In the increasingly complex modern world, the ability to navigate the financial landscape is one of the most essential life skills. Yet despite the paramount importance of money management principles, most education systems around the globe are failing to adequately prepare students with formal financial literacy training and to Raising Financially Intelligent Kids. This oversight puts individuals at a major disadvantage before they even enter adulthood and the “real world” of bills, jobs, investments, taxes and countless money matters.
One of the most influential and passionate voices calling for a transformative change has been Robert Kiyosaki, the entrepreneur, investor and personal finance educator who shot to fame with his book Rich Dad Poor Dad. Kiyosaki’s fundamental premise is that the traditional school system is focused on creating “employees” through academics like reading, writing and arithmetic – while neglecting to teach crucial “financial education” about how to generate wealth and achieve financial independence as entrepreneurs, investors and business owners.
This report will explore Kiyosaki’s arguments for overhauling education systems to incorporate comprehensive money management training, starting from an early age. We’ll examine his key principles, the potential benefits of financial education for both individuals and societies, and the strong case for making it a mandatory part of school curricula worldwide.
The “Rich Dad Poor Dad” Paradigm
The title of Kiyosaki’s seminal work refers to the two very different perspectives on money, work and wealth that he learned growing up. His own “poor dad” represented the mainstream path – getting a professional career and highly educated, but still struggling financially despite a high income. Conversely, his best friend’s father (the “rich dad”) followed a fundamentally different road to wealth through entrepreneurship, investment and building an empire of money-generating assets.
As Kiyosaki recounts, the rich dad imparted invaluable financial wisdom like:
“The poor and the middle class work for money. The rich have money work for them.”
This core idea – that generating passive income from assets like businesses and investment properties allows one to escape the constraining “rat race” of merely trading time for money – is central to Kiyosaki’s philosophies. He argues that the skills needed for this mindset should be learned from a young age, rather than simply training students for the “birth, school, work, retirement, death” cycle of conventional careers.
Other key principles from the rich dad included:
- An emphasis on financial literacy and entrepreneurial skills over purely academic training
- Using assets to acquire bigger assets and grow wealth exponentially
- Not focusing solely on a high income, but prioritizing building equity and cash flow
- Taking calculated financial risks to reap greater rewards
- Minimizing liabilities like excessive debt, materialism and high taxes
According to Kiyosaki, the poor and middle classes are “doingwhat they are taught to do” through their schooling – striving for secure jobs and steady paychecks to sustain a lifestyle of home ownership and monthly payments on things that depreciate and don’t generate income. The rich take a different path of seeking financial independence through developing assets, cash flow and keeping expenses low.
While authenticity of Kiyosaki’s rich dad figure has been scrutinized, his bold lessons sparked a vast personal finance following. His overarching message is that traditional education systems are severely lacking by failing to provide skills for generating wealth – instead keeping students trapped in an “employee” mindset that leads to a lifelong struggle of treading financial waters.
The Case for Financial Education from Youth
Based on Kiyosaki’s principles, the strongest case for incorporating money management comprehensively into standard school curricula can be summarized as follows:
- Preparing students for financial realities
Managing personal finances is a core life skill that impacts virtually every aspect of one’s future. Yet most schools still send students out into the “real world” shockingly underprepared for basics like budgeting, saving, debt, investing, taxes, retirement planning and more.
This lack of preparedness has contributed to alarming and widespread financial crises like burgeoning personal debt levels, Americans’ inability to cover even minor emergencies, generational cycles of poverty, and the looming retirement insecurity as masses enter their golden years lacking sufficient savings and investments.
Just as math, writing and other fundamentals are considered indispensable foundations, financial instruction should be viewed as equally vital knowledge for navigating adulthood. After over a decade of mandatory schooling, having zero background in this crucial domain sets many students up for major money struggles before they even begin their journey.
