Am I a "Poor Dad"?

The other day I was giving my kids a mini-lecture about the importance of doing well in school. My basic reasoning went as follows:

• To earn a decent living these days, you need to get a good job.
• You get a good job by going to college.
• You go to college by doing well in school -- studying, doing your best every day, etc.
• If you don't apply yourself in school, you could miss out on college and end up with a much lower-paying job.

As I was saying this, the thought popped into my head: "Am I a 'poor dad' "?

Not a bad dad, but a "poor dad" as described in Robert Kiyosaki's book Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not! If you recall, he describes his "poor dad" as having a "go to school, get good grades, get a good job" mentality. Kiyosaki says this is actually the wrong mentality -- that if you really want to do well, you'll work for yourself (here's more info if you're interested.)

Ok, we'll set aside the fact than many people think Kiyosaki is a financial whack job for the moment. Does the "go to school and get a good job" mentality work? It did for me.

There's no doubt that, on average, if you go to college, you'll earn more than people who don't go. For me, a small $5,000 investment in college paid off very well. That said, not everyone needs to go to college to be successful. But for most, IMO, this is the first step towards wealth as it helps you earn a decent income. From there, it's just three simple steps to financial freedom.

So, to answer my own question, I don't think I'm a poor dad. But I'm interested in your thoughts on the importance of college and where it fits into getting wealthy these days.

Comments

[James]

What a great question! I like the life application to a popular book's philosophy.

I completely agree with you that school/college is important. I think there are more ways to get rich than those outlined in Rich Dad/Poor Dad. And I think Kiyosaki's definition of rich is very narrow. I would guess you give your kids a much broader, richer definition of "rich" than most in our culture.

IMO it is important to integrate the "outside the box" thinking Kiyosaki talks about with the college degree that 98% of parents want for their kids. It's a more balanced, stable life. Getting a good job and spending less than you earn is just as valid a path toward wealth as starting your own company or inventing a product. I would suggest it is a more sure-fire way toward being rich because you are in more direct control of the wealth acquisition.

[kb]

Everybody I went to college with at State U is doing great. We graduated in '02 and tuition/fees were under $5,000 a year.

Of my three roommates from college, one is a engineer, another is at an Ivy League school getting an MBA, and the other is an investment banker. I'm an actuary.

Everybody is close to making 100k or is already at six figures.

Going to college is still great advice. Saving and investing is important, with or without a degree!

[Pop]

I think going to college AND grad school is the way to get rich in this country- yes there are a few Kiyosakis and high school drop-outs who started their own scrap metal businesses and are now loaded, but practically every doctor, lawyer, business executive, dentist, etc. who have been taught about (and who practice) saving and investing are very, very well off by their 50s.

[Kyle]

I think Kiyosaki has it all wrong here. Sure, the RICHEST individuals tend to work for themselves and own businesses, but Kiyosaki assumes everybody wants to be THAT rich. I personally don't. I know I'll never have $20 million because I'll stop when I have $10 million. Many people just don't want to work that hard or don't want to take that risk, and there's nothing wrong with that. Besides, it's far easier to succeed in business if you've worked in that industry before for someone else and learned the ropes on somebody else's time.

[Rod Ferguson]

I can chime in on this one. I do not have a bachelors degree; I went through college for a couple of years but had to drop out to get a job "temporarily" to help with home finances, and that "temporarily" has extended to about 20 years. My wife, on the other hand, has a BA, MDiv and almost a PhD. From a purely monetary standpoint, even with her PhD, she'll have little to no chance of making as much as I do a year (over $100k) due to her field.

Having said that, I do not want to give the impression that any HS graduate can go out and make six figures out the gate; most of those people are the ones asking you if you'd like fries with that or calling you during dinner asking if you'd like to switch long distance plans. While I did drop out and start working, I never stopped learning. I continued my education on my own, picking subjects and researching them as deeply as I could. I made it a point to not stick within my profession; I would dig into to whatever I fancied at the time. Philosophy, quantum mechanics, lupines, finance, history, psychology - you name it (you should see our library - close to two hundred linear feet of books.) I chose a profession that did not require a degree if you had the abilities and knowledge and I was lucky enough to do it in a time that the profession was grossly understaffed.

