Those are strong words, and words I believe to be true. This is a quote from Robert Kiyosaki’s book, Increase Your Financial IQ, and I believe it sets the pace for what this book stands for: Financial education.
Just so we’re clear, this book is not how to get rich, or make money, although Kiyosaki does throw out a few ideas on these matters. No, this book is about increasing your financial knowledge. There is a big difference between the two, and it is important not to purchase this book thinking you will get rich from reading it.
However, there are some great observations Kiyosaki makes about how wealthy people deal with money vs. how middle class people deal with money. He outlines his thoughts in what he calls, the Five Financial IQs -
The Five Financial IQs
- Financial IQ #1: Make More Money
- Financial IQ #2: Protecting your money
- Financial IQ #3: Budgeting your money
- Financial IQ #4: Leveraging your money
- Financial IQ #5: Improving your financial information
Financial IQ #1 – Make More Money. This is a no-brainer, right? Well sometimes it is easier said than done, but Kiyosaki believes anyone can do it. According to RK, making money is all about how you leverage your time and talents. RK is a big fan of business owners working to create alternative and passive income streams instead of trading your time for money.
Financial IQ #2 – Protecting your money. Pay fewer taxes. Kiyosaki is referring to legal ways of reducing your taxes! For many people this is easier said than done, but Kiyosaki gives several examples of how it can be done. Mostly though, he is referring to the types of income and investments you have – for example, owning your own business and using legal business deductions.
Financial IQ #3 - Budgeting your money. The key here is to spend less than you earn. If you budget for a surplus, it will be much easier for you to have extra money to use for step 4 – leveraging your money.
Financial IQ #4 - Leveraging your money. Here, we are talking about investing. Kiyosaki is not talking about investing in mutual funds or stocks, which he things is risky. He recommends investing in real estate, precious metals, or other things you have control over. According to Kiyosaki, he is heavily invested in real estate and he owns a silver mine.
Financial IQ #5 – Improving your financial information. Obviously, you made it this far, so you are doing something right! Seriously though, this goes back to the opening quote of this review. Increasing your financial mindset is one of the most important things you can do for yourself.
What I liked and didn’t like
Like. Kiyosaki is a contrarian, which at times is a good thing. He believes more people should work for themselves to create wealth and alternative income streams instead of relying on trading your time for a paycheck. This is contrary to what many people believe – go to school, get a good job, and save. Not everyone should run their own business, in my opinion, but everyone can do little things to increase their income.
Didn’t like. Kiyosaki is extremely harsh on the stock markets, which in itself is not a bad thing. But it is a bad thing when you make incorrect blanket statements about them. Case in point: “You can train a monkey to save money and invest in mutual funds. That is why the returns on those investment vehicles are historically low.”
Obviously, this is a horrible statement. Many funds have high historic returns, as does the market as a whole. However, there are no guarantees with the market, and the US market is based on the US dollar, which has been steadily losing value for years. I believe this is Kiyosaki’s main contention with the markets.
Buy or don’t buy (or get it free!)
There are a lot of people who do not agree with Kiyosaki’s view points concerning financial matters, and in some cases, I agree. But this book is not about how to make money, it is a different way to think about money. I don’t think this is a great investment for those with an advanced understanding of personal finance, investing, or business, but if you read it you may pick up a few things. I do think this is a good book for people with an entrepreneurial spirit, or those who don’t handle money well. You can buy Increase Your Financial IQ, or you enter a book giveaway and maybe get it free! I have 2 copies available and the contest ends March 29th. Good luck! Update: Giveaway over!