“Money is not the goal. Money has no value. The value comes from the dreams money helps achieve” – Robert Kiyosaki
Unfair Advantage: The Power Of Financial Freedom by Robert Kiyosaki
If you’re looking for new ideas to help you get started or continue your journey to financial freedom then Unfair Advantage: The Power Of Financial Education by Robert Kiyosaki is definitely worth reading. The ideas in this book are unconventional but anyone who has read any other books in the Rich Dad series will already know that. The great thing about reading or listening to Robert Kiyosaki is that you know the information and advice is coming from someone who is not teaching from a theory book, he’s teaching from experience. From being homeless and more than one million dollars in debt to being financially free and then to becoming rich Robert Kiyosaki is the real deal.
Why Financial Education Is Important
According to Robert Kiyosaki a global financial storm is approaching and the people that will be hurt the most are people holding on to old ideas like job security (which a lot of us know doesn’t exist), savings and a retirement plan. Some people are aware that they need to change what they’re doing but without a strong financial education they don’t know what to do or how to change.
How To Catch A Monkey
Natives of Africa and Asia have used the following technique to catch monkeys for thousands of years. The hunter finds a tree with a small hole in the tree trunk and puts fruits or nuts inside the hole. A monkey finds the fruit or nuts and grabs it by putting it’s fist in the hole. The monkey’s clinched fist filled with fruit or nuts can’t come out of the hole, so the monkey is stuck as long as it’s fist is clinched. Instead of letting go of the fruit or nuts the monkey struggles trying in vain to pull it out and when the hunter returns they easily catch the monkey. Humans are similar to monkeys but instead we cling to job security, possessions, money and a home, even if we can’t afford it.
Kiyosaki’s book outlines why he believes the coming financial storm will hurt the people holding onto obsolete ideas the most. The following reasons are why a financial education is so important.
The End Of The Industrial Age
The industrial age began around 1500 and ended around 2000. During the industrial age financial education was not important because if a person had a high paying job with a good retirement plan they would be taken care of for life. As technology replaces the need for manual labour and factories are dismantled and rebuilt in countries with lower wages a safe secure job with a great retirement plan has become an obsolete idea. In the information age which began with the birth of the internet, financial education is essential.
The Rules Changed
In 1971 president Richard Nixon took the U.S of the gold standard and changed the rules of money. The U.S dollar became an instrument of debt, no longer backed by gold and since then has lost 95% of it’s purchasing power. After 1971 savers became losers because more money is being printed everyday driving the value of the dollar down. Saving money that keeps going down in value is like the monkey holding on to the fruit and nuts.
(Seth Note: This paragraph is extremely important. There is an amazing video from Mike Maloney explaining this tragedy)
Also since 1971 bank bailouts have become more frequent and increased in size, putting a tremendous burden on all tax payers. Due to lack of financial education most people think that debt is bad, and it is if you don’t know how to use debt to make you richer. If you have a strong financial education you can use debt to become rich.
The other reasons Kiyosaki lists for the coming financial storm are that inflation is rising. Therefore, more and more people are moving from the middle class into poverty. Governments around the world have chosen to bailout banks at the expense of the working tax payer.
Preparing For A Storm
This book will help you to decide what type of education will help you to prepare for the financial challenges ahead and give you some new ideas on what you can do. The world economy is going to change whether you like it or not, the rules have changed because we’ve moved into the information age but a lot of people are still following the old rules. It’s time to adapt.
The Key To Success
The key to succeeding in the information age is education. In the industrial age academic and professional education were enough to succeed, but in the information age a third type of education is needed: financial education. Education is a process but the problem with traditional education is that it’s a process to become an employee. What if you don’t want to be an employee? What if you want to start a business or learn to invest? Then you’ll need to look at non traditional education and open your mind to new ideas.
The Best Investment
The best investment you can make is in your financial education. No investment is a good investment if you are a bad investor, so before you invest in anything else, invest in your financial education. This book is for people who are interested in finding out what kind of education it takes to succeed in business or investing.
It’s time to let go. In the same way the monkey can’t find freedom until it let’s go of the fruit and nuts you can’t find freedom until you let go of your old obsolete ideas. If you continue to listen to the same advice and take the same actions you will get the same results. This book is about the unfair advantage you will have with a sound financial education but you must take action and learn by making some mistakes. Kiyosaki says “the idea that mistakes are bad is a bad idea” and your failures are your biggest opportunities to learn and to grow.
“I can accept failure, but I can’t accept not trying” – Michael Jordan
Unfair Advantage 1: Knowledge
Your level of financial education determines what you do with your money and how you invest. Without financial education your risks go up and your returns go down. People who don’t have a strong financial education and want to invest generally give their money to the “experts”, the smartest financial brains in the world, the people who caused the biggest financial crisis in history in 2007 and risk losing it all.
Unfair Advantage 2: Taxes
People who have a strong financial education can earn more and pay less (even zero according to Kiyosaki) in taxes. Taxes are not fair and financial knowledge on taxes is an unfair advantage. To earn more and pay less on taxes there is three things you need to keep in mind,
1. the harder you work for money the more you pay on taxes
2. the harder your money works for you the less you pay in taxes
3. the harder other people’s money works for you, you pay even less in taxes
Unfair Advantage 3: Debt
After Nixon took the U.S dollar of the gold standard in 1971 it doesn’t make sense to save dollars that keep losing value as the government continues to print money at will. Kiyosaki recommends that if you’re going to save then save gold or silver which have real value. If you have a strong financial education then Kiyosaki recommends using debt to acquire assets which will also give you government incentives on taxes. Today all money is debt, so debt makes the world go around. Obviously to use this strategy you need a high level of financial education. Debt is leverage and if you abuse it, it will magnify your losses.
Unfair Advantage 4: Risk
Without financial education you will lose your money regardless of what you invest in. In an attempt to avoid risk people often lead lives of extreme risk.
Unfair Advantage 5: Compensation
Rich people don’t work for money, they work for assets that produce cashflow in good economies of bad economies. Rather than save dollars in a bank, a high level of financial education will allow you to convert dollars into real assets that produce cashflow and tax advantages.
A financial education is essential if you want to be financially free or independent. There are principles in this book that you must learn. Understand how to navigate through the challenges that are heading towards us in this world economy. Choose your teachers carefully. Robert Kiyosaki is someone who has travelled the journey and is willing to help you.
Check out more from Diego on his website: Best Financial Success Books