However (and I'm one of those who thinks Kiyosaki is nuts), he does allude to what I'm talking about. Drive. Motivation. Self-determination. If you have these things, are willing to make sacrifices and stick to your plan come-what-may.. no, you don't need a degree to succeed. It does make it easier and there are benefits to a structured learning regimen. On the other hand, it can sometimes lull you into a false sense of security; what they teach in college isn't really deep - it's broad. To walk out thinking you have depth is a big mistake, and it's a common mistake amongst recent grads I have met.

In short, no you don't need a degree. But if you don't get one, be prepared to to "do it yourself" if you want to succeed.

[Pop]

Rod,
I mean no offense at all, but it's taken you 20 years to make six figures, correct? That's a starting salary for a 24 year old newbie lawyer or MBA grad. Doctors and dentists take a little longer, but any of those people who are good at what they do are making 250k+ by their early 30s.

Yes, if someone (such as your wife) chooses to get degrees that don't have a lot of value in the workplace, then a high school grad can probably out-earn them. But for a true no-brainer way to get rich, it's the right grad school degree.

[CB]

The real advantage of college is the much greater possibility of working a job you'll enjoy. You could work in a factory right out of high school and make more than you would until about age 30 after going to college, but it's likely not work you'll enjoy.

[Rod Ferguson]

Pop - yes, it has taken twenty years but I was making north of 80k 10 years ago, which is over 100k in today's dollars. I've had the purchasing power of about 100k for just under 15 years, even if the dollar figure broke six figures recently.

I'd like to know what companies are giving out $250k+ regularly to folks with around 10 years of experience? Even if you factor in matching 401(k), options, pensions, etc, that's a pretty rare thing from what I've seen - unless you are taking about folks working in downtown Manhattan. Where I live, a highly compensated professional (non-executive) hangs out in the $100-150k range.

[Bob]

Well, wealth and education are still much related to each other, the richest out there are (for the most part) the most educated. Unemployment is rising for the non-educated, even though the US is going through some harsh economic times jobs are still plenty available if you hold a bachelor’s degree, and even better if you fit the 5% of Americans that hold a Master’s degree. Therefore, you couldn’t have given your kids a better advice, I am sure they would like to finish college and start building a solid career rather than struggle with low-paying, low-skilled jobs out there available for the general population (the other 73% non-educated ones)...

[Jon]

There's nothing wrong with encouraging your children to do well in school, with the goal of going to college and doing well there, too. It isn't necessarily all about the starting salary when you graduate. The skills you learn by giving high school and college your best effort will translate into life skills as well, which will help you to be successful in a career or as a business owner. Another thing which college can provide, especially if you're involved in positive campus activities, is a large network of college graduates in diverse fields that you can tap later in life for knowledge, sales leads, job opportunities, political appointments, etc.
Depending on one's ambitions, having a rewarding job can be enough to be "rich." If that's not enough, then you can always get a side business going while enjoying the security and benefits of having a day job, and eventually become as successful as your determination and dreams will allow.

[MonkeyMonk]

I think the ultimate answer is somewhere in between the two schools of thought.

I personally prefer the "poor dad" approach because I think everyone benefits from laying the groundwork of a solid education and good job. Once you attain this level you can start applying some of Kiyosaki's principles. That way, if things don't pan out for you (as I suspect they don't pan out for 99% of Kiyosaki's followers), you're not thoroughly hosed.

[Todd]

I think college is a great move for 95% of all people. Even the other 5% would benefit from it. You have your whole life to work. Even if you want to start a business, go get the degree first. Most businesses fail. Degree gives you leverage if you need or want a job. Think of it like financial insurance.

