Financial Intelligence
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Robert Kiyosaki, author of this text entitled Increase Your Financial IQ is an investor, entrepreneur and educator whose perspectives on money and investing align with conventional wisdom. Kiyosaki has challenged and changed the way many people around the world think about money.

Born and raised in Hawaii, this financial expert is a fourth-generation Japanese-American. After graduating from college in New York, Kiyosaki joined the Marine Corps and served in Vietnam as an officer and helicopter gunship pilot.

On the question of whether money makes one rich, this author says it is not so. He explains that money alone does not make one rich, adding that we all know people who go to work every day, work for money, make more money, but fail to become richer.

This financial expert asserts that ironically, many only grow deeper in debt with the money they earn. Kiyosaki says we have all heard stories of lottery winners, instant millionaires, who are instantly poor again. He adds that again, we have heard stories of real estate going into foreclosure, and instead of making homeowners richer, more financially secure, real estate drives homeowners out of their homes and into the poorhouse.

Kiyosaki says many of us know of individuals who have lost money investing in the stock market. He educates that even investing in gold, the world’s only real money, can cost investors money.

According to him, this text is not a get-rich one or a text about some financial magic formula. Rather, he says it is about increasing your financial intelligence, your financial IQ. It is about getting richer by getting smarter and the five basic forms of financial intelligence required to grow richer, regardless of what the economy, stocks, or real estate markets are doing, reveals this author.

Structurally, this text is segmented into ten chapters. Chapter one is interrogatively entitled What is financial intelligence? In this author’s words here, “Money alone does not solve your money problems. That is why giving poor people money does not solve their money problems. In many cases, it only prolongs the problem and creates more poor people.”

Kiyosaki educates that hardwork also does not solve money problems, stressing that the world is filled with hardworking people who earn money, yet grow deeper in debt, needing to work even harder for more money.

He says education does not solve money problems, adding that the world is filled with highly educated poor people.

According to Kiyosaki, it is only financial intelligence that solves all money problems. In his words, “In simple words, financial intelligence is that part of our total intelligence we use to solve financial problems… Financial intelligence solves these and other money problems. Unfortunately, if our financial intelligence is not developed enough to solve our problems, the problems persist… Many times they get worse, causing even more money problems. For example, there are millions of people who do not have enough money set aside for retirement. If they fail to solve that problem, the problem will get worse, as they grow older and require more money for medical care.”

This author reiterates that whether or not you like it, money does not affect lifestyle and quality of life, adding that the freedom of choice that money offers can mean the difference between hitchhiking or taking bus or travelling by a private jet.

Chapter two is based on the subject matter of the five financial intelligence quotients (IQs). Kiyosaki educates that the five basic financial IQs are: Making more money (Financial IQ No 1); protecting your money (Financial IQ No2); budgeting your money (Financial IQ No3); leveraging your money (Financial IQ No4) and improving your financial information (Financial IQ No5).

As regards difference between financial intelligence and financial IQ, he says, “Most of us know that a person with a mental IQ of 130 is supposedly smarter than a person with an IQ of 95. The same parallels can be drawn with financial IQ. You can be the equivalent of a moron when it comes to financial intelligence… Financial intelligence is that part of our mental intelligence we use to solve our financial problems. Financial IQ is the measurement of that intelligence. It is how we quantify our financial intelligence. For example, if I earn $100,000 and pay 20 per cent in taxes, I have a higher financial IQ than someone who earns $100,000 and pays 50 per cent.”

Kiyosaki explains that in this example, the person who earns a net of $80,000 after taxes has a higher financial IQ than the person who earns a net of $50,000 after taxes. Both have financial intelligence, but the one that keeps more money has a higher financial IQ, educates this expert.

In chapters three to seven, the five financial IQs already discussed in chapter two, are elaborately examined respectively.

Chapter eight is christened The integrity of money. According to Kiyosaki here, “‘Integrity’ is an interesting word. I have heard it used in many different ways and in different contexts. I believe it is one of the more misused, confused, and abused words in the English language. Many times I have heard someone say, ‘He has no integrity’, or ‘If they had any integrity, they would be more successful’. Someone else might say, ‘That house has integrity of design’.”

This author says before discussing the integrity of money, it is necessary to define Integrity. Kiyosaki says “Integrity”, according to Webster, can be defined as “Soundness” (an unimpaired condition); “Incorruptibility” (firm adherence to a code of especially moral or artistic values) and “Completeness” (the quality or state of being complete or undivided).

This expert educates that just as health can break down from a literal lack of integrity, so can wealth be compromised by lack of integrity. “Instead of disease or death, which comes from a breakdown in the body’s integrity, symptoms of a lack of financial integrity are low income, crippling taxes, high expenses, excessive debt, bankruptcy, foreclosure, increased crime, violence, sadness, and despair,” expatiates this author.

