The Good
Flawed Educational System
As Robert mentions many times in the book, our traditional educational system is flawed. Our education system is designed primarily to create employees and could be a negative influence for an entrepreneur. As Kiyosaki mentions, he’s not suggesting don’t go for higher education, he’s suggesting higher education does not assist with “street smarts”. Financial literacy is something that is rarely discussed in school, and if it is discussed, it is only at basic levels. Based upon my personal background, I’ve made this a personal focus and will make sure my children are well educated in this subject.
The cost of education continues to increase much faster than the rate of inflation. It’s becoming more clear our education system is broken. Robert’s statements about this topic are accurate.
Being An Entrepreneur Is Less Risky
It’s typically stated: owning a business is more risky than working for someone else. In my opinion, owning a business gives you all sorts of self-reliance skills you will not get when working for someone else. If anything with today’s “cradle to grave” mentality, we are creating more dependent individuals.
Owning a business has given me much more independence and invaluable skills I could still use if I were to work for someone else. Things I used to consider risky or could never imagine doing before owning a business, I now do on a weekly basis.
Your Primary Residence Is NOT An Asset
Over the years it was generally accepted that your primary residence was an asset. Robert flat out states (and I believe correctly), your home is not an asset, since it does not generate positive cash flow. The housing bubble and collapse proved this correct.
“Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets”
While rental properties have also gone down in value, if you focused on positive cash flow, you still are bringing in money every month. Robert even states in his book, home values do not always go up.
Pretty much all consumable goods are liabilities, and something even I got tripped up with. He states you should buy investments that generate cash flow to help pay for your “doodads”. I think this is a great way to look at how to purchase your toys.
What is an Asset or Liability?
“An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.”
A load of naysayers of Robert’s books point out this statement doesn’t follow general accounting standards. This is true, and Robert acknowledges this. The point, which many miss, is that you should be focusing on cash flow to get wealthy.
“Wealth is a person’s ability to survive so many number of days forward… or if I stopped working today, how long could I survive?”
This statement I still use today and devoted a few posts about this topic:
How Wealthy Are You?
Does Net Worth Matter?
How to Become Wealthy