I think Kiyosaki is mostly fluff with a few good points. Having said that, many people think the only way they can earn money is with a job. If you remove Kiyosaki's fluff (which helps him sell books) he makes a good point that you don't have to think that way.

[pink panther]

Before school, I was in rural poverty with no particular future; after school, I have been a professional for a decade and a half. Worked for me! Pulled me and my family out of serious poverty. Back then, the amount of money I am making would have been beyond my wildest dreams, but my dreams back then as a kid did not account for inflation!

[Richard]

College is going to be the default plan for my kids (they're not even in Kindergarten yet).

I'll encourage them to start their own businesses if they're interested and/or have good ideas. I'll encourage them to go do something else (acting? art? baseball?) if they show strong abilities in some other area.

But most entrepreneurs fail multiple times and most people can't be a pro ball player. College is a great default course and a great fall back for between those entrepreneurial ventures

[My Dollar Plan]

I'm not a Kiyosaki fan, but he does give people something to think about. There are many different paths to wealth.

I think you are a great dad for encouraging college. I plan to encourage both college and entrepreneurship for my kids. Like Todd said, most businesses fail.

Having a degree can only help. In addition, I think the college "experience" has some merit as far as learning to be an adult an finding yourself.

[Matt]

The more interesting question: Was Kiyosaki's pre-book success really the result of a successful wife? Kiyosaki didn't get rich until after SHE became successful. He met her while he was broke - I think the story goes that she was broke too. Then SHE became rich and he followed some years later. Are you smelling something fishy here? Somehow, he became successful all by himself a few years after she did and this apparently has nothing to do with her influence. This was casually divulged during the introduction to his series on PBS, of course, he didn't make that much about the chronology of events but isn't it curious?

It's just a hunch but I think Kiyosaki's wife is the real brains behind his financial success BEFORE the book sales and the daddy tales started being spun.

If I was a hack writer and then I met my wife and she produced an incredible novel and then I produced an incredible one a few years later - would you go to my writing seminar (if you knew this)?

[WiseMoneyMatters]

I would approach teaching children a little differently than the "do good in school" approach. I'm actually almost finished with an article for my job about how teaching kids hard work ethics is more important than telling them to do good in school or go to college. If you teach them to work hard, doing good in school should come naturally as a part of that mentality. If they want a job in a field that requires a degree, going to college will be a natural progression of that. If they want to skip college and start a business from their basement to become the next Bill Gates, that's also a result of hard work.

I would focus on work ethic and explain that getting good grades in school is a result of a good work ethic rather than purely focusing on the grades themselves. That's my 2 cents.

[Kim]

A college degree will make a person a more successful entrepreneur 95% of the time.

No matter what you do in life, a college education will only enhance it. And the people you meet in college are often the ones who become important business contacts later in life.

[rebel]

First, let me start by saying I did not finish my degree. I think going to college is a great idea. I definitely thik it should be encouraged. A degree makes it much easier to get your foot in the door. But you can't stop with just saying they should get a degree. You have to teach them everything else. Be responsible, plan ahead, and take chances. I know plenty of people out there with a degree who make around 40k and have been out of school for 10 years. teach them to use what they have, whether it is a trade skill or a degree, as leverage. A degree helps, but it alone will not get you 'rich'.

[Kevin]

Instead of saying "good job" why not say "good skills". Like my situation, I could go open my own CPA firm if I wanted to, but I choose to work for someone else as an employee with the outlook that if I work hard I may become an owner of the firm one day (and in fact have already discussed this with the other partners).

You don't HAVE to work for somebody, but that is what most people do. If you have good skills it is that much easier to go it on your own....even as something that doesn't require a college degree like electrician, plumber, mechanic, etc.

[SAHM]

I have a BA. My dad likes to say that I've never used it. I'm a stay at home mom, and that is what I plan to do until my husband retires (then we'll just travel). I would not trade my degree or experiences for anything. First, I was able to get a much better job right out of college than I would have without a degree. I have used so many of the things I learned in my degree specific classes (advertising and public relations) in many things I do on the side (I have a small at home business) and in volunteer work.

