Rich Dad's Increase Your Financial IQ
Get Smarter with Your Money
Book Edition Details
Summary
In a world where financial mastery often seems elusive, Robert Kiyosaki emerges as a beacon of clarity and empowerment with "Increase Your Financial IQ." This transformative guide shatters the myth of quick riches, instead laying out a roadmap to genuine wealth through five dynamic principles of financial intelligence. Kiyosaki doesn't just tell you how to grow your money; he shows you how to shield it, budget with precision, and make your assets work tirelessly for you. With his insightful guidance, he invites you to elevate your financial acumen, ensuring you're equipped to navigate the complex landscape of money management. Prepare to redefine your financial future and break free from the relentless grind of the Rat Race, armed with the knowledge to thrive.
Introduction
In today's rapidly changing economic landscape, millions of people work harder than ever yet find themselves falling further behind financially. The traditional advice of "work hard, save money, and invest in mutual funds" is no longer sufficient in our new economy. While schools teach us to read, write, and solve mathematical equations, they fail to provide the most crucial education of all: financial intelligence. The gap between the wealthy and everyone else continues to widen, not because the rich have more money to start with, but because they possess a different kind of intelligence altogether. This intelligence isn't measured by academic grades or professional achievements, but by the ability to solve money problems and make money work for you. The exciting truth is that financial intelligence can be developed by anyone willing to learn, regardless of their starting point or background. When you understand how money really works and develop your financial problem-solving abilities, you gain the power to transform not just your bank account, but your entire life.
The Five Financial IQs That Create Wealth
Financial intelligence consists of five distinct but interconnected capabilities that work together to create lasting wealth. Unlike academic intelligence, which focuses on memorizing information, financial intelligence is about solving real-world money problems that everyone faces. The first intelligence involves making more money through solving bigger problems for more people. The second focuses on protecting your money from the countless predators seeking to separate you from your wealth. The third intelligence centers on budgeting your money to create a surplus rather than living paycheck to paycheck. The fourth involves leveraging your money to achieve greater returns with less personal risk. The fifth intelligence encompasses improving your financial information and education to make better decisions. Consider Robert Kiyosaki's own journey from a struggling Marine Corps officer earning $200 per month to building multiple million-dollar businesses. After leaving the military, he deliberately chose a lower-paying job at Xerox over higher-paying positions as a ship's officer or airline pilot. This seemingly illogical decision was driven by his recognition that he lacked the sales skills necessary to become a successful entrepreneur. Despite earning only $720 per month in expensive Honolulu, he invested in developing his weakest financial intelligence. For two years, he struggled and nearly got fired multiple times because he couldn't sell. His colleagues who chose the higher-paying traditional jobs initially earned much more money. The transformation came when Kiyosaki pushed through his fear of rejection and developed his sales abilities. By his third year at Xerox, he had become the number one salesperson in the Honolulu office. More importantly, he had solved his fundamental problem of not being able to make money. This experience taught him that the process of solving problems, not the money itself, was what ultimately made people rich. When he left Xerox to start his first business, he carried with him not just sales skills, but the confidence that he could overcome any financial challenge. To develop your five financial intelligences, start by honestly assessing which area represents your biggest weakness. Focus on that single intelligence first, understanding that they all work together like systems in your body. Read books, attend seminars, find mentors, and most importantly, start practicing with small amounts of money. Remember that every successful person started as a beginner, and your current financial situation is simply feedback about your current level of financial intelligence, not a permanent condition.
