Make Money Work for You

Rich Dad, Poor Dad
by Robert T. Kiyosaki with Sharon L. Lechter C.P.A.

I've had this book on my shelf for at least four years since someone at NAF gave it to me, but I just read it yesterday. It only took a few hours and I'd say it was worth the time. I think I can sum it up for you, though:

1. Rich people don't depend on paychecks to get (or stay) rich. Before you even get your paycheck 1/3 to 1/2 is gone (taxes). The more you work and earn, the more you pay in taxes. Jobs mean you're working for someone else first, then the government second.

2. Pay yourself first. Don't buy a lot of doodads (like golf clubs, big screen TVs, cars, boats, etc) and then try to save what's left. The easiest way to do this is to invest in a 401K or some similar plan through your employer. According to the authors, if you start early enough, you might be able to save enough for a comfortable retirement, but you're not going to get rich.

3. Instead, the rich pay themselves first and use that money to purchase assets that will generate income (real estate, stocks, bonds, businesses, whatever). A house is not an asset. A house is a liability. You spend money on a house every month. (I liked this - it made me feel a lot better about not owning a house yet.)

4. Eventually, if you keep investing well, your investments will shelter you from government taxes. (Create a corporation you can spend the money on legal expenses and only pay taxes on what's left, not like income from a paycheck which is taxed first and then you can spend what's left.)

5. Also, you will be able to "retire" and live off the income generated by your assets - a paycheck without a job. Then you're rich.

Mr. Kiyosaki admits in the book that he's not a writer. His co-author is an accountant, also not a writer. The lack of a real author or a good editor was apparent in the book. Parts of it are repetitive, which I found annoying. But it's short and simple to read. I don't think Josh and I are going to run out and take a real estate seminar (which is how Mr. Kiyosaki started his fortune; apparently you really can buy a chocolate factory with no money down), but I'd like to make some changes in our saving and investment strategies.

Mostly the authors want to emphasize the importance of financial literacy. They aren't any real get rich quick schemes. You have to learn how to invest, and then invest. Good luck.