I had wanted to be a pediatrician from the time I could say the word. That was always my ambition, so college was a no-brainer. As I got older, I began to really look at the sacrifices required of a doctor, especially a good doctor. After my second year of college (and several top level math & science classes), I decided that having a family was more important in the long run. I still don't regret taking any of those upper level classes. They taught me how to think, how to analyze, and how even one small decision could affect the whole outcome.

I will encourage my kids to attend college, even my daughter who says she just wants to be a Mommy. You never know where life will take you. Just having a diploma shows you have the guts to finish something that is not always easy.

On the contrast, I have a brother that hated school and didn't go to college. Now at 30, he is trying to go back. He tried to start a couple of businesses, but they have not succeeded. He realizes that because he does not have a degree, it has held him back.

[Kevin]

Pop - but do those lawyers or MBA grads have loans to pay off? Just cause they're starting off making $100k a year (which I doubt anyway except maybe NY or other major cities) doesn't mean they're keeping $100k.

[LC]

I agree that going to college and "getting a good job" is the best way to be successful later in life. All my friends who did are making over $75k and my friends who did not are making $11/hr. Of course, it's not the only way, but Kiyosaki's claim is the exception rather than the rule. Even if you start your own business, you still have to work hard and apply yourself, so doing well in elementary/high school will serve you well and are good habits to develop whether college is in your plans or not.

the go to school, get good grade, good job is a fairly low risk way to open more doors and which generally leads to better jobs and making more. Kiyosaki's is correct that getting "rich" usually requires you working for yourself, but that usually comes with taking quite bit of risk. Whether you decide on taking this risk or not, the get a good job path still seems like good advice as a way to mitigate risk. I went to school, got good grades, make good money, and now am using some of that money for my wife to start a business. The risk is very low (we don't need a business loan and can live on my salary) but the rewards can be just as great.

[Cyllya]

I think college is important, because it opens a lot of doors and it's nice to have lots of doors open, especially if you're not going to be entering any of them for a few years and aren't going to know what you want by then. Even if you aren't planning to go to college, don't burn the bridges you need to go.

But
* Don't scare your kids into thinking their life will be hard and/or amount to nothing because they didn't go to college. A lot of kids graduate high school, don't yet know what they want with their future, and get themselves tens of thousands of dollars in debt striving for a diploma that doesn't help their eventual life goals just because mommy, daddy, and the school counselor said they'd be losers if they didn't.
* I'd say your train of logic derails a bit at the third bullet point: "You go to college by doing well in [pre-college] school -- studying, doing your best every day, etc." Having a good high school GPA apparently(?) helps with scholarships and whatnot and maybe admissions to certain colleges, but MOST (not all) of the actual education you get from it is pretty useless. I wouldn't encourage people to stress out about it too much.

Kevin:

To answer your question, the legal profession has many different pockets. The top pocket is at starting salary of 160K across all the big markets (NYC, Chi, DC, Boston, LA, San Fran, etc.), with a layer right below that that is still easily 125K-145K as starting salary. Even secondary markets like Detroit, their top firms are now 100K starting. Of course, that's a small slice of the profession. (You better have gone to either a top five school or a top twenty-five and graduated in the very upper part of your class) to land those jobs. And you need to be willing to pay the price in terms of what they will demand for the money. But that's the reality of that end of the profession these days. We will see how long it lasts, especially with the wall street shakeup.

So, with the right approach to savings, even someone who financed law school all with loans, if they can land one of those jobs and do well there, they will be in good shape. It's just that everyone who goes to law school thinks they will end up there when only a small group actually does.

[Jim]

I think that teaching your kids to do well in school, go to college and seek a good job is a good thing. Thats the best strategy for the vast majority of us. If they become entrepreneurs during their life then having a good eduction certainly won't hurt.