Protect and Leverage Your Money Like the Rich
The wealthy understand that making money is only half the battle; protecting it from predators and leveraging it for maximum returns represents the true path to financial freedom. Financial predators come in many forms, from obvious threats like taxes and inflation to hidden dangers like poorly structured investments and excessive fees. The rich don't just earn more money; they structure their affairs so that a smaller percentage of their income flows to these predators while simultaneously using leverage to multiply their returns. Rich Dad taught young Robert about financial predators using the metaphor of farmers protecting their crops from "bunnies, birds, and bugs." The most dangerous predators, he explained, weren't always the obvious ones. Some of the biggest threats to your wealth come from people and institutions that appear to be helping you. Bureaucrats take your money through taxes, bankers profit from your deposits while lending out multiples of your savings at higher rates, and brokers earn commissions whether you win or lose. Even well-meaning family members can become financial predators through poor advice or emotional manipulation. Rich Dad's lesson was clear: you must actively protect your money because no one else will. The wealthy also understand leverage as a tool for amplification rather than risk. When Kiyosaki purchased a 300-unit apartment building for $17 million using only 20% down payment, he wasn't taking on dangerous debt. Instead, he was using the bank's money to control an asset that generated monthly income from 300 tenants. The rental income covered all expenses including the mortgage payment, while he received 100% of the tax benefits, appreciation, and cash flow despite putting up only 20% of the purchase price. This wasn't risky because he had control over the income through property management, unlike stock market investments where he would have no control over company performance. Begin protecting your wealth by understanding the difference between good debt and bad debt. Good debt puts money in your pocket and someone else pays it off, like rental property mortgages paid by tenants. Bad debt takes money from your pocket, like credit card purchases or car loans. Next, structure your investments to minimize taxes by focusing on assets that generate cash flow rather than capital gains, as cash flow is typically taxed at lower rates. Finally, only use leverage on investments where you have significant control over the outcome, and always ensure the investment generates enough income to service the debt payments.
Develop Your Financial Genius Through Smart Environments
Your environment shapes your thinking more powerfully than your willpower or good intentions. The wealthy deliberately place themselves in environments that support their financial growth, while average people unknowingly remain in environments that reinforce limiting beliefs about money. Developing your financial genius requires consciously choosing environments that challenge your current thinking and expose you to people operating at higher financial levels than your own. Traditional education fails most people not because they lack intelligence, but because schools primarily develop only one type of intelligence while ignoring others crucial for financial success. Robert discovered this truth when he struggled academically despite having strong spatial, kinesthetic, and intrapersonal intelligences. The academic environment favored linguistic and logical-mathematical learners, making him feel stupid despite having capabilities that would later make him wealthy. His breakthrough came when he found learning environments that engaged all parts of his brain simultaneously, particularly his subconscious mind which controls fear and confidence. The transformation accelerated when Kiyosaki began spending time with successful entrepreneurs and real estate investors rather than employees and academics. Through mirror neurons in his brain that automatically mimic observed behaviors, he began adopting the thought patterns and actions of wealthy people. This wasn't about pretending to be rich, but about programming his subconscious mind with new standards and expectations. Even when he was financially struggling, he maintained the standards of dress, dining, and association that matched where he wanted to be, not where he currently was. Create environments that support your financial growth by joining investment clubs, attending real estate seminars, or participating in entrepreneurship groups. Read books by people whose financial achievements you admire, and if possible, find ways to spend time around successful investors and business owners. Most importantly, be willing to feel uncomfortable in these new environments rather than retreating to familiar but limiting surroundings. Your current financial situation is a direct reflection of your current environment, so changing your results requires changing where and with whom you spend your time.
Summary
The path to financial freedom isn't found in working harder or following conventional wisdom, but in developing the five financial intelligences that wealthy people use to solve money problems and create lasting wealth. As Robert learned through years of study and application, "It is not real estate, stocks, mutual funds, businesses, or money that makes a person rich. It is information, knowledge, wisdom, and know-how, aka financial intelligence, that makes one wealthy." The most exciting aspect of this truth is that financial intelligence can be developed by anyone willing to learn, regardless of their starting point, background, or current financial situation. Begin today by choosing one of the five financial intelligences to focus on, find an environment that supports your learning in that area, and start taking small actions to solve the money problems in your life rather than avoiding them.
Related Books
Download PDF & EPUB
To save this Black List summary for later, download the free PDF and EPUB. You can print it out, or read offline at your convenience.
By Robert T. Kiyosaki