- Promoting financial independence
The traditional education model is geared towards turning students into good employees for conventional career paths, rather than entrepreneurs, investors and business owners. The latter requires a divergent type of financial intelligence – one that allows for wealth accumulation by making money work harder through ownership of income-generating assets.
Principles like building equity, tax strategization, cash flow assets and appreciating assets are seldom emphasized in school hallways. Yet, financial education on these fronts can equip young learners with a mindset of ultimately achieving financial independence and passive income – rather than being trapped eternally trading time for money at a job.
With the knowledge and tools to produce wealth for themselves proactively, future generations can break the cycles of living paycheck-to-paycheck and move towards greater financial freedom.
- Escaping poverty mindsets
For students hailing from lower-income households, one of the biggest transmission routes for generational poverty is a lack of education about wealth-building skills and shifting to an “abundant” money mindset. In these environments, financial survival basics may get shared, but seldom the wealth strategies that allow for escaping the struggles of scarcity.
Even from a young age, financial education can expose underprivileged youths to a vast breadth of possibilities beyond their circumstantial realities. It can spark the ambition to control their earnings, seek out asset building opportunities, embrace positive daily money habits, and apply entrepreneurial thinking to their skills and talents. In doing so, such training can transform the narrative on what’s possible and seed the financial confidence needed to elevate entire families out of subsistence living.
- Setting realistic money expectations
A key peril for those lacking financial literacy is the lure of unrealistic societal expectations – purchasing homes or cars beyond one’s means, falling victim to consumerist traps, or failing to properly calculate the cost of raising children for example.
Financial education can provide the numeracy skills to properly assess earnings, expenditures, rates of return and long-term implications. Young learners can develop context for major expenses, levels of debt that might be unwise, and how quickly small spending can compound into major financial challenges if not managed prudently.
With these capabilities, future generations can enter the workforce, partnerships and parenthood stages with their eyes wide open. Overspending and unrealistic assumptions have been the downfall for many – skills learned in school financial courses can prevent such pitfalls from derailing students’ fiscal standing before they’ve even truly begun their adult lives.
- Gaining investment comprehension
A 2019 study found that a mere 27% of Americans understand investment fundamentals like interest compounding and inflation impacts – while nearly two-thirds couldn’t accurately calculate returns in an investment scenario. No surprise then that many in society struggle with building wealth beyond basic savings, simply because they missed core investment education growing up.
Investment vehicles like the stock market, bonds, real estate, retirement accounts and other asset classes remain hazy domains of confusion for millions. What should have been an advantage of starting prudently investing from an early age gets squandered due to lack of knowledge.
Incorporating investment training into curricula can give students crucial headstarts on compound interest, asset appreciation, portfolio diversification, dollar cost averaging and other wealth-accumulation principles before they’ve even begun their careers. By normalizing habits like funding retirement accounts as young adults, they can reap exponential benefits over decades compared to those who delay due to investment illiteracy.
- Developing entrepreneurial spirit
Another oversight of traditional education models is the heavy lean towards shepherding students into conventional employment funnels, with entrepreneurship receiving scant attention or encouragement. Yet, notable billionaires from Kiyosaki to Richard Branson have credited giving schoolchildren practical training in launching businesses as pivotal experiences that shaped their paths.
Learning principles like marketing, operations, accounting, financing and revenue models in a low-risk environment can spark entrepreneurial thinking. It shows students how to monetize their skills and creates divergence from the pervasive “employee” mindset of simply trading time for money.
With business ownership and capital investment positioned as viable alternatives to “getting a job”, financial education can open eyes to paths like franchising, freelancing, incubators, startups and asset acquisition. This spirit can both propel economic growth and transform lives through avenues towards self-made prosperity.
- Tax and legal literacy
Given the profound impacts of taxation and financial regulations on wealth accumulation, it is shocking that the vast majority receive zero formal education on these topics. The knowledge deficit leaves many students woefully underprepared to capitalize on tax strategies used by the wealthy, shelter assets properly, file optimally and stay compliant
