Chapter 2 Preamble: This is all you need

Are schools really preparing kids for the real world? Study hard, get good grades, and you can land a job that pays well and comes with many other benefits.My parents used to tell me that.Their goal in life was to put my sister and I through college, thinking that we would have the best chance of being successful in life.When I honorably earned my degree in 1976, top of my class in accounting from Florida State University, my parents achieved their goal and took it as the proudest achievement of their lives. Achievement.I was quickly hired by one of the Big Eight accounting firms under the Master Plan, so I sensed early on that my long career and retirement would be a smooth path without much change.

My husband, Michael, walked the same path.We all come from hard working families with modest lifestyles and a strong work ethic.Michael also graduated with honors from a prestigious university, and he has also studied twice: once as an engineer and the other in law school.After that, he was quickly hired by a well-known law firm in Washington, specializing in patent law.Like me, his future looks bright, his career path is well established, and he has full retirement security. Although we are very successful in our careers, it should be said that we have met or even exceeded the hopes put forward by our parents at the beginning, but life is not as once and for all as they originally portrayed for us.Due to various reasons in the new economic era, we have all changed jobs several times, which made the occupational pension plan that seemed so attractive at the beginning almost impossible, and we can only earn our own pension.

Michael and I are happily married and have three wonderful children.As I write these words, two of them are in college and the other is starting high school.We spend a lot of money hoping to give our children the best education possible. One day in 1996, the youngest child came back from school disillusioned, saying that he was tired and didn't want to study anymore.Why should I take the time to learn things that I will never use in real life?he protested. I replied without thinking: because if you do not study well, you will not be able to enter the university. But I don't want to go to college, he said, I just want to get rich.

If you can't graduate from college, you can't get a good job, I said with a little panic and motherly love, if you can't get a good job, how are you going to get rich? The son smiled, shaking his head slowly with a little boredom.We've had many conversations like this before, and each time it boils down to this conclusion.He lowered his head and rolled his eyes. Obviously, my mother's words of wisdom failed again in front of deaf ears. Despite his intelligence and strong will, the son was a polite and respectful young man. Mom, he spoke again, this time it's my turn to listen to the speech, keep up with the times!Look around, the richest people didn't get rich because they were well educated, look at Michael.Jordan and Madonna, look at Bill.Gates, who dropped out of Harvard and founded Microsoft, is now the richest man in America, and he's only in his thirties.Even with the unconventional label, he still owns a $4 million-a-year baseball diamond.

We were all silent for a long time. I thought it was my turn to pass on the advice my parents gave me to my son, but I didn't realize that the world had changed, and that advice might need to change too. When my efforts lasted for about ten minutes, I found that I could no longer use the words my parents persuaded me to convince my son, because the times have indeed changed, and many examples of reality tell us: get a good education and good grades Success is no longer guaranteed.And kids seem to realize this before we do. Mom, my son is still going on with his speech, I don't want to work as hard as you and Dad in the future.You guys make a lot of money and we live in a big house with lots of toys, but at the same time you have a lot of bills to pay every month.If I follow your advice, I will be like you in the future, working twice as hard just to pay more taxes and take on more debt.Now there is no stable job in the world at all, life ebbs and flows, unpredictable.I'm sure you also know that college graduates earn much less money today than when you graduated.Looking at doctors again, they earn far less today than they used to.I knew I couldn't count on Social Security or my company pension anymore, and I was looking for a new way out.After a moment of silence, I think he is right, he does need new answers, and so do I.My parents' advice may have been useful to someone born in 1945, but it may not be so useful to someone born in these rapidly changing times.I can no longer simply repeat to my kids: Go to school, get good grades, and get a safe, steady job that will support you for life.I knew I had to find a new path and show it to the kids.

As a mother and an accountant, I'm concerned about the lack of economic literacy my kids learn in school.Many young adults today have credit cards before they reach high school, but have never taken a class on money or how to invest it, let alone understand the complex and intriguing business of credit cards.Without sufficient financial intelligence and an understanding of how money works, they are not ready to enter the real world that awaits them, where being able to spend money is valued more than being able to save money. When my oldest son fell into credit card debt with no recourse during his freshman year of college, I helped him deal with those credit cards, but he was in the same trouble again before long.This incident made me always want to find a way to help me teach my children about financial affairs and develop their financial intelligence.

