CTech Book Review: Understanding the Basics of Financial IQ
Yair Benyamini is the co-founder and CEO of Lendai, a fintech direct lender financing US properties for foreign investors. He joined CTech to share a review of “Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!” By Robert Kiyosaki.
Title: “Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money, What the Poor and Middle Class Don’t!”
Author: Robert Kiyosaki
Robert Kiyosaki, an American businessman and author, published the first version of the book “Rich Dad, Poor Dad” in 1997. Kiyosaki is well known to Israelis, especially business and real estate investors.
Interestingly enough, at first the book was not a bestseller. However, in the years leading up to the internet revolution, it became a very popular book in Israel, and when readers realized its value, the book began to gain readers.
Thanks to Kiyosaki, the world’s middle class learned and understood the secrets of creating passive income and gradually took an interest in it.
The book walks through Kiyosaki’s unique process of self-development and the reader is taken on a journey of a lifetime. When Kiyosaki was 9 years old, he was exposed to the ideas of wealthy people. In Hawaii, he learned with children from wealthy families. Throughout the story, Kiyosaki is lost between two worlds: the world of the wealthy kids at his school and the world of his house and his father. While Kiyosaki’s biological father believes in the power of government to help citizens, his wealthy father is an entrepreneur who believes in finding new ways to make more money and hiring talented people to make new ventures successful. .
According to the book, poor and middle-class people work for money, while the rich don’t. The main message here is: when you don’t have to work for money all day, you own your time and can innovate or pursue your interests.
Often people want financial freedom. They want to be employed not out of necessity, but rather out of a passion for the job. Kiyosaki explains that most people give up on this goal because they think it’s too difficult.
A person who has a specific career goal or is considering becoming a business owner knows what they intend to accomplish in the future. Therefore, setting goals should be the first step. Due to its difficulty, many people give up on this goal. When people work for a living without setting direct goals, they forget about goals they have no chance of achieving. While at Xerox, Kiyosaki founded his first company in order to accumulate properties and investments. Thanks to these first steps he took to escape the rat race, he was able to become more and more successful in his position as an employee.
The book describes four types of people and gives examples of them, ways to promote their financial goals and promote their business. The first is the employee who has a job, Kiyosaki explains why moving to the next quadrant, the self-employed, is real financial progress. After moving from the first quadrant, the next steps would be much easier. The last and most respectful quadrant, where the wealthy are, is the investor. Money works for the investor, not the investor for the money.
The most important basics for Financial IQ that everyone should know:
Accounting – Understand assets and liabilities and read numbers.
Investing – the basics of investing are money generating cash flow.
Understanding markets – rules of supply and demand. You need to understand the basics of economics.
Know the specific business laws – businesses that understand the technical issues of accounting, investing, and leverage might be more successful than other businesses.
Save tax payments legally – businesses can get benefits that individuals can’t.
It takes time for readers to implement the insights they get from this book, as they are often influenced by their current environment and businesses. Moving into the position of investor and company founder was for me the only way out of the rat race. My co-founders and I created Lendai not only to get closer to the investor quadrant, but rather to help others reach that quadrant as well!
Investors around the world are following Kiyosaki’s lead and building their own real estate portfolios. With each new edition of the same old book, I learn more and more about Kiyosaki’s ideas. Thanks to Lendai, we help foreign investors finance their real estate investment in the United States and thus allow them to continue to develop their profile. We’re helping more people make their money work.
Although the book gives you specific suggestions on why and how to move from your current position to financial success, it requires a strong mindset from the readers and great ability to implement these lessons. Not everyone is in the right self-development mode for this. So, without taking personal risks as an investor or as an entrepreneur, you cannot implement the methods. It took me several years in the labor market to take the leap and become an entrepreneur.
Who should read this book:
Even though this book was written 25 years ago, the book is as relevant today as it was when it was written. This is due to the ease with which new businesses can be created in the digital world: fintech, online and e-commerce. Additionally, the book has become even more convenient with the availability of digital tools to manage money and investment opportunities.
Basic accounting and finance are considered the domain of CPAs. According to today’s reality, this could have been the case in the past. Everyone should read “Rich Dad, Poor Dad” in a changing world that is creating an ecosystem of innovation. Innovation cannot exist without a deep understanding of investment and finance.
Finally, readers who think financial literacy is a basic need in today’s world should read the book.