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This book addresses the current (2009) financial crisis in the US and world economy.  Kiyosaki analyzes the historical actions and factors that led to this situation, and provides specific suggestions for getting out of this.  Steve Forbes and Donald Trump have both written forewords for the book.

Equipping, not Directing
Kiyosaki points out that this is not a how-to book, with step-by-step instructions.  But the principles he presents indicate approaches that should equip the reader with a new perspective.  Kiyosaki's primary focus is informing and enabling ordinary people to take charge of their financial lives, rather than being victims of the system and those who already have money.

Readers will come to understand the irresponsible decisions taken by past and present government administrations that contributed to the crisis now in process.  Kiyosaki outlines events and decisions that have changed the kind of money system we now have, which require a changed focus on wealth and financial security.

Valuation
A critical turning point was Richard Nixon's decision in 1971 to remove the US dollar from the gold standard.  There was thereafter no real-world standard of reference for the valuation of the dollar.  The basis of value became the "faith and credit of the United States."  Thus money simply saved away loses value steadily under the pressure of inflation.

In the current climate, the government has allowed the Federal Reserve Bank to print extensive amounts of currency.  This automatically makes all money less valuable.  Thus money in bank accounts is losing value daily.  The bank loan system whose legalized abuse led to the current crisis is based on loaning more than the bank has available.

The current infusion of loans and new currency is further diminishing the value of the numbers on the ledgers.  The ones who suffer are those who are solely dependent on a job for their financial security.  A job makes them a victim of the rich who hire them.  Kiyosaki presents alternatives.

Kiyosaki explains that in the old system, based on gold, saving was an investment.  He notes in contrast that now money in a bank is not an investment, but a liability, since it is losing value.  But money being used gains value as it is invested in real assets.

Financial Intelligence
Kiyosaki defines five types of intelligence needed to understand the new financial system and take charge of wealth management.  Underlying all these is to stop thinking poor.

Here are his five points of financial intelligence:
1.  Making More Money.  This involves the problem of debt, living above one's means.  But Kiyosaki further says wage earning makes you a victim and places a limit on money.  Lack of money further puts the focus on money, rather than on yoru planning.  Rather, look for ways to increase your income by making your money work for you, rather than the other way around.  Think in terms of increasing your income by understanding how money and debt work.

2.  Protecting Your Money.  The highest percentage of tax is paid by wage earners.  Thus look for other types of income than earned income.  He presents very practical alternatives.

3.  Budgeting Your Money.  A budget is a plan for "the coordination of resources and expenditures."  This does, of course, entail the simple logical recognition that you cannot spend what you do not have.  He refocuses us on matching income to needs or desires by managing money and creating wealth.

Kiyosaki urges us to be intentional, planning what we will spend, and to create ways to get income for what we plan, not being a slave to to either a paycheck or to our uncontrolled desire for things.  His focus is on managing debt and understanding liabilities.  In this section he focuses on controlling expenses.  Some money must first be put aside for investment in real value.  If the money becomes too little, more effort has to go into bringing in more money in whatever ways.

4.  Leveraging Your Money.  Here Kiyosaki outlines specific strategies for increasing the value of your money, creatively making it do more, saving taxes by understanding how money, debt and taxation work, using other peoples' money on "good debt" in assets that will produce money (like rental property).  A critical insight here is the confusion that owning a house with investing.

An "investment" is something that brings you return.  Kiyosaki focuses on creating cashflow.  House prices derive primarily from market value (valuation based simply of estimates, and who wants it, and how many are looking for homes).  Real estate you invest in will produce income for you (cash flow, creating money and paying the expenses or loan, etc.).

5.  Improving Your Financial Information.  He caps it with useful insights and suggestions.  In this section he describes 4 approaches to wealth, related to developmental stages in human society and economies.  Hunter-Gatherer, Agrarian, Industrial and Information.  This is a helpful practical section on ways people think about wealth and money in certain life contexts.  Knowing these contrasts can help you take understand where you are and take charge of your situation.

See related reviews and articles on this site:
Being Legally Prepared for Business
Intuitive Trading with the Right Brain

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OBJ

Initial reading notes made 30 May 2009, developed 31 May 2009
Basic Review posted on Barnes and Noble 2 June 2009
This expanded review posted on Amazon and Thoughts and Resources 2 June 2009

Orville Boyd Jenkins, EdD, PhD
Copyright © 2009 Orville Boyd Jenkins
Permission granted for free download and transmission for personal or educational use.  Other rights reserved.

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