Robert Kiyosaki is a master of teaching context. For example, the CASHFLOW Quadrant does not teach how to buy real estate or how to invest in stocks. Yet it’s a very powerful teaching tool because it helps people shift their context. It helps people examine their philosophy and how they approach earning money, whether it’s as Employees (E), Self-employed professionals (S), Business Owners (B), or Investors (I).
Part of the power of the CASHFLOW Quadrant is that it invites each of us to examine who we are today and who we would like to become tomorrow. In many instances it suggests a profound transformation. Shifting context means improving perspective (the big picture). Studying content suggests expanding what we know (or the details) and the how-to instructions.
Of course this book contains content, which will help you learn more about the nitty-gritty of paper assets. But every bit of instruction must be applied within the proper context.
The Education Hierarchy ™
It is said that beauty is in the eye of the beholder. I’d say that the same is true with value. The value of some information might be priceless to some and worthless to others. Some education is important to everyone—reading, for example. I don’t think there are many of us who can achieve success in life without knowing how to read. But the importance of most education is more subjective than we normally think. What is vital to know and what isn’t really depends on your circumstances and your goals. For example, had I actually wanted to become an exercise physiologist like my college counselor had directed, knowing the difference between a tendon and a ligament would be really a big deal. But in my current life as student of investing? Not so much.
It bothers me that those on school boards have the power to impose their opinions on the rest of us. The school curriculum is based on what they think is valuable, and those assumptions can be inaccurate for your life’s goals. Some education really matters to the school board but doesn’t affect your financial life. Dissecting a frog comes to mind. The school board thought it was vital I learn to dissect a frog in high school. Well, I’ll tell you, I’m living proof you can live a good life without being an expert at dissecting a frog. I’ve done ok. I have a great family. I’ve made a good life. And the frogs of the world are just going to have to go on their merry way undissected.
Now, if I were going to be a biologist, it might be a different story. It might become vital I know how to dissect a frog. But that’s because of my circumstances and my goals, not some universal dictate of a bureaucracy. If I wanted to be a biologist I would be vitally interested in frog innards. I would want to know how the insides of a frog work. It would be a driving passion. I would be burning to cut open any unsuspecting frogs I could find. I’d be reading all about frog biology, watching frogs be dissected by experienced practitioners, practicing on fake frogs—anything I could do to learn. Just as it has been for me with stocks.
Perhaps some of the most vital education you can receive doesn’t even register on the school board radar screens, but is critical to your financial life. You might never have had a class on living a life without a job, but it may be one of your goals. You have likely never even had a class on the basics of the stock market, but the stock market is what millions of people are depending on for retirement. Evidently, these are trivial matters to the average school board. But these are subjects of vital interest to you and me.
Is that a problem? No. You don’t need to wait for someone else to dictate what is vital to your education. Not anymore. Not when you become a serious student, because being a serious student is being an active student. Your financial success is too important to leave it to someone else and their opinion of what’s important. I stopped being passive when it comes to education a long time ago.
I submit that becoming a successful investor begins by becoming a serious student. This is my invitation to you. It is an invitation to develop your own education hierarchy. You and I are now free from the school board’s assembly-line approach. You do not need to be force-fed from their “like it or not” menu anymore. Value is in the eye of the beholder, and you get to decide what knowledge is valuable to you!
Once you decide what is valuable to you, all of your education opportunities can be categorized as trivial, interesting, important, or vital. Don’t waste your time on the trivial. Then be mindful of wasting too much time on that which is merely interesting. Choose to focus on the important and the vital—that’s where you can best spend your time, your effort, and your money. When you set your goals, think about what you are learning in the context of the Education Hierarchy™. When you do, you’ll find that what you study will be more meaningful, more valuable, and more fun.
Make a list of classes you took in school and think about where these classes fit into your education hierarchy and reflect on how much or how little you use that knowledge each day. Then make a list of what you think you will need to learn to achieve the goals you have today. As you progress through this book, you might discover that mastering The 4 Pillars will be more valuable to you than anything you have ever studied before.
Traditional schools tend to focus on what they often refer to as “general education.” The first two years of a typical college experience usually include learning a few things about a bunch of subjects instead of learning a lot about a few subjects. That’s why you’ll often see people with majors as diverse as art history and pre-med taking the same classes their freshman year. That has never made sense to me. We might end up well-rounded, but we also end up bored—and we pay for the privilege with our time and our money. And you know what? I don’t want to be well rounded. I want to be really, really, really good at building cash flow. If I need to dissect a frog, I’ll hire a biologist.
That’s why the books in the Rich Dad Advisor series are so useful to anyone who wants to learn about investing. And with teaching tied to the four pillars, I promise not to waste your time with things that are merely interesting. Moreover, I can promise you that as an investor you will use each of these four pillars on a regular basis, and you will come to view them as vital in your investing.
The Education Continuum ™
The CASHFLOW Quadrant helps us figure out who we are and who we would like to become in terms of how we choose to earn money. The Education Continuum ™ helps us to evaluate our current education level and set vital goals related to where we want to arrive educationally and the degree of our transformation. Remember that true education is transformation. It changes us.
As you read this book, you will move along the continuum. Your context will shift as you evaluate where you are on The Education Continuum ™ and with each new topic of your financial education.
Ignorance
Ignorance simply means we’re not aware of something. If you’re ignorant of something, it doesn’t mean you’re stupid. I’ve observed that most of the people I teach in my workshops have a college education, and, quite frankly, most of them probably have higher IQs than I do.
My grades in school were pretty average—and sometimes even below average. The only reason I am the one who’s often teaching others is that I have been a student of investing for a longer period of time than most people. My mentors have been students of investing longer than I have been. I was smart enough to seek out those mentors—and listen to them.
What you lack in smarts or talent, you can make up for with passion and hard work. Effort is the great equalizer.
Most people don’t have a clue about the stock market