Lesson 5: Keep Learning All the Time

Developing financial intelligence pays off huge returns. If your mind is trained well, you can create enormous wealth in what in the grand scope of things is an instant.

In contrast, an untrained mind can also create poverty that lasts lifetimes.

Robert Kiyosaki believes financial intelligence is made up of four broad areas of expertise:

• Accounting: financial literacy. Read and understand financial statements.
• Investing: strategies to use money to make more money. The creative piece.
• Understanding markets: understand supply and demand. Can you create something that the market wants? Does an investment make sense under current market conditions?
• Law: use tax advantages and legal protection to build wealth more quickly and reduce risk.

Taken together, financial intelligence allows you to construct creative ways to solve financial problems, vet the ones that are more likely to work, then have the technical ability to execute them.

Consider that spending money on financial intelligence is like buying yourself life - you may save on years of working because of making the right decisions.

Keep Learning, and Learn Quickly

Great opportunities arise in a changing world. (Shortform note: Put technically, markets are less efficient and less at equilibrium when things rapidly change, like through new technology.)

300 years ago, land was the basis of wealth. Then factories and industry became the new basis for wealth. Today, it’s information. And by its nature, information changes more rapidly than land or manufacturing. So it’s even more important to keep learning and adapting, quickly, as it’s ever been.

(Quote from Charlie Munger: “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero. You’d be amazed at how much Warren [Buffett] reads.”)

This doesn’t have to be difficult or intense. Robert Kiyosaki mentions jogging through his neighborhood to spot which houses were listed for sale for longer than others, and making low-ball offers for these houses.

The more you learn and the more experience you get, the more money you make, which gives you more chances to learn even further. The faster you can iterate your knowledge, the faster the returns compound.

Learn Broadly

Many people with great talent in their trade aren’t rich. They’re specialists and proud of it.

Often, they just need to learn and master one more skill to dramatically boost their income.

• Analogy: How many people can make a better hamburger than McDonald’s? Most people would think so. Then why does McDonald’s make more money than they do? Because McDonald’s has mastered a business system, while most people focus on building a better hamburger.

Notable examples of underappreciated skills include sales, marketing, communication, negotiating, investing, people management, and financial intelligence.

• Consider taking a pay cut to work at a firm where you’ll gain a critical orthogonal skill - like marketing at an ad agency, or people leadership in the military.
• Rich Dad invited his son and the author to work in a broad set of roles at his companies (bus boy, construction worker, accounting) and participate in meetings with bankers, lawyers, and accountants.

Look ahead at what skills you want to acquire before choosing a profession and specializing in the rat race.

Side note: if you do specialize instead of generalize, make sure you have a union. If your specialist skills are of limited value outside the industry, like teachers or airline pilots, you’ll have nowhere to work if you get pushed out of the industry.