He says the integrity of all the five financial IQs is needed to grow rich, stay rich and pass wealth on to generations after you. Kiyosaki asserts that missing one or more of the financial IQs is like someone who does not know how to drive attempting to drive a car that has brakes without pads, and water in the gas line.

In this author’s words, “When a person is struggling financially, one or more of these financial intelligences is out of whack, financial integrity is not sound, and the person is not complete. For example, I have a friend who earns a lot of money as a manager of a small business. Her problem is she has no protection against taxes, plus she does not budget wells, spends impulsively to buy clothes and goes up in price. She gets her financial advice from her husband and his (the husband’s) financial planner.”

In chapters nine and ten, this author beams his intellectual searchlight on the concepts of developing your financial genius and developing your financial IQ.

As regards style, this text is a prototype for stylistic excellence. For instance, most of the illustrations are based on the financial experiences of the author himself, thus lending credibility and conviction to the text. The language is simple and the presentation very didactic. Kiyosaki generously employs graphical embroidery to achieve visual reinforcement of readers’ understanding and make the layout of the text eye-friendly.

However, conceptual repetition is noticed in chapters three to seven where the five financial IQs already discussed in chapter two are further examined. One would have expected him to have harmonised chapters two to seven. Probably, Kiyosaki wants to create emphasis through deliberate repetition.

Also, the word “Intelligence” whose grammatical behaviour in the dictionary shows that it is an uncountable noun as reflected by the symbol “U” against it, is still used in this text in a countable way on pages 150 and 151 where we have “Intelligences”.

In spite of the few errors, this text is fantastic. It is a must-read for those who want to accomplish financial freedom and abundance through concrete financial education.

Rich Dad Poor Dad by Robert Kiyosaki, is one of the best books I have ever read in my life. It was a New York Times best seller and the most famous book by the author. The first time I read it was in May 2008, I read it again this year and even decided to write a review to remind me of the golden rules of the rich.

I started to read the Rich Dad series in 2007 with Rich Dad’s Cash Flow Quadrants, since then I have bought 14 books from the Rich Dad’s series and his advisor’s books. Personally I do not like to read the same book twice, but Rich Dad books are exceptional, I have read many of them twice, and every time I read it I always pick up something new or spot something I did not realise at first reading or have already forgotten. I am a big fan of Rich Dad and I rated this book five stars at Amazon.

This book is very inspirational and one of the best mindset books you can ever read; he combined stories and also used simple English to make it easy to understand. There are lots of people in this world who are much richer than Robert Kiyosaki, however, there are not many people willing to share the secrets of the rich and teach you how to build wealth. I truly admire and respect Robert Kiyosaki’s generosity and courage to share his wealth secrets with the world and his determination to educate people for their financial intelligence and the well-being of humanity.

Robert Kiyosaki had two dads; one rich one and one poor one. The poor dad was his real dad; he was highly educated with a PH.D, and once was the head of state education of Hawaii, however he struggled financially for his entire life. Rich dad was Robert Kiyosaki’s best friend’s dad who started mentoring him when he was a child and had a massive influence on his life and wealth building. Rich dad never finished the eighth grade, however, he owned substantial real estates, investments and he owned businesses and later became one of the richest men in Hawaii. Rich dad died leaving tens of million of dollars to his family, charities and his church, while his poor dad left bills to be paid. Robert Kiyosaki’s decision to listen and follow his rich dad’s guide and advice has ultimately made him rich and shaped who he finally became.

Poor dad often said “The love of money is the root of all evil”, while rich dad said “The lack of money is the root of all evil.” Poor dad often said to Robert Kiyosaki “Go to school, study hard, get a degree and find a good job”; he believed in hard work and loyalty. However, Rich dad often said to Robert Kiyosaki “Mind your own business”, “Invest and build your own assets and create jobs”; he believed in working smart and always said work to learn rather than work for money. Poor dad believed his house was his biggest asset, while rich dad taught Robert Kiyosaki your house is a liability to you and an asset to your bank.

As you can see Robert Kiyosaki’s Rich dad had a completely different mindset compared to his poor dad, that’s why they saw the world and money in a different way. Most of us are too familiar with poor dad’s philosophy and that is why most of us are not rich. Robert Kiyosaki said our mindset is our most important asset and that is why it’s very important for us to financially educate ourselves first in order to become rich.

Lesson # 1 The Rich Don’t Work for Money, They have Their Money Work for them. When Robert Kiyosaki was nine years old, he already had a strong desire to get rich. His best friend Mike and himself then decided to ask Mike’s dad to teach them how to become rich and their journey began. At first they worked for 10 cents per hour for rich dad and then later they worked for him for free. Rich dad told them “The poor and middle class work for money, but the rich have money work for them.”

Lesson #2 Why Teach Financial Literacy? Rich Dad said the most important and only rule in getting rich is that you must know the difference between an asset and a liability and buy assets.
He said that most people struggle financially because they do not know the difference between an asset and a liability. The rich acquire assets and the poor and middle class acquire liabilities, but they think they are assets. To simplify, an asset is something that puts money in your pocket, and a liability is something that takes money out of your pocket.

