should encourage people to be entrepreneurs
• 70% say the success and health of our economy depend upon it
More importantly, I learned more, retained more, and wanted to learn more from the experience of Monopoly as a kid and applying what I was learning to collecting rent for rich dad. These lessons are locked in my brain. While I have a Bachelor of Science degree from a great school, I do not remember much of what I learned during those four years. For example, I remember taking three years of calculus, but I could not solve a math problem using calculus today. As the saying goes, “Use it or lose it.” I would need calculus if I were a rocket scientist, but I do not need calculus to be rich. Elementary level math—addition, subtraction, multiplication, and division—will do.
In 1984, my wife Kim and I founded a financial education company with offices in the United States, Australia, New Zealand, Singapore, Canada, and Malaysia. We taught investing and entrepreneurship using games and simulations. Learning was fun and exciting.
In 1994, we retired. Kim was 37, and I was 47. We retired on the passive income, the cash flow, that we received from our investments. Like rich dad, we were playing Monopoly in real life. And we still do today. And following the crash of 2007, our income (cash flow) went up as asset prices fell. Knowing how to do well even in a crash or in turbulent markets is an essential aspect of financial education.
In 1996, Kim and I founded The Rich Dad Company. The Rich Dad Company produces financial education products such as the board games CASHFLOW® 101, CASHFLOW® 202, and CASHFLOW® for Kids. Board games are great ways for families to learn together.
We also have an expanding line of electronic games for mobile devices and tablets. Our electronic products will be supported by on-line curriculum and assessment tools… so you can grade yourself, correct, learn, and improve.
In 1956, when Mike and I were nine years old, rich dad began teaching us financial and entrepreneurial skills using games and simulations. Rich dad was ahead of his time and that gave us an unfair advantage over our classmates.
Action Step for Parents
Take time to discuss money and the role it plays in life
Unfortunately, in many homes, there is little discussion or conversation about money. And when there is, it’s often an argument.
As a young boy, I have painful memories of the fights between my mom and dad over money. No matter how much money my dad earned, we never had enough money. Rather than discuss money, my mom and dad—the two people I loved most—only fought about money. My rich dad, on the other hand, spent hours discussing real money problems. Today, I carry my rich dad’s discussions into my own marriage. Rather than fight about money, Kim and I openly discuss our money problems.
Once you establish the ritual of your family Wealth Education Nights make it a time to discuss real life money problems when they occur in the course of everyday life. Talk about the problems and challenges, what caused them, and how you’ll solve them.
Invest the time to make your home to be a place of discussion rather arguments about money.
PREPARE YOUR CHILD FOR THE WORST
As a child’s first and most important teachers, parents are the ones who provide the foundational building blocks of education. Parents celebrate a child’s first words and teach them new ones, teach them to count and walk and read and ride a bike. As a child grows up, many parents become sounding boards, guides, advisors, and role models. Parents interact with their kids every day and, consciously or unconsciously, have a huge and powerful impact in shaping their lives. We lead by example and when kids see parents who are open to new ideas and embrace life-long learning it makes an impression. A child’s life changes when his or her parents are teachers who will ask questions until they have a clear understanding of the answers, keep an open mind to other points of view, and encourage their children (and their spouses) to follow their dreams on the path to a rich and rewarding life.
I often see parents walk a fine line between sheltering and protecting their children from life’s harsh realities and proactively preparing them for what, in today’s world, is likely to be an uncertain future. The world of tomorrow belongs to those who can process information, see relationships and trends, and be agile and responsive to change as the world changes. And just as our world today is very different from the world in which our parents grew up, the world your child will face will be different, too. We can expect new and different challenges… as well as new opportunities.
Making the Case
Most Americans have heard references to “the 800-pound gorilla in the room.” If you have not heard the phrase, it simply means that there is something—a topic or an idea that carries some weight or needs to be reckoned with—that everyone knows about, but no one wants to talk about.
There Are Four Gorillas in Your Child’s Future
As I see it there are four gorillas—gorillas of the future—that your child will face. Few people are talking about them, but they’re out there. Few people are talking to your child about these four gorillas—gorillas of the future—and your child needs to prepare for before he or she encounters them later in life.
800-Pound Gorilla #1: The New Problem of Growing Old
The problem of growing old is a new phenomenon.
In 1935, the Social Security Act was signed into law by President Franklin D. Roosevelt. Back then, 65 was considered old age. Today, “65 is the new 45”—at least that’s what many baby boomers would like to believe. In America, people fear growing old and the loss of their independence more than they fear dying. With advances in medicine and technology, the new old for your child may be 90 or even 120. In other words, growing old is a new and escalating opportunity… and problem.
Is Age an Asset or Liability?
During the Agrarian Age and Industrial Age, being older was an asset. Older meant wiser. In the Information Age, being older is a liability.
In 2012, the U.S. government finally admitted that the Social Security fund will be bankrupt by 2033. How old will your child be in 2033? Most baby boomers will just be entering their 80s. The question is: How will governments afford to keep an aging population housed, fed, and given proper medical care?
In 2012, the Social Security Administration reported that 10.8 million Americans were now receiving disability benefits. That is a 53 percent increase over the past decade. More than 5 million people have applied for disability benefits since the economic crisis began in 2007. When unemployment rises, more people collect disability. What will happen if the economy remains flat for the next 20 years, as many predict?
Today, many governments are going bust,
