Kiyosaki and Sources Of Wealth

“You’re not your job. You’re not how much money you have in the bank. You’re not the car you drive. You’re not the contents of your wallet. You’re not your khakis.” – Fight ClubDSC02988

Someone’s Rich Dad?  Yeah, no marble sculptures of Poor Dad.  The Romans took “Got Your Nose” seriously.

I think that Robert Kiyosaki wants you to be rich.  I’m certain he wants you to think that he’s on your side, and he’s also spent a lot of time and effort doing presentations long after I would have retired to my private island off the coast of Antarctica (I like it cold) with my laser penguins.  Kiyosaki has made a metric ton of quarters selling the concepts in his Rich Dad/Poor Dad series of books (Amazon LINK) through both the books and personal consulting (rumor has it personal coaching can cost $45,000, and those are real American dollars, not fake Canadian metric currency).

Kiyosaki’s story is that his natural father was “Poor Dad.”  I’m assuming this book was NOT originally released on Father’s Day.

Poor Dad was very smart, and had a Ph.D. and worked in high government posts, but had a worldview that didn’t set Robert up for financial success.  By contrast, “Rich Dad,” a mentor and friend, explained how getting to financial freedom and wealth really worked.

Kiyosaki breaks the ways that people make money into four categories:

  1. Being an employee. This is most of us, and society works to perpetuate this role.  What is an employee?  One who works for a salary (or hourly wages) and benefits.  We live with a misconception that being an employee carries with it a degree of security, even if it’s less security today than it was in, say, 1970.  If you work for the government, however, it’s more likely that you’ll get malaria from a married vampire bat than get fired. (really)

Being an employee is generally based in . . . fear.  And the ultimate fear that employees have is . . . termination.  The threat of being fired, for many, is a direct threat to the core of who and what they are.

Being fired brings with it:

  1. Reduction in Resources – Most jobs pay enough to keep you coming back, but only a very few offer sufficient extra income to build real wealth. To the astonishingly high 78% of Americans that sometimes or always live paycheck to paycheck, the threat of job loss is especially dire.  It doesn’t help that we, as consumers often increase our individual spending so that it matches our income.  But, I’ve posted about that before (LINK).
  2. Loss of Status – Many men (especially) think of themselves AS their job. When you think about it, this makes sense.  The first question you ask a working-age man that you’ve just met is “What do you do?”  This establishes him the social hierarchy.  Society really does define a man by his work.  Time at work can represent half of your waking time.  In 2015, I spent 48% of my waking time at work or commuting to work, meaning I interacted more with co-workers than I did with my family that year.  Status drives many important hormones, and, for men, stress and job loss actually cause testosterone levels to plummet.
  3. Loss of Purpose – I’ve discussed before (LINK) that purpose is necessary for a real life, and it’s necessary to have a big one. Given the hours and time spent at work, it’s inevitable that work can become our purpose.  When you lose that purpose, you’re set adrift until you find a new one.

In a sense, the employer/employee relationship is a kinda like an “on speaking terms” hostage situation.  They have a job that represents status, purpose, and life-giving resources.  You have all of your time, effort, and passion to trade for that job.  Kiyosaki thinks that’s a bad trade.  But he could buy his own island.

  1. Small Business Ownership is the second income generator that Kiyosaki talks about. And, if possible, it comes off even worse than being an employee.  Being a small business owner entails all of the work of being and employee, plus lots more risk.  His reasoning is that employees at least have the business to fall back on if they have a bad day, week, or year.  Kiyosaki defines a small business as a business where, if you take a day off, the business cannot go.  You’re the spark, the fuel supply, and the tires.  Essentially, you become the whole car.  Or Taco Truck.
  2. Business Owner, which Kiyosaki defines as someone who hires employees (smart ones!) to work for him (or her). Kiyosaki feels that small businesses can’t compete at all against these larger entities, since he can hire great legal, accounting, and HR people and small businesses have to do all of that themselves, generally not very well.  Given that the business has support staff in place, the business owner can focus on the business itself.  The owner can also take a day or a week off and the business will continue to function and generate wealth.  Kiyosaki likes this, since money invested into the business makes more money.  And Kiyosaki breaks with many financial advisors here – debt is just fine in his book as long as the debt is generating more revenue than it costs.  This is his formula for building personal wealth, as well as freeing up time to do . . . whatever it is you want to do.
  3. Investing is the end stage for Kiyosaki. Investing allows for all of the time freedom, plus financial freedom.  All of the wealth you could want.  Kiyosaki would NOT classify your house as one of your investments – it doesn’t generate revenue, and you have to pay for it, so it’s a liability.  Investments generate income.  Oh, and risk?

“Investing is less risky than being an employee.  Skilled investors are in control of their investments, employees are controlled by a boss.”

Furthermore, Kiyosaki makes this Zen-like statement:  “ . . . you do NOT (emphasis in original) invest with money!  You invest with your mind!”  In other words?  Find the deal and the money will show up.

As I said, this is a different way to look at life – a different lens.  I’ll easily admit that my life since I was 22 has been focused on being a great employee.  At some point, it seems I need to have better investments, but note that Kiyosaki says . . . “Skilled investors,” but, alas, tonight I learned that my Pez® collection is not an investment because it generates no revenue.

Thoughts?

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom – How to be happy and how to be healthy. Oh, and rich.