One day last year, my husband called me from the office: I have a guy here and I think you should meet him.His name is Robert. T．Kiyosaki, he is a businessman and investor, and he is preparing to patent a new educational product with me, which I think is exactly what you are looking for. Thanks to my husband Michael for this cash flow by Robert. T．Kiyosaki was so impressed with the new educational product he had developed that he arranged for us to take part in a test of a prototype of his product.Since it was an educational game, I also asked my nineteen-year-old daughter, a first-year student at a local university, if she would like to go along, and she said yes.

About fifteen people, divided into three groups, took part in the game. Michael is right, this is exactly what I was looking for.It looks like a game of Strong Hands or Monopoly, with a big, stylishly dressed mouse in the middle.But it's not as simple as those games where there are two paths on the game board: one inside and one outside.The object of the game is to get out of the inner road Robert calls it the rat race, into the outer road, or the fast lane, and finally realize one's life dream with the income earned from the investment.As Robert designed, Fast Lane is like a game like Strong Hands or Monopoly that fully shows how rich people do in life. However, when most players have not actually become rich in life, Apart from increasing people's unrealistic dreams of wealth and pure entertainment, these games do not seem to be able to help and guide people's economic life.Yet when Robert went on to explain to us the meaning of the rat race, I was immediately hooked.

If you look at the life of the average educated, hard-working person, you see a very similar path.The child is born and goes to school, the proud parents are very excited because their child is doing very well and going to a prestigious university.Then the kid graduates, maybe goes on to further education, and then it's programmed to do one of the following: find a safe, steady job, maybe a doctor or a lawyer, or join the military or go into government service.He started earning money, credit cards started pouring in, and he started shopping, if he hadn't already done so before. With money in hand, the kid went where other young people like to go.There he started to have a girlfriend, they dated and soon got married.Life is great now because in modern society both husband and wife work, two incomes are heaven.Feeling successful and bright, they decide to buy a house, a car, take a vacation and have a baby.So here comes the problem: a lot of money is needed.The happy couple decided their careers were the most important thing and started working harder, seeking promotions and raises.The raise came, and the birth of another child necessitated a bigger house, and they had to work harder.They became exemplary employees, even dedicated to the company.They go to school for more training so they can make more money, maybe they work two jobs.Their incomes have gone up, but so have taxes on their income and property taxes on their new houses, and so have their Social Security and other taxes.They get big paychecks and wonder where the money is going.They bought some funds and used their credit cards to buy some groceries.As the kids grow up, so does the money to put them through college and provide for their own retirement needs.

The happy couple, after turning thirty-five, fell into the trap of the rat race.They keep working for the boss of the company, for the government by paying their taxes, for the bank by paying their home loan and credit card loan, but what awaits them is more and more debts and collection notes, so they work harder, If you acquire more debts, you will fall into the vicious circle of financial stress and cannot extricate yourself. They then advise their children to study hard, get good grades, and find a secure job or career.As for money, they have learned nothing but from those who want to take advantage of them and profit from their naivety.They work hard all their lives, but then the process repeats itself in their next generation. It's called the rat race.

