Review: Financial IQ by Robert Kiyosaki

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Financial IQ by Robert KiyosakiI think Financial IQ by Robert Kiyosaki is a good “big financial picture” book that can help some re-frame the way they think about money and the impact money has on their lives. He talks about various Financial IQs and how the rules of money has changed, all of which are important ideas to think about. I’m not saying he’s right, but he certainly raises questions that require additional investigation. I don’t think you should take anyone’s opinions, and that’s what a book like this is really about, as pure gospel without reviewing the details for yourself. For an example of this, let’s take a look at one of the rules that have changed, according to Kiyosaki.

Gold Standard

Kiyosaki repeatedly states that the rules of money changed in 1971. 1971 was the year that President Nixon took the United States off the gold standard. Kiyosaki goes on to explain how that turned our dollars from “money” to “currency,” and how all currencies will eventually move towards being worthless. Besides being a little inflammatory and doomsday-ish, the point is somewhat valid as the concept of inflation is just that – our money is worth less and less each year. Is this true?

If every nation’s money is pegged to gold, what you have are pieces of paper worth exchangeable for different amounts of gold. If you have that, then exchange rates are all fixed and there is no inflation. What ends up happening is that instead of inflation handling the differing growth rates in countries, you would have a shifting of gold reserves. If a country’s gold reserves go down, then you end up deflating and have to pay people less and then they can’t pay their debts and all sorts of bad things happen (at least according to this interesting article by Peter Bernstein. So… while inflation seems bad, it’s not as bad as deflation. So, the lesson of the day is to trust but verify. 🙂

Financial IQ’s

The five basic financial IQs are:

  1. Making more money.
  2. Protecting your money.
  3. Budgeting your money.
  4. Leveraging your money.
  5. Improving your financial information.

The importance of these financial IQs is that these are the five areas you need to educate yourself on about money, having a high IQ in one area does not mean you have a high IQ in any of the others. Just because you’re good at making money doesn’t mean you’re good at protecting it or leveraging it. I think we can all agree with that but we’d also agree that this is hardly groundbreaking information. Let’s take a look at the first Financial IQ: Making more money.

IQ #1. Make more money!

The key to making more money is learning from your mistakes and solving your problems. Kiyosaki begins this chapter with stories of his younger years as he left a lucrative job as a third mate on an oil tanker to enlist in the Marines for Vietnam, then opting to become a Xerox salesman rather than return the oil business so that he could pursue the path of entrepreneurship. He goes on to explain the rest of his successes and failures with the point being that you have to learn from your mistakes in order to find the right path for you. (there’s also a little bit of Seth Godin’s The Dip in there, where you don’t settle for your local maximum)

Many of the other chapters are like this, very high level, and it’s something that JD of Get Rich Slowly complained about in our chat the other day. The problem with being at such a high level is that it requires the reader to bring it down to the street level, where you take those ideas and act on them. If I remember correctly, JD wasn’t a big fan of that because sometimes we need actionable advice and this book just doesn’t deliver on it.

I have a different take, I appreciate the high level look and brain stimulation. I never thought about the impact of coming off the gold standard (I am only 27) and some of the other viewpoints brought on by Kiyosaki and so I welcome the ideas he’s pushing. Some of them aren’t too groundbreaking, but some of them do intrigue me.

If you’re looking for or need a step by step guide or something like that, I don’t think you’ll like this book very much. If you are looking for something high level, I think this one may stir up your brain a little and get those juices flowing.

