Rich dad poor dad: Spitting facts or big cap?
Good day
I hope this email finds you well
For my older audience, I’ll begin with a definition of terms.
Spitting facts: Gen-Z slang commonly used to affirm that you believe someone is speaking truthfully. For example, “I read rich dad poor dad, and Robert Kiyosaki was spitting facts.”
Cap: Gen-Z slang meaning false. For example, “What Robert kiyosaki said about assets is just big cap.” The word “big” is used for emphasis.
Bear with me…
An alternative headline may have been, “Rich dad poor dad: Truths and falsehoods.”
Maybe I’ll go with that next time.
However, let me not digress. I was a science student in high school, but as I write this, I’m in my final term of a finance and economics degree. What changed? I’ve always been an avid reader. “When you have nothing to say, read, and when there’s too much on your mind, write.” In grade 11, my friend handed me “rich dad poor dad.” Today, I’ll be unpacking a book that changed my life and ignited my passion for finance and investing.
Truths:
The Importance of Financial Education:
Kiyosaki emphasizes the value of financial education, and I agree with. Having a good grasp of financial concepts aids in making informed decisions and leveraging opportunities effectively.
Entrepreneurial Mindset:
Kiyosaki advocates for the cultivation of an entrepreneurial mindset, emphasizing the importance of seeking and creating opportunities instead of solely relying on a salaried job. This aligns with the broader understanding that diversification of income streams can offer more financial security and potential wealth.
Falsehoods
Assets vs. Liabilities:
The book's primary distinction between assets and liabilities is fundamentally flawed. It states that assets put money in your pocket while liabilities take money out. That’s generally true, but Kiyosaki goes on to say that your house is a liability, citing that paying for it takes money out of your pocket every month. That’s big cap.
The truth, according to the definitions of accounting, is that your house itself is an asset because you control it (own it), it has economic value, and it provides future benfit. The loan you take out to pay off your house every month is a liability. To be able to recognize where Kiyosake is misleading us, it’s important to understand the distinction between your house and your home loan. Those are two different, seperate things. Your house is an asset and the loan is a liability.
Dismissal of Formal Education:
Kiyosaki’s skepticism of the formal education system seems exaggerated. While it's true that academic institutions might lack practical financial education, they do play a crucial role in fostering critical thinking, specialization, and providing a foundational knowledge base. How else would have I known that the finance guru was capping? I had to learn accounting 101.
Real life experiences are important because you have to live some things in order to know them practically. Life in the real world and in a book are two completely different things. However, formal education is just as important as experience because it can fast track your learning, and fertilize the soil where the seeds of experience can be planted.
In the end, “Rich Dad Poor Dad” offers valuable insights and introduces readers to important financial concepts. However, like any advice, it should be taken with a grain of salt and balanced with different perspectives. It's essential to cultivate a broad understanding of finance, integrating both the entrepreneurial spirit Kiyosaki encouragess and the risk-averse wisdom that is fundamental to sound financial planning.
Until next time, keep exploring and learning.
Warm regards and happy heritage day!
Kagisho R Moagi
Disclaimer: Investing poses risks. Anyone who said this was financial advice was capping. This is not financial advice and is for educational purposes only. For financial advice, contact a financial advisor or a financial professional equipped to spit facts.