Increase your Financial IQ
I love listening to books rather than reading so this youtube video is great as it can be on in the background feeding me while driving, flying or just doing some boring work. If you want the mp3 contact me.
One of the greatest failures of the educational system is the failure to provide financial education to students. Educators seem to think that money has some sort of quasi-religious or cult-like taint to it, believing that the love of money is the root of all evil.
As most of us know, it is not the love of money that is evil—it is the lack of money that causes evil. It is working at a job we hate that is evil. Working hard yet not earning enough to provide for our families is evil. For some, being deeply in debt is evil. Fighting with people you love over money is evil. Being greedy is evil. And committing criminal or immoral acts to get money is evil. Money by itself is not evil. Money is just money.
Your House Is Not an Asset
The lack of financial education also causes people to do stupid things or be misled by stupid people. For example, in 1997, when I first published Rich Dad Poor Dad and stated that “Your house is not an asset… your house is a liability,” howls of protest went up. My book and I were severely criticized.
Many self-proclaimed financial experts attacked me in the media. Ten years later, in 2007, as the credit markets crumbled and millions of people were in financial free fall—many losing their homes, some declaring bankruptcy, others owing mo re on their house than it was worth as real estate dropped in value—these individuals painfully found out that their homes are indeed liabilities, not assets.
Two Men, One Message
In 2006, my friend Donald Trump and I wrote a book titled Why We Want You To Be Rich. We wrote about why the middle class was falling behind and what we thought the causes of the decline were. We said that many of the causes were in the global, government, and financial markets. This book was also attacked by the financial media. But by 2007, most of what we said had come true.
Today, many financial experts continue to recommend, “Work hard, save money, get out of debt, live below your means, and invest in a well-diversified portfolio of mutual funds.” The problem with this advice is that it is bad advice—simply because it is obsolete advice. The rules of money have changed. They changed in 1971. Today there is
a new capitalism. Saving money, getting out of debt, and diversifying worked in the era of old capitalism. Those who follow the “work hard and save money” mantra of old capitalism will struggle financially in the era of new capitalism.
Information vs. Education
It is this author’s opinion that the lack of financial education in our school systems is a cruel and evil shame. In today’s world, financial education is absolutely essential for survival, regardless of whether we are rich or poor, smart or not smart.
As most of us know, we now live in the Information Age. The problem with the Information Age is information overload. Today, there is too much information. The equation below explains why financial education is so important.
Information + Education = Knowledge
Without financial education, people cannot process information into useful knowledge, knowledge they can apply. Without financial knowledge, people struggle financially. Without financial knowledge, people do things like buy a house and think their home is an asset. Or save money, not realizing that, since 1971, their money is no longer money but a currency. Or do not know the difference between good debt and bad debt. Or why the rich earn more yet pay less in taxes. Or why the richest investor in the world, Warren Buffett, does not diversify.
Without financial knowledge, people look for someone to tell them what to do. And what most financial experts recommend is to work hard, save money, get out of debt, live below your means, and invest in a well-diversified portfolio of mutual funds. Like lemmings simply following their leader, they race for the cliff and leap into the ocean of financial uncertainty hoping they can swim to the other side.
This Book Is Not about Financial Advice
This book will not tell you what to do. This book is not about financial advice. This book is about your becoming smarter, financially, so you can process your own financial information and find your own path to financial nirvana.
In sum, this book is about becoming richer by becoming smarter. This book is about increasing your financial IQ.