{ 8 comments, please add your thoughts now! }

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8 Responses to “Review: Financial IQ by Robert Kiyosaki”

  1. I am getting a bit bored by Kiyosaki’s books. He seem to write the same thing in all his books. Maybe this one is slightly different but I guess I’ll skip it

  2. Kiyosaki has never been much of a “step-by-step” author. Instead, as Jim has pointed out, he deals more concerning perspective. This style ‘used’ to drive me nuts. I, like the majority, wanted somebody to take me by the hand and show me how to earn dollars. This attitude, while it seems it would be more satiable, would do less good in the long run. Jim, you’ve referred to Kiyosaki as being on a “higher” level; in actuality, he talks on the ground level; he’s one of the few who discusses principles and mindsets – which is where prosperity begins (earning dollars is simply a bi-product). My own blog discusses principles and likely frustrates many as I don’t discuss the actual ‘how’ I’ve earned, lost, and am again earning. Grrrrr… so frustrating, I know. I was there.

    Ralph Waldo Emerson penned:
    The man who knows how will always have a job. The man who also knows why will always be his boss. As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.

    –Dave Charbonneau, C.E.R.

  3. muntz says:

    Okay – you just saved me some time – I’m not going to read your blog ever again — Robert Kiyosaki is a fraud and dispenses horrible advice. I’m not going to go into all the reasons why statements such as: “how all currencies will eventually move towards being worthless” and “If every nation’s money is pegged to gold…there is no inflation” are completely idiotic, misleading and meaningless. I’m tempted, but I won’t.

    Thanks for saving me the time! You are now deleted from my bookmarks.

    • Spear says:

      you sir is regurgitating utter ignorance if the United states currency isn’t back by Gold anymore what do you believe will happen to it? the value will depreciate of course, on top of that if the government prints more money as a measure of fixing the depreciated value problem, what do you think will happen? Inflation of course. All what I have just stated are facts, so I don’t know how you arrived at the conclusion that the gentleman statement was “completely idiotic, misleading and meaningless” you shall soon find out how idiotic and misleading it is

  4. jim says:

    muntz: It’s okay if you don’t read my blog anymore but I would advise that you read more about the gold standard.

  5. muntz says:

    Not only did I read the Bernstein article, I read his book, “The Power of Gold.” By the way his book, “Capital Ideas” is a must read for anyone who cares about investing.

    I have no argument w/Bernstein – I have a problem with you taking anything Kiyosaki says seriously. I do understand that deflation is worse than inflation and agree with what Bernstein says – of course it is an intelligent, learned thoughtful argument – completely the opposite of anything I’ve read from Kiyosaki.

    So far as the Gold Standard goes, I don’t feel like going into it here – but step back for a moment – what is the ‘value’ of gold? There is nothing intrinsic to it aside from industrial and consumer uses. Gold has a value that people decide on – just as they decide on the value of money. Pegging currencies to gold is counterproductive. In any case our currency is actually backed by all the assets in the united states.

  6. jim says:

    I take anything that anyone says with a grain of salt and I wanted to look at this book from an impartial view. I personally don’t like Kiyosaki, never liked his Rich Dad Poor Dad series, and I think that he picks positions that are unpopular for the sake of making a splash. What I liked about the book was that it activated the thinking juices in my brain, not that I agreed with every point he made in his book. I think taking a critical look at how you perceive and interact with the world is crucial to being educated.

    Value of anything is what people are willing to pay and that’s based on scarcity. 🙂 Gold has just been around the longest, that’s all. Salt was once more valuable than gold but that waned as salt become easier to find and at least you could eat it (can’t eat gold, shots of Goldschlager don’t count).

    I honestly don’t understand why people “hate” anyone in the public eye, be it Kiyosaki or Orman or Trump or whomever, it seems like a lot of emotional investment in someone you’ve never met. That’s not meant to discount your feelings (or anyone who feels the same), it’s just that if I really didn’t like Kiyosaki then I probably would’ve skipped this article on my blog.

  7. traore says:

    The purpose and mission of Robert Kiyosaki is aimed to help people achieve economic success and stability. Robert Kiyosaki has a certain style in motivating, and his attitude towards money is defiant and pro-active. These values have found its way into his many books of the Rich Dad, Poor Dad series, and in their deliverance has helped many people understand how to make money work for them.

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