SOME THOUGHT PROVOKING SCAMS, DISGUISED AS WISDOM FROM MY MENTOR.
Introduction
A Quick Note from
Robert Kiyosaki
Throughout history, cultures have tightly grasped their dearly held beliefs
so commonly accepted, so religiously observed, that to question them is
sacrilege. They are so sacred that to call these beliefs scams is to doom
oneself to isolation and abuse. When it comes to money, these scams have
toppled every past fiat government in history.
Our culture is no different. Our beliefs are no less sacred. The beliefs and
scams are so sacred and hold so much power that when they are wrong their
damage is immense. These scams assisted in the crisis of 2007.
When the global financial crisis began in 2007, many people clung even
more tightly to their sacred beliefs and their jobs in the hope of not being one
of those who were laid off. Millions held on tightly to their homes, even though
they could not pay the mortgage. Most cut back on their spending and saved
more, even though the federal government was printing trillions of dollars,
destroying the purchasing power of their savings. Workers stuffed even more
money into their retirement plans, even though the stock market had crashed,
wiping out their prior gains. And school enrollments boomed, as more people
headed back to school, even though unemployment was soaring. The faith in
the scams held strong. What else could people do?
The crisis did not have the effect of causing people to question the causes
and the beliefs that created the crisis. Instead people clung the lies, their job
and the system wide scams that created the problem. Rather than let go,
most people clench their fists tighter and wait for the crisis to pass, praying
that their political leaders can solve this global crisis and that happy days
will return.
The problem is that the coming decade, the years from 2010 to 2020,
will prove to be the most volatile world-changing decade in world history.
Unfortunately, the people clinging to the relics of the past— relics such as
job security, savings, a home, and a retirement plan— will be those who are
most ravaged by the global financial storm approaching.
A few know they must make changes. Yet without a strong financial
education, they do not know what to do or how to change.
Rich Dad’s vision has always been to provide comprehensive financial
education with quality, free resources when possible to as many people as
we can.
The mission of Rich Dad Scams is to take you from the established
mindset about money to the enlightened mindset, to put a bullet to the head of
bad financial advice, and to help you take charge of your financial future.
I hope you enjoy the following. Please share it with your friends, family,
and co-workers—anyone you know who could benefit from the collective
knowledge of the Rich Dad team.
Comprehensive financial education is still the surest way to financial
freedom, both personally and as a society. Together we can make a
difference.
Rich Dad Scam #1: Higher Education
The “school = success” scam
When I was young, my poor dad always told me the best path to success
was to go to school. He felt that was the best way to get a good job. The
problem was that my poor dad was one of the most educated people I knew,
but he was always complaining about money and how unhappy he was with
his work.
My rich dad, on the other hand, didn’t have a college degree. Yet he
was very rich and successful. Rich dad said, “School teaches you to be an
employee. If you want to be rich, don’t count on school.”
So, from a very young age, I learned that the promise of higher education
for success was one of the biggest scams around. That’s why the first Rich
Dad Scam identified is higher education.
Going to school doesn’t make you financially smart
Because I’m outspoken against the school system, I’m often accused
of being anti-education. Nothing could be further from the truth. But “go to
college” is one of those things people point at as a way of being successful
without ever stopping to think if it’s true.
The Rich Dad Scam that school will make you a success is perpetrated
everywhere and all the time. What will make you successful is not going to
school but rather financial education—learning how money works and how
to make it work for you—is what will make you successful, and, unfortunately,
you can’t get that in school.
When it comes to money, going to school won’t make you smart.
Understanding value
This doesn’t mean that education isn’t important. The basic education
you get in your K-12 years is important to everything that comes after. And if
you want to be a teacher, a lawyer, or a doctor, then obviously you’re going to
need to go to college.
But what you won’t learn in school is how money works. Education,
particularly in America, doesn’t teach students how to live or be self-sufficient.
Instead, it teaches us to be employees instead of our own bosses. It makes us
workers instead of innovators. That’s a big reason why we call school a Rich
Dad Scam. In fact, the rich use school to keep poor people poor.
Different types of intelligence
One of the worst things about school is that it recognizes only one type
of intelligence—book smarts. If you aren’t book smart, you are very quickly
labeled smart or stupid. As a child, I was not book smart, and I was labeled
stupid. But I wasn’t stupid. I was just interested in different things. And I was
bored. For instance, no one could tell me when I’d ever use calculus in my real
life! Yet, I was told to comply and learn. I was being trained to be an employee.
My rich dad wasn’t book smart either. Yet, he was very smart. He had
street smarts, which he used to become very rich. School doesn’t teach you
to be street smart. I had to learn that from my rich dad. My poor dad thought
school was incredibly important, and he was very book smart. But what did it
get him? He struggled financially most of his life.
That’s another reason why we label higher education a Rich Dad Scam.
The so-called experts tell you that you need it. They tell you it’s important.
But it doesn’t actually do anything for you except make you a good employee.