The only way to get out of the rat race is to prove that you are good at accounting and investing. You know how difficult it is to become a master in these two difficult fields.To my amazement as a CPA who worked for one of the Big 8 accounting firms, Robert's game was able to make these two classes so much fun and exciting to learn.The game where we're trying to get out of the rat race is so well designed that we quickly forget we're learning. It was a fun afternoon of toy testing.My daughter also participated, and we talked about things we had never talked about before.As an accountant, it's easy to play a game with a balance sheet and a balance sheet, so I have time to help my daughter and others in our group who don't seem to have the concept. I was the first person to jump out of the rat race that day, and the only one who achieved the ultimate dream and completed the entire game.I walked out in fifty minutes, even though the entire playtest was three hours long.At my desk there is a banker, a businessman, a programmer and my daughter.It amazes me how little these people know about accounting and investing, which are so important in life.I don't know how they manage their finances in real life, I can understand my nineteen year old daughter not knowing that, but those are adults and at least twice her age. For two hours after I stepped out of the rat race I watched my daughter and other highly educated adults continue to roll the dice to move their markers.While I'm glad they learned so much, I'm still amazed at the fact that adults don't even have basic knowledge of accounting and investing, how little they know about the cause-and-effect relationship between balance sheets and balance sheets, When they buy or sell assets, it is always difficult to remember that every transaction has an impact on their monthly cash flow.So I wonder how many people in the real world are struggling with their personal finances just because they never learned this stuff? Thank God they are just playing and are only haunted by the desire to win the game.I said to myself.After Robert finished this test, he gave us some time to discuss and evaluate the Cash Flow game.The businessman at my table was not happy, he didn't like the game.I don't need to know this at all, he exclaimed: I hire accountants, bank managers and lawyers, and they will tell me these things. To this Robert replied: Do you see that there are many accountants and bank managers, lawyers, stockbrokers, real estate agents who are not rich?They know a lot and are the smartest people, but most of them are not rich.It is precisely because we do not have this knowledge ourselves that we want to seek advice from these professionals.But what if one day you're driving on the freeway, stuck in traffic, struggling to get to work, and you look to the right and see your accountant also stuck in traffic, look to the left and see your bank manager , what would you think at this time?If they can't protect themselves, how can they help you? Computer programmers are also not interested in this game.He said: I can buy software to manage these things for me.The bank manager was impressed: I had learned this in school before, but I never knew how to apply it in my real life.Now that I know, I'm going to get my life out of the rat race too. My daughter said the game touched her deeply.I had a great time learning it, it seemed to give me a life experience ahead of time, and I learned a lot about how money works and investing.Now I know how to choose a career that I want to pursue instead of choosing a career because it is safe or profitable.I think I need to keep playing this game and introduce it to my friends, if we learn what this game teaches, we will be free to do and learn what our heart really wants instead of learning something else Something just because it's a skill required for a particular job.If I learn this, I won't have to worry about job security and social security, which is what most of my classmates care about. Since most people were so excited about the game, I didn't get to wait to talk to Robert after the game, but we agreed to meet up at a later date to discuss his project further.I knew he wanted to use the game to help others learn more about economics, and I was eager to know his plans. A week later, my husband and I planned a dinner party for Robert and his wife.Even though this was our first meeting, it felt like we had known each other for years. We found that we had many things in common.We talk about everything from sports to cooking to socioeconomic issues.We talked about this changing world, and we spent a lot of time talking about the many Americans who have little or no retirement savings, and the nearly bankrupt Social Security and Medicare systems.Will my children be required to contribute to the pension of 7.5 million people in the future?We don't know if people realize how dangerous it is to live on one pension plan for the rest of their lives. Robert's main concern is the growing chasm between haves and have-nots.A self-taught, self-made entrepreneur who traveled the world and invested extensively, Robert retired of his own accord at the age of forty-seven.He retired because he had the same concern I had for my children, but more children of course.He knew the world was changing, but education hadn't changed with it.As far as Robert is concerned, children are spending years in an outdated education system learning things they will never use and are preparing to rely on them for a world that never existed. Today, the most dangerous advice you can give your kids is this: go to school, do well, and get a safe job.It's old advice and it's bad advice, if you could see what's happening in Asia, Europe, South America, you'd be as worried as I am. He's sure that's bad advice, because if you want your kids to have a financially secure future, they can't play by the old rules of the game, and that's just as dangerous as being too aggressive.I asked him what the old rules were. Someone like me has a completely different set of rules of the game in economic life than you guys, let me ask you, what happens when a company announces a drawdown? People will be fired, families will be hurt, and unemployment will increase. right.But what happens to the company?Especially for a publicly traded joint-stock company?I thought for a while and said: When a downsizing is announced, the stock price of a listed company usually rises. The market likes this news, because when the company reduces the number of people, the cost falls, which means that the company has increased the average labor productivity through automation. Yes, he said: And when the stock price goes up, people like me, the shareholders, get richer.That's what I mean by a different set of rules.Employees lose, but owners and investors