Jim

[Steve]

I am not sure why it has to be one or the other.What kind of parent would discourage education? Even if it is not formal, education is the key to being "rich".I make great money at my job, but without financial education it wouldn't matter one bit. Finance has nothing to do with my career.However the time I have put in educating myself about savings, investing,debt, etc has paid off very well.In regards to formal education that more depends on someones desired line of work. If i wanted to become a doctor or Lawyer I would have to go to school.There is no way around that.Kiyosaki is a moron, if you tell your kids to start their own business , what kind of business are they going to start without having some sort of "education" or experience in that field

[broke college grad]

I think doing well in school is highly overrated. I had a 3.9 GPA and I would have been vastly better off today if I had never gone to college.

[fathersez]

I am steeling myself for this very same talk with the 3 younger kids later this year.

True, getting a job may not be the only option to get comfortable, but with kids, I think this is the place to start.

I think, you have summarized the message very well. I'll use it.

Thanks

[Lisa]

I am a nontraditional student, having returned to finish my degree last summer. Your excellent and timely advice to your son will save him from what I didn't know 30 years ago. Now in school, I know for a fact I will make more than previously. But that was then, and this is now. The rules have changed dramatically and had I not made this decision, my income would not have kept up with inflation. That, for me, translates to lost income for retirement savings. I'm majoring in finance not only because I love it, but I vowed to educate myself about money. Plus, with new updated skills, I will be more marketable. After I graduate, I plan to keep investing monthly, and this time I'll know what I'm doing. So, your advice is to be commended. The reality is, there is a lot of competition getting into college now, so good grades are a must. Technology is advancing at break-neck speed, so one needs to be on the cutting edge education-wise. And with the baby boomers retiring at a rapid rate, a bright, young man fresh out of college would be most attractive to employers. As you know, the wage disparity between the educated and uneducated is ever-widening, so it's always good to have that degree. And who's to say the college experience won't widen his horizons to start his own venture down the road? I agree wholeheartedly with your advice, and would add, if he has any entrepreneurial interest, many colleges now teach that too. The college education will definitely enhance either way. And as for me, thank goodness I graduate in late 2010 so the finance industry has time to settle down. What a week! lol

[Pop]

"Of course, that's a small slice of the profession. (You better have gone to either a top five school or a top twenty-five and graduated in the very upper part of your class) to land those jobs."

I guess I should have qualified my statement by saying I assume the person went to a good school and is willing to work in a city (if I was only accepted to a tier III school, I think that would be a hint to try something different). Yes there are lawyers who make 50K, but by and large they went to horrible law schools and work for a nonprofit.

[Pop]

"I think doing well in school is highly overrated. I had a 3.9 GPA and I would have been vastly better off today if I had never gone to college."

What was your major? I am going to guess it wasn't in a science or economics.

[Meg]

I would make sure to instill both mindsets. Make sure they know they have options in life other than slaving away to the Corporate Man for 60 years, but also stress the value of education no matter what.

Whether they want to work for themselves one day or try to shoot up the corporate ladder, they're going to be best off with a good college education (which can include classes on entrepreneurship and business and real estate), and they're going to be in the best place to get into a good college only if they make good grades now.

[Sarah]

To fill in a little further, lawyers in their first full year at the firms anonymous is describing made $205,000 last year when you include the bonus.

It will almost certainly be less this year.

[Kimberly]

If your only real goal in life is to accumulate as much money as you possibly can, then sure, perhaps the "do well in school and get a good job" approach isn't the most optimal one. Fortunately, people with any sense see beyond this, and have developed specific career goals. Most professions with a philanthropic bent or greater purpose to them (teaching, research, medicine, etc.) specifically require a degree. By entering these fields, you may not maximize your earning potential, but if you pursue a career that makes a positive impact on the world and that you genuinely love, your "poor dad" approach will make you far wealthier than Kiyosaki ever will be.