“But I studied money in college!”
Tom Wheelwright, my Rich Dad Advisor on taxes, went to school to be
an accountant and got straight A’s. He will also gladly tell you that he got no
practical financial education. He learned what was needed to do a job but not
how to successfully manage his own finances. And he went to school to learn
about money!
People often say they learned about money in school. You may learn how
to balance a checkbook in school, but you won’t learn how money really
works. That’s not an accident; it’s a scam.
The rich use school to train us to be good employees. We start out being
told what to do, and are rewarded for compliance. It’s very easy to transition
from a school to a company where you’re told what to do. And that leads us to
trust and hand things off to the government and the rich bankers who handle
our 401(k). The rich use education to make themselves richer and keep you
poor, and when you realize that, it’s not hard to see why it’s one of our Rich
Dad Scams.
Think for yourself
The people who fall for scams are typically those who are conditioned
not to think for themselves. Unfortunately,
Rich Dad Scam #1, Higher
Education, robs us of the independence to think for ourselves, to think like
an entrepreneur, an innovator, and an investor. It instead teaches us to be
dependent.
You need to learn to speak the language of money to be successful.
That takes financial education, which opens up a whole new world, a world
where you can succeed on your own terms. Unfortunately, our schools don’t
teach that language. They teach you the basics, and then they either teach
you a specific trade or skill, or they simply train you to be an employee.
Today, it’s time to start thinking for yourself. Don’t fall for this the scam of
higher education. Instead, start your financial education today, and begin your
journey to financial freedom.
Rich Dad Scam #2: Get a Job
We see scams every day. Sometimes they are easy to see and call out,
like spam emails that promise riches in exchange for your bank information.
But some scams are a lot harder to spot. From my rich dad, I learned financial
smarts, which taught me how to spot scams—and how to not be taken in.
Unfortunately, without those financial smarts, it can be very easy to be taken
in by scams, especially the scams that the rich use to keep the poor in
their place.
To break away from those scams you usually need someone else to warn
you that you’re being duped, to tell you that you’re being taken advantage of,
and to tell you what you can do about it.
The big one: You need a job
When I was young, my poor dad always told me that I needed to go to
school so that I could get a good job. To my poor dad, getting a good job
was the most important thing in life. My poor dad worked very hard. And he
was always worried about money. Yet, he never got ahead. His job was one of
the things that actually kept him from succeeding. He toiled away working for
others, often getting raises only to keep up with the cost of living and paying a
high percentage to the government in taxes.
My rich dad, on the other hand, never had a “real” job, and he was rich
and successful. My rich dad understood that the sentiment, “Get a job,” was
a scam. Rather than get a job, he made jobs. Rather than work for someone
else, he worked for himself. Rather than pay high taxes, he used the tax code
to get rich.
How the scam works
The reason Get a Job is a Rich Dad Scam is because it makes you poorer,
especially if you have a high paying job, because you pay the most in taxes.
And guess who isn’t paying a lot of taxes? The owner of the business you
work for. The scam gets even worse when you look at it long-term. If you do
well at your job, if you claw your way up the ladder, what is your reward? A
small increase in pay and a bigger increase in taxes.
It gets even worse if you work for yourself. You pay the highest taxes in the
form of self-employment taxes.
The only way to avoid this is to be the owner of a big business or to be an
investor, to put your money to work for you. That’s where the rich work and
live. The system is set up to benefit the rich so they can keep their money
while making sure you keep getting taxed.
The tax scam
When you realize that taxes are a way of keeping you in your place, you
can see that this Rich Dad Scam is really just an extension of Rich Dad Scam
#1, “Go to School.” It’s in school that you learn to be a good employee, that if
you work hard you can succeed. But really, you can’t, not on those terms.
The government gives tax breaks to those people they identify as creating
jobs: entrepreneurs and big business owners. They want the private sector to
develop real estate, start companies, and generate wealth. The government
rewards that. In return, the government expects employees to pay taxes that
cover things like Medicare and Social Security.
Some people argue that employers pay these taxes too, but really what
they are doing is using money that would otherwise pay you to pay their share
of the taxes.
False security
The idea that a job is an important part of your personal security is a big
part of the Rich Dad Scam #2, “Get a Job”. The reality is that having a job
does not make you secure. You only need to look at the state of our economy
or turn on the news to see that people are losing their jobs. In an economy
where people are losing their jobs, the more secure position is to own the
company that is firing people.
Stepping away
My poor dad, just like most people, was conditioned and taught from
the day he was born to be an employee. My rich dad broke away from that
thinking and was an entrepreneur. He put his money to work. He was on
the side of the rich, the side protected by the government. But how do you
get there?
The first answer is simple. You do it by increasing your financial education
and beginning to think like an entrepreneur instead of an employee. When
you do that, you break out of the rat race. You realize that everything you’ve
been taught about getting a job and finding success is a lie, and that there is
another way— a better way that actually works. And that’s the secret the rich
don’t want you to know.
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