Financial philosophy

Optimistic financial philosophy from a self-made man

I've never been especially keen on self-improvement literature. I found it fit for people with problems and I liked to think I'd always been beyond it. Call it cheekiness or narrow-mindedness, but my natural instinct was to shrug off all sort of friendly advice. It was enough to develop a sense of independence and being self-driven, which are good qualities by any standards, but I suspect now that this insistence on going my way has slowed my growth in a range of areas. It's a little like with education - you can get to understand things by your own discovery, but it takes up lots of time and leads you astray time and time again. On the other hand, you can go to school and absorb this knowledge in a condensed form within a much shorter time period. With too many life choices, I resisted turning on the acceleration that listening to others usually gives you.

In fact, I clearly remember thinking that self-help books, apart from being for the weak, are just an elegantly packaged way for their authors to make money off of their ideas. And it really did bother me, as if I was better off ignoring their insights (and losing a possible edge they can give you) rather than letting them make a living off of well-earned royalties. There's something oddly unconstructive about this attitude to people, ideas and life and I've been fighting it with a passion in the last couple of years.

Of course, there's no point being uncritical about self-improvement titles. Anyone who believes they can turn their miserable life around by merely imbibing somebody's words of wisdom is, in the vast majority of cases, plainly wrong. Many things are easier said than done. Nowhere is it truer than in self-improvement industry. You really need to see meaning behind what self-proclaimed gurus preach, separate wheat from chaff and see your own life in a wider perspective. Learning from your own mistakes during practical application is inevitable and takes polished and elegant ideas to the level of real experience. It allows you to transcend the book's message and take it in whatever direction is right and good for you.

So what attracted me to books such as Rich Dad Poor Dad by Robert T. Kiyosaki? I started to stagnate and it became a source of frustration. My intention has never been blowing up my current, rewarding and meaningful life and turning a completely new page; rather, I felt like I needed motivation to evolve. Kiyosaki's guide is about money, but I've become more open than ever to coaching in many other areas. In fact, this idea of seeking improvement that can make me a better person, not necessarily a millionaire, a famous person or whatever ambitious goals people might have, but somebody who's headed in the right direction, who keeps moving on, who resists satiation. What I also appreciate about self-improvement books is their adherence to a positive outlook on life and a belief that positive change is attainable. Not without effort, not without all sorts of investments, but attainable. There's never too much can-do thinking, especially if it's definitely not part of your national cultural baggage.

I like to think of Kiyosaki's small book (or should I say a booklet?) as presenting a particular philosophy of personal finances. By which I mean that it's, to a degree, a philosophical treatise. It offers a coherent vision of taking control over money in your life and giving it a place it deserves. Without deluding readers with promises of foolproof cash-generating schemes and other magic wand solutions, it places emphasis on the role of values and common sense. In places, especially when Kiyosaki was critiquing excess consumption and living beyond your means as sources of financial trouble faced by so many, I couldn't shake the feeling I was reading my own thoughts. Even though I don't necessarily agree that great minds think alike, it gave me a sense of satisfaction that I'd reached the same conclusions as Kiyosaki.

What values are highlighted in Rich Dad Poor Dad? I would start with individual responsibility for your financial condition, which is something I subscribe to vehemently. Too many people rely all their lives on outside forces for income, relinquishing control and laying foundations for never-ending frustration. First, they rely on parents, then on employers and finally on the government. This gives them somebody to blame for their money woes, which is some consolation, but unless they take things in their own hands, not much is going to change. In many ways, Rich Dad Poor Dad is encouragement to pursue a life of an entrepreneur.

Another value Kiyosaki seems to be propagating in his book is restraint. I understand it in two ways. First, he's unabashedly critical of spending more than you earn or even spending a disproportionate amount of your regular income. Delaying gratification is not only good for your bank balance, but also for your motivation. Waiting to be able to afford whatever it is that you crave gives you a strong psychological boost to do better, as opposed to taking out a loan or paying up front otherwise and simply having it. Restraint is also necessary to build your assets. Amassing capital, property or other money-generating investments is Kiyosaki's single most important piece of advice. What made Rich Dad Poor Dad so believable for me was the fact that he stopped short of pointing out which instruments or programs guarantee success. Instead, he left the readers with a general approach and plenty of space in between to fill out with their own investment ideas, which tend to change depending on location, market conditions and many other factors. This is what you'd call giving somebody a fishing rod.

The last strong message I picked up while reading Rich Dad Poor Dad, one that is sure to give me the most trouble in real life, is about the importance of risk tolerance. I'm OK claiming responsibility for myself, I'm OK saving and delaying gratification, I'm OK investing long-term in relatively low-risk assets (including stocks), but there are lines I'd be reluctant to cross for fear of capital loss. I'm also quite short on confidence that I'm capable of setting up and executing a business idea of considerable complexity. This translates in aversion to entrepreneurial risk. I'm simply too lazy, comfort-loving and individualistic to believe I can build a successful, team-based company. But I'm determined to change this.

Of course, the more you apply yourself to putting Kiyosaki's ideas into action, the more likely you are to get some interesting effect. For example, you might be able to retire at the age of 35 or 40 with a nest egg large enough to let you and your family enjoy complete leisure thanks to interest payouts. For many, it's an inspiring vision. But, admittedly, there other other things worth your attention and commitment than money and your financial security. It's a dilemma everybody needs to solve for themselves.