I started reading the book Rich Dad Poor Dad out of curiosity. I wanted to know what the rich teach their kids about money that the poor and middle class do not. Reading the first few chapters has made me realized the kind of programming I was raised in. The author, Robert Kiyosaki, defined the “Rat Race” as a pattern of an average-educated, hard-working person. Parents tell their child to study hard, graduate college and get a good job. Child does exactly what they’re programmed to do – lands a safe, secure job and starts earning money. Credit cards start to arrive and shopping begins.
After a while, the child finds someone special and settles down. Now having two incomes, the young couple feels successful and decides to buy a house, a car, take vacations and have kids. Having huge expenses now, the couple starts to work harder, and seek promotions and raises. They get more education or specialized skills so they can earn more money and might even take another job. With an increase in income comes increases in taxes, as well as increase in expenditures since they now have more income to spend. They might even decide to buy a larger home, invest in mutual funds, and spend some more using their credit cards. Their kids are growing up fast and the need to save for college as well as retirement increases as well.
The happy, successful couple is now trapped in the Rat Race for the rest of their working days. They work for their company owners, the government paying taxes, and banks paying mortgage and credit card debts. Their kids grow up seeing how hard they work for money and how they spend their hard earned money. Then they advise their own children the same thing they were advised growing up: study hard, get good grades and find a high-paying and safe career. This process or cycle repeats into another hard-working generation.
I haven’t finished the book yet. But reading this has made me realized that I am in the Rat Race. I was an achiever in school, having excellent grades and all. I landed a very good job, settled down and increased my expenses — because I can afford to, or so I thought. Now I’m trapped with the rest of everyone in it. And now my kids are seeing the same pattern in us, and we are unconsciously teaching them the same thing.
But I guess learning about this is not all bad news. It is indeed an eye-opener for me but it doesn’t end there. Now that I am aware of it, instead of digging myself a deeper hole, I must now get myself (and my family) out of it. Learn more about building assets to cover my expenses and make sure that my expenses is always LESS than my assets are my next steps. And while we are in the subject of assets, I am also grateful to realize that I’ve also managed to build a few this year. Now I just need to get my act together and focus on building more.
Are you in the Rat Race? How did you manage to get out?