Psychology of Money:13

Check out the non-fiction section of any airport bookstore (at least in English speaking countries) – it’s more than likely you’ll spot a copy of Rich Dad, Poor Dad – an entire book about prosperity versus poverty thinking.

The author’s point?  The rich don’t work for money, they make money work for them. Richard’s rich dad never finished high school, his poor dad was highly educated. And while it might be obvious now who had the more successful relationship to money, it wasn’t obvious to Richard when he was growing up – the rich dad wasn’t yet rich and the poor dad wasn’t yet poor but the lessons that they wanted to teach Richard represented polar opposite views.

Guess which dad said “the love of money is the root of all evil?” and which one said, “the lack of money is the root of all evil?”

It’s an interesting book to read if only to notice just how uncomfortable I am imagining how to behave more like rich dad.

Here Richard gives a good example of common behaviour that leads to more and more debt:

“The middle class finds itself in a constant state of financial struggle. Their primary income is through wages, and as their wages increase, so do their taxes. Their expenses tend to increase in equal increments as their wages increase; hence the phrase “the rat race.” They treat their home as their primary asset, instead on [sic] investing in income-producing assets.

This pattern of treating your home as an investment and the philosophy that a pay raise means you can buy a larger home or spend more is the foundation of today’s debt-ridden society.

This is high risk living caused by weak financial education.”

Tomorrow we’ll take a closer look at a few lessons from Rich Dad.

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