Increase Your Financial IQ

Book #5: Increase Your Financial IQ: Get Smarter with Your Money, Robert Kiyosaki

What is the key to generating wealth?  Your financial IQ.  Knowing how money works and how to make money work for you is important in the process of growing your financial household.  In this book, Robert Kiyosaki discusses the 5 principles of financial IQ: 1. Making money, 2. Protecting money, 3. Budgeting money, 4. Leveraging money, 5. Improving your financial information.  It is a good resource in your financial education.

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So, what do I think about this book?  As you are well aware, from time to time when there is a book that strikes me in a certain way I add an extra personal commentary beyond the simple description of the book.  I think that is important here.

I am no financial expert, that is why I am reading this book.  But I am skeptical that what Kiyosaki presents here is the whole picture.  Certainly what he says in regards to the 5 steps is good information.  And there certainly seems to be some merit to the principle of leverage in investing for passive income.  But a system that is built on debt in need of servicing without collateral seems to be a bit risky.  The assumption in Kiyosaki’s logic regarding leveraging debt to obtain cash flowing real estate is predicated on the presence of tenants and a low vacancy rate in your rentals.

Finance is important.  Like it or not, we all need money to live.  How much is the crucial issue.  This is answered by questions like… What are your beliefs about the role of money?  What life style do you want to live?  When do I want to retire?  How much do I need to retire?  Should I save?  How much do I need to save?  For what?  The questions can go on and on.  But bottom line, we all have one crack at this life and we certainly have a limited period of time when we can be financially productive.  Sink or swim, the decisions we make regarding money will have huge impacts on the life we lead.

Like Noah prepared for the impending flood, if we do not get our financial house in order, we can find ourselves on a fixed income dependent on government programs in our older years.  I agree with Kiyosaki that our society does a really horrible job educating the masses on money and good money management.  I have been blessed with parents who have been good money managers and have passed along good lessons about how to treat money.  My Dad is famous for saying, “Spend less than you make, and do it for a long time and you will be a rich man.”  But despite having a good example at home, much of what I have learned has been self taught using resources from Crown Financial Ministries, Dave Ramsey, now Kiyosaki and seeking advice from trusted people and professionals as topics arise.

But this certainly isn’t standard across the board.  Many people find themselves in perilous financial positions certainly from what life throws at them, but also from poor financial choices stemming from a lack of understanding of money management and financial planning.  The average amount saved for retirement is $95,000.  The average American with credit card debt carries a balance of $16,000.  Which In our education system, we as a society would benefit from an emphasis on money management education.  And as our entitlement state through Social Security, Medicare and Medicaid continues to grow, the national budget can only be helped by improved financial awareness and management by our citizenry.

The Bible has much to say on the topic of money as well.  While money is important, It is not everything.  In 1 Timothy 6:10 Paul writes, “The love of money is the root of evil.”  Note that it doesn’t say that money is evil.  Just as words in and of themselves are amoral, it is what we do with our words that makes all the difference.

God is not concerned as much about how much money you have but in how you steward the money he has given you.  All things are the Lord’s and we are called to be wise stewards of the world and resources that he has entrusted to us.  In Matthew 25, Jesus tells the parable of the ten talents.  In it, each steward was given differing amounts of money.  They were commended or condemned not on how much they had, but in their stewardship of the resources they had been given.  Proverbs speaks often about money and warns about the limits of money.  But perhaps the most important passage to influence personal financial stewardship is a passage that has nothing to do with money.  2 Corinthians 8:9 says, “For you know the grace of our Lord Jesus Christ, that though he was rich, yet for your sake he became poor, so that you by his poverty might become rich.”  Christ is the ultimate example of self-sacrificial love and service of others.  And because Christ gave the ultimate gift through his death and resurrection, we are freed from the need for self service and self aggrandizement and are free to serve as Christ served us.  In the context of money, we are called to be generous with the resources God has given us.  Whether rich or poor, what we have is a gift from the Lord that is to be used to serve others.  How much we have is not the issue; our heart is the issue.  Because of Christ we are richly blessed.  We should reflect Christ by being a blessing to others.