SOME THOUGHT PROVOKING SCAM DISGUISED AS WISDOM By ROBERT KIYOSAKI (PART II)
Introduction
A Quick Note from Robert
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 #3: Work Hard
People often talk about a scam as a con. Con is short for confidence.
A con man can only dupe you if you put your confidence in him. When I talk
about Rich Dad Scams, the scams designed by the rich to keep you poor,
one of the hardest things to get past is that so many of us have been taught
to believe with conviction and confidence that these scams are true. And the
conning started so young that we never had a chance to think differently.
That’s the difference between thinking like my poor dad, who did what
he was told and died poor, and thinking like my rich dad, who was financially
educated and grew rich based on his knowledge of how money worked.
This chapter is about one of the biggest, most-ingrained Rich Dad Scams:
If you work hard, you will be rewarded.
Don’t work hard
My poor dad worked hard all his life. He went to school because he was
told to. He got a job because he was taught that was what you have to do. He
worked hard because that was what he was supposed to do. Yet, he struggled
financially his whole life, and often he was not happy.
When it came to working hard, my rich dad liked a story from Mark
Twain’s The Adventures of Tom Sawyer. Tom runs a con job on the kids in his
neighborhood. His job is to paint a fence, and he makes it look like so much
fun that all the other kids offer to pay him to do the work.
Rich dad said, “Rather than work hard, I work smart. Smart work is getting
others to not only do but also want to do hard work for you. And smart work is
also getting money to work for you, not the other way around”
Why hard work doesn’t work
It seems like a simple math equation: effort=reward. You work hard, you
earn more, you get more for your effort, and it seems like it should work.
Once upon a time, it may have worked that way.
But now, there are two problems. One, as I wrote about in Rich Dad Scam
#2, “Get a Job”, if you’re an employee, working harder may get you more
money but it also means you’ll be taxed more. So working harder can actually
result in you being punished financially. That’s why we created the Rich Dad
Scams series, so that you can see them for the lies they are.
The second problem is that you’re working hard for something in particular:
Money. And that money is worth less and less every day.
During the 21st century, average income after inflation has fallen. And
continues to fall. If you’ve been working hard at your job for ten years, the
money you’re making now is actually worth less than it was when you earned
it. Practically speaking, that probably means you’re either making the same
amount now as a few years ago, or maybe even making less! Rather than
work hard for money, you should be working smart by having money work
hard for you. That is what the rich do.
Working differently
Every week most people just hold on until Friday because they hate their
job. And when Sunday rolls around, they’re miserable because they know they
have five days of work to look forward to.
It’s a lousy way to live, but it’s not the only way. We’ve just been trained to
think it’s the only way.
I love my work, but I’m also never far from it. Like most entrepreneurs, I’m
at it almost 24/7, but it doesn’t make me miserable—and it certainly doesn’t
feel like work. It’s more like a game that I love to play. It’s challenging. It’s fun.
It’s rewarding. If that sounds attractive to you, the first step to get there is
recognizing “work hard” for the Rich Dad Scam that it is. Stop working hard
for others and start working smart for yourself.
Rich Dad Scam #4: Live Below Your Means
Rich Dad Scams, are scams that I’ve identified that the rich perpetrate on
the poor and middle class to keep them poor.
One of the most challenging things about these scams is how ingrained
they are. If you weren’t lucky enough to have a rich dad to teach you about
them like I did, these scams probably make up your ideas and attitudes
toward money. They feel built in. Most people believe they must be true
because they’ve heard them all their life.
So it can be difficult to remember that the Rich Dad Scams I’ve identified
are lies, but it’s vital to know that they are. And this post is going to handle
one of the big ones. This scam says: In order to be rich, you have to live below
your means.
On the surface, “Live below you means,” seems to make sense, but the
only people who live below their means are poor people. The rich don’t live
below their means. Rather, they make better means.
A poor mindset
My poor dad said, “We can’t afford that.”
My rich dad said, “Rather than live below my means, I make more money
to get what I want. Rather than say, ‘I can’t afford that,’ I ask, ‘How can I
afford that?’”
“Live below your means,” is a poor mindset because it teaches you to think
too narrowly. Rather than teach you to be creative in making more money, it
teaches you to be merciless in what you spend your money on. You balance
the dollars you bring in from your job against your needs and wants. And no
one likes finding things you can live without so you can afford something else.
It’s awful.
When my wife and I want to splurge on something, we don’t look at where
to cut costs to afford it, we acquire an asset to offset the cost of what we
want. So, instead of always looking for what we can cut to afford something,
we’re always looking to expand our wealth to cover the cost of what we want.
It’s a completely different mindset, and it’s the way my rich dad taught me
to think.
For instance, some years ago I wanted to get a new Bentley. I could have
easily paid cash for the car, but I didn’t want to do that for a liability. Instead,
I invested in assets that would provide enough cash flow to cover my new toy.
I took a little longer, but six months later my investments were creating enough
cash flow to pay for my car—and some. In the process, I got my fun car and
also built my wealth.
This is the core of thinking like rich dad instead of poor dad. Think like an
investor or an entrepreneur. Identify what you want and work out a plan to
get there in a smart way through assets. If you live within your means, you
can never add assets, so you’ll never break the chain of cutting costs and
budgeting to afford something.
Change your thinking
If you want to think like rich dad instead of poor dad, begin asking, “How
can I afford that?” rather than saying, “I can’t afford that.” In the process you’ll
go from a poor mindset to a rich one—and you’ll also break out of the pattern
set by Rich Dad Scam #4, “Live Below Your Means.”
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