Rich dad also said that in order to get rich, we have to read and understand numbers and he drew diagrams of the cash flow pattern of an asset and of a liability. Most people do not get financially ahead, because they do not understand cash flow, and do not know how to have their money work for them. Rich dad said in order to be rich and maintain your wealth, you must know how to read numbers and be financially literate in words as well as in numbers.

Lesson # 3 Mind Your Own Business. This means to build and keep your asset column strong.

Lesson #4 The History of Taxes and the Power of Corporations. Tax is the biggest secret of the rich, this is because the rich use their corporations to earn, spend and then pay taxes, while middle and poor class people earn, pay taxes and then spend. According to rich dad, tax is the single biggest expense for most people, however, the rich know about and use the tax laws to become richer and richer.

Lesson #5 The Rich Invent Money. Financial intelligence requires various skills including the ability to read numbers, understand the investment strategy of money making money, the supply and demand of the market and the laws and regulations. Opportunities are everywhere, but if you do not develop your financial intelligence you will not able to identify them.

Lesson#6 Work to Learn – Don’t Work for Money. Rich dad said do not specialise in one thing, but learn a lot of different things, what he means is that you should generalise in order to learn all the different aspects of a business. Rich dad also advised Robert Kiyosaki that he must work to learn skills not work for money.

Rich Dad books have had a life changing impact on me and this book is no different. Like his Poor Dad, I believed in excellent education, getting a good job and then climbing the corporate ladder. I thought the only way to get rich was to get promoted to higher positions in a big corporation or run my own company. Until I read Rich Dad’s book series, I had no idea that the chances of getting rich just being an employee are very slim and I realised what was wrong with the way I thought.

As Rich Dad said whether you like it or not the laws are written by the rich and for the rich, if you want to get rich you must use the same laws that the rich use. I did not know that tax laws are one of the biggest reasons why the rich are getting richer and the poor are getting poorer. Even at business school, I learned nothing about money, investment and wealth management. After reading his book, I realised that I need to acquire and create assets and learn to make my money work for me. This book has completely changed my mindset and helped me to think outside the box. As it is such a brilliant book I also bought it for other members of my family and have no hesitation in recommending it to anyone.

The basic premise of the Rich Dad, Poor Dad series of books is that the business world is made up of largely 4 types of individuals:

1. Employee (E) – has a job.
2. Self-Employed (S) – owns a job.
3. Business Owner (B) – owns a business system.
4. Investor (I) – makes money work for them.

Identifying where you are in this Cash-flow Quadrant can largely be determined by where most of your income comes from. What affects which quadrant we decide to generate our income from is a due to internal differences in our core values, interests, outlook, life stage etc.

We can actually earn income from each of these 4 quadrants simultaneously if we so choose but most of your income will likely come from one quadrant. Whilst financial security can be found in each of the 4 quadrants, the skills and tools required and attained in ‘B’ or ‘I’ quadrants will help you achieve financial freedom more rapidly.

Traditional schooling teaches us largely to focus on become an Employee (E) or a high-paid Self-Employed(S) individual such as a doctor, lawyer or accountant. Whilst there is nothing wrong per se in this idea, it becomes a problem if your primary goal is to attain financial freedom. Financial freedom is seldom to be found in the Employee (E) or Self-Employed (S) quadrants.

The attainment of financial freedom requires a high level of financial intelligence. You need to be ready to move beyond job security (in the ‘E’ quadrant) in order to begin your journey towards financial freedom. Be under no illusions though, it is a bumpy, windy road laden with risks that need to be constantly managed; it is NOT for you if you want a secure, normal life. However, if you are prepared to make the leap, the prize at the end of this particular journey is financial freedom.

In my view, the words ‘financial’ and ‘freedom’ go hand-in-hand. You can never really be truly “free” in the modern world we live in unless you are financially free. The whole purpose of life is to generate and experience more life. Money allows you to “live” more life. Financial freedom is when you have enough wealth (assets and cash-flow) to allow you live more life on a sustainable basis.

Changing quadrants is a life-changing experience and often requires a fundamental shift in ones core values in order to come about. It requires massive action and massive personal transformation. You will be required to step outside your comfort zone. Once you have crossed the proverbial Rubicon, or as Kiyosaki puts it in Rich Dad, Poor Dad, ‘crossed from the left side of the quadrant into right side’, there is generally no turning back. However, it is important to note that success is not guaranteed. For example, 80% of businesses start-ups never get to celebrate their 5th birthday. And of those that have become a successful, many successful “B’s” have lost their money through over-confidential forays in the “I” quadrant. The road to financial freedom is littered with casualties and people who turn back on their goals out of fear.

In summary, the rules of the game are totally different in each quadrant. They are completely different worlds and require different mindsets, tools, skills and behaviour. Continuous learning and education will be your constant bedfellows in order to help you on this journey through each quadrant.