I didn’t know why I haven’t read Robert Kiyosaki’s Rich Dad Poor Dad book until recently. I wish I had read this popular book on money and personal finance earlier so that I could work my money work even harder for me. If I had known earlier, I will definitely make better decisions when it comes to my personal finances and probably achieve financial freedom way earlier.
Well, I guess it’s better late than never. I could not help but to agree to everything Robert mentions about money. That book was published in 1997 and 24 years later, his financial principles still holds true, against the test of time. So if you have not read his book yet, I urge you to read it as soon as you can; especially if you have just entered the workforce or graduated from college.
And if you are a parent, it would be exceptionally useful if you start introducing the concept of money to your children and encourage them to talk about it over the dinner table. Money should not be deemed as a sensitive topic or brushed off as unimportant because money plays a role in lives. However, we should not let money control us or dictate the way we live.
Below are 5 key principles about money which sometimes I wish my parents would have taught me as a child. Now, it’s my turn and yours, to teach our future generation about money.
1. Instead of telling yourself that you can’t afford it, ask ‘how can I afford it’?
I come from a middle-class family and though we were never poor, my mum taught me how to save and be thrifty. I guess her good habits of saving money and being thrifty has rubbed on me. And often times, she would looked for the cheapest option and complained how things are really expensive these days. I grew up learning how to tell myself that I could not afford this and that. That stops me from spending unnecessarily but it also forces me to look for cheaper alternatives which end up taking a lot of time.
Rather than telling myself that I can’t afford it, I should be asking myself ‘how can I afford it?’. Housing in Singapore is too expensive so how can I afford it or what can I do to earn more money? When you turn it into a question, it makes your brain work and makes you think harder. It aligns with growth mindset where learning and questioning doesn’t stops. For a children, this can be really powerful and impactful in their lives if they can start asking questions.
2. Tell your children to study hard to that they can find a good company to buy or invest in.
There’s this hearsay that we should study hard so that we can get better jobs in future. Growing up, I thought so too and wholly believe that I should work hard and achieve good grades in order to get a high-paying professional job in the future.
Now that I’ve learnt more about personal finance and investing, it makes so much more sense to work hard and equipped yourself with skills and knowledge so that you can start a business or invest in a company. Schools today don’t teach our children that when they should.
3. The reason why you must be rich is because you have kids.
In Singapore, many quipped that having kids can be really expensive. The expenses required to support a child is high. Hardly anyone would say that they are rich because they have kids. But if you think about it, kids are our assets. They not only bring joy to our lives but they also open up opportunities for you in life. Remember, they are also part of the family unit and who says children can’t earn money?
I have a friend who says that children are ‘cash cows’. Groom them to become influencers by posting their cute photos and videos online to garner a large following. Though I am not too sure if it is even ethical by doing so, I believe that your kids are priceless.
4. Encourage talks about money and business with your family.
I do not talk much about money or businesses with my family as I think my parents themselves aren’t into investing or finances. But I do know that for some families, money can be a really sensitive topic and children should not meddle with financial affairs.
Looking back, I wish I had more open discussions about money with my family. And there’s nothing wrong having an interest in money. Having an interest in money does not equates to you being obsessed with money.
People often say that money is not important but how is money unimportant when you need it to survive in this dog-eat-dog world? I believe that money is important but it is not the most important thing in our lives. These are the sort of topics about money that we should be talking about with our kids.
5. Learn how to manage risks instead of avoiding them completely.
Not all risks are dangerous. In fact, taking responsible risks or managing risks is what makes us human. If Christopher Columbus hadn’t taken the risk to sail around the world, we wouldn’t have known that the earth is round.
Taking risks is a form of challenge we set for ourselves and if we fail, we should learn how to manage the outcomes and persist. There are several strategies to manage financial risks. Dollar-cost averaging is one.
My grandparents used to stash their money under the pillow or bed instead of depositing into the bank because they fear that if the banks collapsed, their hard-earned money would be gone. The bank interest rate back in the 70s was about 7%. Imagine if they have deposit in the bank, they would have even more savings for their retirement.
I personally wish that I have invested my hard-earned cash earlier but my parents would dissuade me from doing so – all because of the past negative experiences with stock investments. They made a huge loss during the 1997 financial crisis and since then, they were afraid of investing in shares. But if they learnt how to manage the risk and understand that the crisis is temporary, they would have earn back their losses when the economy rebounded.
6. Total financial self-reliance is much better than relying on others.
My mum would often talk about how generous our government is in providing financial aids, subsidies and rebates. Yes, we have a good government who care for its people but we should not rely entirely on the government or the companies we are working for. The system can change over time with new leaders and anything could happen. During the pandemic, many were laid off as their companies went in debt.
I believe that COVID-19 has taught us a lot about the importance of being self-reliance. Many have started their own businesses during this period of time and invest in shares, funds and cryptocurrencies in hopes of gaining financial freedom. Achieving financial self-reliance is not impossible. In fact, it has been made so much easier to do so with technological advancements.
7. Tell yourself that you will be rich.
This statement has some Biblical truth to it. God blesses us in all areas of lives, even our finances. What we say or do have a profound effect on us. If we keep telling ourselves that we’ll never be rich, then you wouldn’t be rich. In church, I was taught that our Father in heaven provides us in abundance so that we’ll never feel a lack. There’s absolutely nothing wrong in telling yourself that you will be rich one day and you will be able to bless others with more. Start claiming this blessing over your life today and believe that God will be your saviour and provider.
Are you excited to share these truths with your children, family, friends or colleagues? Let me know what are your thoughts about these financial principles. Do they concur with you?