A Guide on Robert Kiyosaki and Personal Finance
Robert Kiyosaki is a well known author of self-help books on finance and motivational speaker. His book “Rich Dad, Poor Dad” is among the most popular books in personal finance. The success of the book also prompted Kiyosaki to write more books geared not only for adults who wants to learn more about personal finance but also for kids. He has published more than 15 books to date including collaboration with Donald Trump titled “Why We Want You to be Rich.”
Complementing the books he published are the board games he created. They are compared with monopoly but they are more focused on personal finance. Called the
”Cashflow 101” there is an online version of the board game. The game was followed up by Cashflow 202 and Cashflow for Kids.
Before his success, Robert Kiyosaki worked as a Xerox salesman. He also established a company that made wallets with locks made of Velcro. It was only in 1997 that he gained success after he established Cashflow Technologies Inc. which holds the rights to his “Rich Dad” brand as well as “Cashflow.” Kiyosaki is a graduate of US Merchant Marine Academy in 1969 as a deck officer. He was part of the Vietnam War and he left the corps in 1975.
Rich Dad, Poor Dad
Kiyosaki became very popular after publishing his book “Rich Dad, Poor Dad” in 2000. The book outlines his experiences and realizations on how to improve financial standing. The title itself provides a good glimpse on what the book is about: the rich dad has some financial secrets that the poor dad is not fully aware. Kiyosaki revealed these secrets to his book which made him very popular because of its unique concepts.
His concepts on gaining personal wealth are very simple. First; a person has to learn as much as possible about personal finance and wealth in order to succeed. This is a very important tool since this is considered a guide on how to handle finances. Second; there is a big difference between corporations and individuals when it comes to spending and taxes. Companies can spend first before paying taxes while individuals have to pay taxes first before any spending. His third concept is practically the secret. Anyone can start a company and reap the benefits of starting a business as they can spend first before paying taxes.
The book also outlines Kiyosaki’s interpretation of wealth which is basically the time period the wealth can sustain an individual without working. He also defines financial independence as the state where a person’s earnings is far more than their expenses.
Techniques on Financial Growth
Kiyosaki is a strong supporter of financial growth through creation of passive income. It is a type of earning where a person doesn’t exert too much effort or a business that doesn’t require extensive management. Through passive income, Kiyosaki believes that wealth can be created as a person can still focus on their career while earning something on the side. He also pushed for increasing assets and decreasing liabilities. This is where he pushes for earnings in a passive way as he treats assets as those who can help in generating income. Liabilities, on the other hand, are those that do not result to earnings or just properties that could not be used to generate cash.
According to Kiyosaki, there are two tools that can be used to increase wealth as the passive source of income is created: the first tool is financial leverage wherein a businessman uses the earnings to improve the fixed asset. By increasing the fixed asset, additional earnings could be achieved and the business would eventually grow. The second tool useful for financial advancement is familiarity with various financial concepts. This is very important as the concept of finance becomes more advanced as personal wealth grows.
Kiyosaki has also created “The Cashflow Quadrant”. He created four groups of individuals based on their source of income: Employee, Self Employed, Business Owner and Investor. The quadrant is split into four where the employee is placed on upper left, business owner on the upper right, self employed (and small business owners) on the lower left and investor in the lower right. This quadrant explains how a person could extend their earnings. For example, an employee could start a small business where the employee could still take care of their career while their business is just starting. At the same time, a person could also engage in another small business that requires his or her careful attention but this is only operates the said business in their spare time. While doing all these three, a person can consider investing in stock market where additional cash flow could be achieved. It is also possible to limit the source of income to two when there is time constraint and other factors that hinder personal management.
Criticisms on Kiyosaki’s Work
Even though Kiyosaki sold millions of books worldwide, there are detractors and criticisms for his work. The common criticism for his work is from the fact that the ideas he presented are just theories and he doesn’t offer a concrete example on what a person should really do in order to increase their wealth. Many cited that the book “Rich Dad, Poor Dad” is just a collection of stories and anecdotes instead of creating a concrete groundwork for individuals to follow in order to increase their personal wealth.