education a person cannot translate information into personal meaning. Information without education is limited in value.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

If we as a people knew that our money was debauched, Monopoly money, we might not be in the financial mess we are in today. If people had a financial education, there would be more than one person in a million who could diagnose our financial problem. If people had more financial education, they would not blindly believe that their house is an asset, that saving money is smart, that diversification would protect them from risk, and that investing for the long term in mutual funds is a smart way to invest. But because of our lack of financial education, the powers that be are able to continue with their destructive monetary policies. It is to their benefit that you and I are in the dark. This is why the rich had to first take over our educational system before they could flood the world with debt. This is why our schools do not teach us about money.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

Just as people do, money evolves. One of the reasons so many people are in financial crisis today is because our money evolved but we did not evolve with it. One reason why we did not evolve is because there has been a conspiracy against our financial intelligence. Our evolution has been stunted.

When it comes to money, most people are smart. Even a ten-year-old child knows the difference between a five dollar bill and a fifty dollar bill. If offered the choice between the five and the fifty, most kids would go for the fifty.

To diminish our natural financial smarts, we had to be financially dumbed down. This was achieved through banking, a complex and confusing system by which money is created. In many ways the modern monetary system makes no sense to a logical person. For instance, how can it create trillions of dollars out of thin air?

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

When I am asked, "What would you teach people about money to increase a person's financial intelligence and financial literacy?" My reply is, "I'd begin with history, because through the lens of the past you can better see the future."

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

Most people who know the rules of the game of the rich are not in financial trouble today. For the most part, it is only those people who have a low financial intelligence and live by the old rules of money who are hurting financially.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

One reason why 90 percent of people are financially average is because they follow average advice, for example:

<ol>
<li>"Go to school."</li>
<li>"Get a job."</li>
<li>"Work hard."</li>
<li>"Save money."</li>
<li>"Your house is an asset and your biggest investment."</li>
<li>"Live below your means."</li>
<li>"Get out of debt."</li>
<li>"Invest for the long term in a well-diversified portfolio of stocks, bonds, and mutual funds."</li>
<li>"Retire, and the government will support you."</li>
<li>"Live happily ever after."</li>
</ol>

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

A good education is not enough. Many students, or their parents, are deeply in debt with college loans. Additionally, in college, students are able to sign up for credit cards, which contribute to more bad debt piling up. When a student takes out loans and signs up for a credit card, cash flows out of the student's pocket for years to pay off the debt from the loans and credit cards. The conspiracy loves students because students are a great source of cash flow. They are usually financially naive, and often think of credit cards as free money. Many students learn that that isn't true the hard way—and of course, most never learn. School is a great place to train people to have cash flow out of their pockets and into the pockets of the rich.

Students graduate heavily in debt, enter the job market, find a good job, rack up more debt, and watch their cash flow to the government via income taxes. The more they earn the higher percentage they pay in taxes. To save money, they eat at McDonalds, and cash flows to McDonalds. They deposit their paycheck in their bank, and cash flows to the bank in the form of fees each time they use an ATM to get their money. They buy a car, and cash flows to the car company, finance company, gas industry, auto insurance, and, of course, to the government for an auto license. They buy a house, and cash flows out of their pockets to pay for the mortgage, insurance, cable TV, water, heat, electricity, and government for property taxes. Every month cash flows to Wall Street to invest in mutual funds for retirement plans, and cash flows from mutual funds to fund managers in the form of commissions and fees. Later in life, when people are old and feeble, cash flows to the nursing home. And when they die, cash flows to pay taxes on what they left behind. For most people, their entire lives are spent trying to keep up with their outgoing cash flow.

[...]

School does not teach kids about cash flow. If schools do have financial education classes, they usually only teach kids to save money in a bank and to invest in mutual funds— again, training them to send their cash to the rich.

If I ran the school system, I would have classes on how to control outgoing cash flow and how to create incoming cash flow.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

When I hear, "It takes money to make money," I reply, "No, money begins with words, and words are free."

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

<strong>Words of a Poor Person</strong>

It is easy to tell whether a person is poor just by their words. For example:

<ol>
<li>"I'll never be rich."</li>
<li>"I'm not interested in money."</li>
<li>"The government should take care of people."</li>
</ol>

<strong>Words of a Middle-Class Person</strong>

The middle class employs a different set of words:

<ol>
<li>"I've got a high-paying, secure job."</li>
<li>"My home is my biggest investment?"</li>
<li>"I'm investing in a well-diversified portfolio of mutual funds."</li>
</ol>

<strong>Words of a Rich Person</strong>

Just like the poor and the middle class, the rich have words that set them apart:

<ol>
<li>"I'm looking for good employees to work for me."</li>
<li>"I'm looking for a cash flowing 100-unit apartment house to buy."</li>
<li>"My exit strategy is to take my company public via an IPO."</li>
</ol>

Can you tell the difference between these words? What kind of reality does each set of words reveal? Repeating the lesson from Sunday school, "And the word became flesh." We do become our words.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

My rich dad valued financial freedom. That is why he believed so strongly in financial education. He often said, "The people with the most security are in prison. That is why it's called 'maximum security."' He also said, "The more security you seek, the less freedom you have."

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

When you leave school, your banker does not ask you for your report card. Your banker does not care if you had good grades or bad grades. All the banker wants to see is your financial statement, because your financial statement is your report card when you leave school.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich