Maybe not everyone wants to be rich, but I am pretty sure that most of us want to earn enough money to meet our life style needs. However, do we know how to make and retain/grow money, or many of us are trapped in a rat race where as we earn more money on our jobs, we have to work harder and harder in order to make more money to cover our expenses. Do our children get the right financial education in order to avoid the rat race? Or by instilling traditional values of going to college in order to get a good paying job and get promoted on the corporate ladder, we only commit them to a life of a rat race and not to financial independence?
Robert T. Kiyosaki addresses some of these questions in his bestselling book Rich Dad Poor Dad.. Typically, I am not attracted to “how to get rich” books. This book was given to me as a present by my parents probably because they were attracted to the promotional phrase on its cover – “What the Rich Teach Their Kids about Money That the Poor and Middle Class Do Not!” I was immediately skeptical – how Robert Kiyosaki knows what every rich person teaches his or her kids and do all the rich people teach their kids the same thing?! People get wealthy in so many different ways – there is more than one method to get rich. Anyway, what is the definition of being “rich”?
To my surprise, however, I liked the book, and I recommend reading it, provided you are reading it for the overall concepts and not for applying some of the specific advice (which it is short on anyway). I suspect that some facts in this books that are presented as real were actually fiction. For example, the entire Rich Dad story is highly unlikely to be realistic. I also have to warn that some of the financial recommendations in this book are simply technically inaccurate. For example, Kiyosaki claims that corporations are great tax shelters and that is the main tool the rich use to buy themselves luxury cars and vacations tax free. The fact is that corporations are not a fitting financial/legal tool in every instance. I started and owned a consulting company, and my accountant and I concluded that it was more beneficial and simpler for me to expense business mileage for my business related trips rather than for my company to buy or event lease me a car. I also had to be very careful with corporate income to avoid double taxation (i.e., paying taxes on corporate profits and personal income). I do not want to go into details of all the technical inaccuracies in this book. John T. Reed covered many of these inaccuracies in the following web page: http://www.johntreed.com/Kiyosaki.html (I recommend referring to this site only after reading the original book).
So given all this, why did I like this book? First of all, I like Kiyosaki’s definition of who is rich – someone who is not dependent on an employer to maintain his or her lifestyle. Kiyosaki makes a point that many people who we think are rich because they live in large expensive houses or drive expensive cars are not necessary rich – they may be completely highly in debt trapped in a rat race to maintain their life styles. He tries to convince his readers that their goal should be to structure their finances in such a way as to not to depend on an employer for maintaining the life style they seek. I agree with Kiyosaki that our goal should be avoiding the trappings of the rat race – i.e., avoiding structuring our financial lives in such a way that as we make more money we need to make even more money being dependent on the source of our earnings (which is typically an employer).
Kiyosaki proposes several principles and lessons about how to get rich. Two most fundamental principles of his philosophy are a) Make money work you instead of working for money, and b) his four quadrant accounting principle: Income, Expense, Asset, Liabilities – he describes how one should leverage assets to generate income while minimizing expenses and liabilities. According to Kiyosaki one can make money working for himself by focusing on acquiring investment assets that generate income over time while minimizing expenses, liabilities and work. Of course, this may not be literary accurate – rich people also work hard to make money. However, as I wrote earlier, if you focus on his overall concepts, this book may open your mind to new approaches of making money.
I also like that Kiyosaki emphasizes financial education. He emphasizes the need to invest effort and money in educating yourself about making money. I agree that investing in education about making money is important. We spend considerable time and effort learning our profession. We also spend time learning various topics related to our hobbies – we take skiing lessons or music, for example. Since I got involved with working dog training, I spent many hours learning about animal behavior, reading dog training books and watching DVDs. However, many of us, me included, spend very little time learning about making money for the sake of making money (e.g., learning stock investment, real-estate, etc.) To become financially independent, we all need to invest more of our intellectual capital in this area as well. Kiyosaki also advocates teaching our kids elementary principles of finance and how to avoid the trapping of the rat race.
I recommend reading any such book with an open mind and at the same time with skepticism. Recommendations of any book may not fit every individual situation and no book’s recommendations should be applied literally in every personal situation. It is great when a book can inspire a new course in life, but every change should not be done hastily without the appropriate consideration of personal situation and ramifications. This book can inspire and motivate you to improving your financial situation, but if taken too literary, it can also mislead and do some damage.
The record snow storm last week on the east coast was a learning opportunity for my kids. Like many other parents in my neighborhood, my wife and I could have bought a snow blower or hired someone to clean our snow, but we did not. We wanted to take advantage of this opportunity to teach our kids the value or work. So our two teenage sons, my wife and I worked several hours to clear over two feet of snow from our driveway. And, yes, even our dog Mansi helped!
Many kids today, especially those in the middle and upper classes, got used to the easy and lazy way of life – someone comes to cut the lawn and do yard work, someone is hired to clean the snow, the food is bought ready in the supermarket, etc. They spent their days watching TV, playing video games, texting to their friends, and sometimes spend limited time on homework. Too many parents tend to pamper their kids and protect them from work. They want them to “enjoy” life as much as possible and want to avoid arguments with their teenage kids over the need to help.
Even in schools teachers are increasingly careful to assign a lot of homework – God forbid the kids will overwork after school. Criticism is no longer accepted for its negative impact on our kids’ fragile emotional state. Teachers and parents are expected to always praise their kids – even when such praise is undeserved.
Many of today’s kids grow in such a sterile environment until they get to college, and suddenly life hits them in the face. Then they do not know how to deal with disappointments, they are not used to work hard to succeed in life, and are not used to failure. Some turn to alcohol and drugs. Many develop the tendency to blame others for their problems. They feel that the society has to help them get a job, healthcare, and a place to live.
So, shoveling snow on a cold day instead of sitting comfortably at home watching TV can be a valuable lesson. It teaches that life can be a hard work sometimes, there is nothing wrong in a physical labor, a family needs to help each other, and you can’t always rely on your parents to provide the easy way out. Besides, a physical activity like this is healthy – even for our two soccer players (although, we made sure that they do not over-exert themselves by lifting too much snow for their size). We did not pay our kids for helping with snow shoveling – helping their family should not require a monetary payment. Now we are waiting for the next teaching opportunity!
I am sure most of you have been following the story of devastation and suffering in Haiti. Many countries have offered both monetary and physical help – many sent search and rescue teams, supplies (although these have been in short order), and medical teams. Here are some of the amounts pledged to Haiti by various countries: China: $10M, UN: $10M, Spain $4.3M, Italy: $2.6M, Indonesia: $1M, Morocco: $1M, Russia: $700K (as reported by the Guardian on link below).
As you can see some of the largest countries in the world – those that often preach Israel how to behave fairly in the Middle East – donated very little. With the exception of Morocco (pledged $1M), none of the Muslim and Arab countries were even on the list of donors. I have not been able to find any reports showing the Arab/Muslim countries lending any help to Haiti.
This brings us to the one of the smallest countries in the world with population of about 7.5M, a country that has been constantly under attack by its neighbors, a country that its existence has been threatened since it was established less than 62 years ago – Israel.
Israel immediately sent two ELAL (Israeli national airline) Boeing 747s packed with two search and rescue teams, a mobile high-tech hospital capable of treating 500 patience per day, and various medical and support personnel to Haiti. To this day, Israel has had the only field hospital in Haiti capable of performing complex surgeries and providing a variety of medical help including maternity ward, neonatal care, pediatric care, care for the elderly, two surgery rooms, x-ray equipment, state-of-the-art respiratory care equipment, and an emergency room.
According to Israeli sources as of last week Israel sent 40 doctors, 24 nurses, medics, paramedics, and search and rescue teams – this tiny country has sent so far over 220 people. It was reported In Jerusalem Post and YNET that this week Israel is sending additional personnel and equipment.
By comparison, China has sent only 60 people so far, and as I already mentioned, it seems that the oil rich Arab countries has sent nothing. The United States pledged a huge support of over $100M and sent thousands of U.S. troops, but so far has been unable to send a working field hospital. I agree with Stephanie Gutmann’s, who wrote in her report that probably the State Department is still drafting the crucial legal papers needed!
One of the first places Israeli search and rescue teams went was to the collapsed U.N. building. The U.N. building from all places! The same U.N. that misses no opportunity to attack Israel and accuse it of “disproportionate” responses when Israel is trying to defend itself from Arab/Muslim aggression and terrorism. The same U.N. that is passing an unfair resolution after resolution and report after report accusing Israel of every imaginable crime – comparing Zionism to Fascism, accusing Israel of crimes against humanity (the infamous Goldstone report), and so on…
Watching the media reports of the Haiti disaster in the U.S. in the last few days (e.g., Fox News, CNN, and CBS), I was disappointed that there was not much mention of the Israeli response. Most concentrated on what U.S. is getting ready to do and on the lack of appropriate and immediate help in Haiti. There were few welcomed exceptions – one reporter on CNN had a short report of how U.S. medical volunteers desperately searching for a hospital facility that has appropriate equipment for providing the needed medical services and finding that only the Israeli team has the only such facility on the island. In complete disbelief the CNN reporter reviews the Israeli hospital and questions why the U.S. was not able to provide an equivalent support (refer to link below).
It’s not that I am looking for a special praise for Israel. After all, the Israelis are there to simply provide humanitarian aid and not for PR purposes. It is just that many in the world media so eagerly report anything negative about Israel – even when the information is completely false – I just hope that they would have the decency to report the heartwarming stories of Israelis helping their fellow world citizens. This may be too much to hope from our many enemies around the world, but at least our friends here in the U.S. should take a stronger notice.
Yes, another disproportionate response from Israel! Once again, this makes me proud to be Jewish and to be Israeli!
Referenced Links:
News report on www.guardian.co.uk
Stephanie Gutmann’s Report
CNN Report