gain.Robert not only describes the difference between an employee and an employer, but also the difference between taking control of one's own destiny and letting it be controlled by others. It's hard for a lot of people to understand, I say, they just don't think it's fair.That's why it's not enough to tell a child: Go get a good education.He says it's foolish to assume that the school system will prepare your child for real life.I'm not saying that the current education system in the United States is bad at all, but at least it is far from enough. In today's world, every child needs to get more education, different education, they need to know real life The rules of the game, a variety of different rules.The rich man has his rules, and the rich man's rules are a secret to the vast majority of the poor and middle class.The other ninety-five percent of the population have their rules, and these people learned them in school.This is why it is dangerous to simply say to children today: study hard and get a good job.Children today need more sophisticated education, and the current education system is not enough to provide these.I don't care how many computers they put in classrooms or how much money schools have spent, but how can an education system teach something it doesn't even know? So how should parents teach their children about accounting?Won't the children be annoyed by these things that even the parents themselves find boring?And how do you teach your kids about investing when you're a risk-averse yourself?Therefore, we can't simply teach, but let the children play the game, let them experience it themselves, study and discuss with them, I conclude that this is the best educational method.Robert said. So how do you teach kids about money and everything else we talk about?I asked Robert.How can we make this education easy for parents, especially those who don't understand it themselves? I wrote a book on this subject.He smiled and said a little shyly. Where? On my computer, it's been there on and off for a few years.I write bits and pieces from time to time, but I haven't put them together yet, I started another book of mine after it became a bestseller, but this new one isn't finished, just fragments. It was indeed only fragments, but after I read several scattered parts later, I concluded that this book has gold worth and needs to be known, especially in this day and age, so we agreed to co-author Robert's book .When I asked Robert how much economics he wanted to teach his kids, he said it depended on the kids.As a kid, he wanted to be rich and he knew he was lucky to have a rich daddy willing to teach him. Education is the foundation of success, Robert said, and just as certain skills taught in schools are very important, so are economic skills and communication skills, if not more so. Then there are Robert's two fathers, rich dad and poor dad, who explain to him and he also uses the skills of his life. The opposition of the two fathers from concept to result provides us with an important contrast.I assisted in the editing and assembly of this book, and for any accountant reading this book, I recommend that you put aside the books you read in school and open your mind to the theory Robert offers.Although many theories challenge some long-accepted, even principled, accounting foundations, they offer a new perspective on how real investors analyze and make investment decisions. When we as parents advise our children to go to school, study hard, and get a good job, we often do it out of cultural convention because people think these things are the right thing to do.But when I met Robert, his mind shook me. Raised by two fathers, he was told to strive for two very different goals.His educated father advised him to work for business and his wealthy father advised him to own his own business.Both paths require education, but the subjects of education are quite different.His educated father encouraged him to be smart, and his wealthy father encouraged him to hire smart.Two fathers raises many questions.Robert's real father, the poor dad, was the superintendent of education in the state of Hawaii. When Robert was sixteen, the threat of not getting a good job if he didn't get good grades came to Robert from his real father. It's almost useless.He had decided his career path was to own businesses rather than work for them.In fact, he probably wouldn't even have gone to college were it not for a bright and persistent high school advisor.He admits it.He was eager to start building his assets, but eventually agreed that a college education would be good for him too.Indeed, the ideas in this book may be too incomprehensible and too radical for most parents today, even those struggling with the inability to keep their children in school enough time.But given our times of change, we as parents should be open to new, bold ideas.Encouraging children to be employees is advising your children to pay more than their fair share of taxes over their lifetime and receive a small and uncertain pension.There is no doubt that taxes are one of the largest expenditures for a person. In fact, most households work from January to mid-May for the government.So we need to tell children new ideas, and this book provides exactly this new way of thinking. Robert claims that the rich educate their children in a different way, at home, at the dinner table.You may not choose to discuss ideas with your children this way, but thank you for seeing those ways instead of just saying no, and I suggest you keep exploring.In my opinion, as a mom and a CPA, the idea of ​​just studying well and getting a good job is antiquated.We need new ideas and a different education.Maybe it would be a better idea to tell the kids to try to be a good employee while also trying to own the business they invested in. As a mother, I hope this book will be helpful to other parents.What Robert is trying to tell people is that anyone can do a great job if he chooses to.If you are a gardener or janitor or even unemployed today, you still have the ability to educate yourself and teach your loved ones to care about their own financial situation.Remember, economic savvy is developed in the process of solving our economic problems. Today we are facing economic globalization and new technology changes, which are as huge as what mankind has faced before, or even bigger.Nobody has a crystal ball to predict the future, but one thing is for sure: Changes beyond the lives we currently live lie ahead.Who knows what the future holds?But no matter what happens, we have at least two basic options: play it safe, or play smart by preparing, getting educated, and awakening your and your children's economic potential. If you have had or have the same troubles as I have, then this is what you need. Sharon. L．Leichter