The average American can’t pass a 100 year old test for 8th graders.
You, like me, could use some help improving your financial IQ, right?
Like Rich Dad, Poor Dad, the book Increase Your Financial IQ: Get Smarter With Your Money is written in an informal style full of personal anecdotes and light on actionable content. However, Robert Kiyosaki’s arguments remain clear and valid.
Here at Enwealthen, we believe in saving time through summaries, so accordingly, he states financial IQ consists of:
- Making more money
- Protecting your money
- Budgeting your money
- Leveraging your money
- Improving your financial information
And then backs up each aspect with details and anecdotes. There is much repetition from his earlier books, such as earlier careers in the Merchant Marine and U.S. Marines.
Building Financial IQ
So how do you increase your financial intelligence? He touches briefly on the history of money and the difference between money and currency. Most importantly, he touches on the Bretton Woods accord, and Nixon taking the US off the gold standard. These are his foundation for his argument that using debt to invest for cash flow is the only sane way to invest in an economy where the government continues to inflate their way out of past financial shenanigans.
One of the things I like about his books, is he usually recommends additional reading. I’m looking forward to reading one of his recommendations – GRUNCH of Giants by Buckminster Fuller. It sounds intriguing, and disturbingly relevant in today’s socio-economic environment.
Most importantly, I find his insights into the modern financial world to be disturbingly accurate. Given his firm grasp of the current state of affairs, I find I’m more likely to follow his advice. The only thing more dangerous than advice, is advice from someone who doesn’t understand the situation.
As usual, he uses his simplified income statement and balance sheet model to demonstrate his points. It’s simple, but effective and easy to understand.
As I mentioned, his informal style does make it easy to miss some critical points. For example, in the section on educating yourself, he spends only one sentence to inform the reader of the importance of hiring a great accountant and a lawyer. Given how critical these services are, I’d expect a little more repetition and emphasis to hammer those points home.
He dedicates a chapter to the brain, including an interesting explanation of different aspects of intelligence and a tripartite model of left / right / subconscious brain, attributing it to Howard Gardner’s Frames of Mind: The Theory of Multiple Intelligences. Intelligence and learning is not an area I’m familiar with, and I found this chapter particularly intriguing. Interesting enough that I’ve added Gardner’s book to my reading list.
The last chapter is subtitled, “Some Practical Applications”. However, when I was expecting meat and potatoes, I ended up with hors d’oeurves – a few light snacks which were tasty but ultimately unsatisfying.
In summary, I like the book. Very entertaining, very informative, and reassuring to hear one person’s success stories. However, it leaves me wondering if his performance is reproducible in the current economic climate. Of course, if you’re still reading this, you, like me, are getting ready to jump in and find out.
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