How to Get the Financial Education You Didn’t Get in School
Growing up in a family of teachers, my grades, the high school and college I graduated from, and getting advanced degrees were everything. Like the medals and ribbons on a Marine pilot’s chest, advanced degrees and brand-name schools were the status and the stripes that educators wore on their sleeves.
In their minds, people who did not finish high school were the unwashed, the lost souls of life. Those with master’s degrees looked down on those with only bachelor’s degrees. Those with a Ph.D. were held in reverence.
I had no desire to study for grades, degrees, promotions, or credentials. From the age of 26 on, if I did attend a course or school, I went to learn, to become a better person. I was no longer in the paper chase of grades, degrees, and credentials.
The more I studied, the more curious about traditional education I became. I began to ask questions…
- Why do so many kids hate school?
- Why do so few kids like school?
- Why are many highly educated people not successful in the real world?
- Does school prepare you for the real world?
- Why did I hate school but love learning?
- Why are most school teachers poor?
- Why do schools teach us little about money?
Those questions led me to become a student of education outside the hallowed walls of the school system. The more I studied, the more I understood why I didn’t like school and why schools failed to serve most of their students, even the “A” students.
My curiosity touched my spirit, and I became an entrepreneur in education. If not for this curiosity, I might never have become an author and a developer of financial education games. My spiritual education led me to my path in life.
It seems that our paths in life are not found in our minds. Our path in life is to find out what is in our hearts.
This does not mean a person cannot find their path in traditional education. I am sure many do. I am just saying that I doubt I would have found my path in traditional school.
My Reason for Becoming a Teacher
My primary reason for becoming a teacher in the B quadrant was a desire to provide financial education. I wanted to make this education available to anyone who wanted to learn, regardless of how much money they had or what their grade-point averages were. That is why The Rich Dad Company started with the CASHFLOW game. This game can teach in places I could never go. The beauty of the game is that it was designed to have people teach people. There is no need for an expensive teacher or classroom. The CASHFLOW game is now translated into over sixteen languages, reaching millions of people all over the world.
Today, The Rich Dad Company offers financial education courses as well as the services of coaches and mentors to support a person’s financial education. Our programs are especially important for anyone wanting to evolve out of the E and S quadrants into the B and I quadrants.
There is no guarantee that everyone will make it to the B and I quadrants, yet they will know how to access those quadrants if they want to.
Where to get a financial education
As an adult, you must take matters into your own hands and teach yourself these topics if you ever want to get out of the Rat Race. And, if you’re a parent, you’ll need to provide this financial education to your children at home, on your own time, since you can’t rely on their schools to do it.
I’ve gathered several resources to help you with both…
Lesson 1: Personal financial statement. One of the foundational elements of financial literacy is understanding how to read and understand a personal financial statement. What is a personal financial statement, you ask? It tracks your income, expenses, assets, liabilities, and cash flow — each of these is crucial to not only understanding your personal financial standing but is also a barrier to entry when it comes to any investment opportunities. If you do not understand these concepts, the only way you’ll succeed in investing is by sheer luck.
Lesson 2: An asset vs. liability. You’ve probably been told that your house is an asset, but I’m about to burst your bubble: Your house is actually a liability.
Simply defined, an asset is anything that puts money in your pocket, while a liability is anything that takes money out of your pocket. Once you learn the true meaning of assets and liabilities, you can get clever and find ways to turn your liabilities into assets.
Lesson 3: Cash flow vs. capital gains. Many people invest for capital gains (the difference they’ll earn when they sell their house for more than they owe on it), but that’s a gamble.
Instead, savvy investors choose to invest for cash flow (the money you’ll earn from renters each month after your mortgage and expenses are paid) and enjoy the passive income and real estate domino effect that leads to achieving your financial independence.
Lesson 4: The CASHFLOW Quadrant. The CASHFLOW Quadrant is made up of four types of earners: Employees, Small business/Self-employment, Big business, and Investors.
Employees are people who rely on paychecks and have no control over their earnings — and while that’s the more “traditional” path, I’d argue it’s only popular because most people don’t have the financial education needed to move to the other side of the Quadrant. But once you learn how to redirect yourself to the right side of the Cashflow Quadrant, everything will fall into place.
Lesson 5: Your wealth number. Regardless of how wealthy you may or may not be, you have a wealth number. If you’re making money through passive income and bringing in more than you spend each month then you’ll have an infinite wealth number.
Lesson 6: Seek expert advice. Choosing the right partners in life—whether marriage or business—will make or break your outcomes. For starters, you’ll want to find the right mentor and coach. You’ll also want to seek out a financial advisor you can trust to ensure they’re the real deal before you commit.
Lesson 7: Know your asset classes. There are five asset classes to learn about—but you only need to learn the basics. Once you learn the fundamentals of each, most people will find one or two that really resonate with them and sink their teeth into learning as much as possible about those.
For instance, I’m focused on real estate investing, cryptocurrency and commodities, and not interested in paper assets.
Lesson 8: It’s normal to make mistakes. It’s rare to find a linear path to success. Most successful investors and entrepreneurs have at least one major failure under their belt (if not several). I’ve made some very big blunders myself, so I’m certainly not immune to this ego-crushing experience.
Finding one’s path is not necessarily easy. Even today, I don’t really know if I am on my path or not. As you know, we all get lost at times, and it is not always easy to find our way back.
If you feel you are not in the right quadrant for you, or you are not on your life’s path, I encourage you to search your heart and find your path in life.
Editor, Rich Dad Poor Dad Daily