The Key to Financial Intelligence

The Key to Financial Intelligence by Robert Kiyosaki – Daily Reckoning

My rich dad said, “The average person is 95 percent eyes and only five mind when they invest. If you want to become a professional in the B and I quadrants (see below), you need to train your eyes to be only five percent and train your mind to be the other 95 percent.”

Every day trillions of dollars are moved around the planet electronically. There is more money being created and available today than ever before. The problem is that money is invisible. Today, the bulk of it is electronic. So, when people look for money with their eyes, they fail to see anything.

Most people struggle to live paycheck to paycheck, and yet $1.4 trillion flies around the world every day looking for someone who wants it. It’s looking for someone who knows how to take care of it, nurture it, and grow it.

If you know how to take care of money, money will flock to you and be thrown at you. People will beg you to take it. If you don’t know how to take care of money, money will stay away from you.

Learning to See Money

Rich dad was adamant that in order to see money, you had to have financial intelligence. His definition of financial intelligence was as follows: It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.

For rich dad, financial intelligence started with simple financial education and grew from there. He felt that education was important because you needed to train your brain to see money; it doesn’t come naturally.

Financial Literacy

The key to training your brain to see money is financial literacy, the ability to understand the words and number systems of capitalism. If you don’t understand the words or the numbers, you might as well be speaking a foreign language.

For rich dad, each quadrant in the CASHFLOW® Quadrant was a different country with a language of its own. Employees (E), Self-employed (S), Business (B), and Investors (I) all use different ways of looking at the world and even different words to describe those ways of looking at the world. In each quadrant, if you don’t understand the words, you won’t understand the numbers.

For example, if a medical doctor says, “Your systolic is 120 and your diastolic is 80,” is that good or bad? Is that all you need to know for your health? The answer is obviously a no, but it’s a start. It’s the same as asking, “My stock’s P/E is 12, and my apartment’s cap rate is 12. Is this all I need to know for my wealth?” Again, the answer is no, but it’s a start.

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