Recently I've been reading two different books (okay, actually reading one, while listening to the other on cd). The first book, "Rich Dad, Poor Dad," by Robert Kiyoski, is about personal wealth and finances. The second book is "The World is Flat," by Thomas Friedman, and is about the history of the world through the evolution of economics. I am not one who really ever thinks about money for very long, but I do like to think about the consequences of business of every day life. Reading these two mooks simultaneously has my mind going nonstop about the plight of the middle class, and those who want to rise above and gain more wealth. "Rich Dad" presents a formula for how to acquire wealth. "Flat" explains the rise and fall of various financial empires. This has been an interesting educational experience!
For many people "Rich Dad" is a ground breaking and fascinating book. Apparently to these people the concepts taught inside are completely out of the box thinking. For me, it is just plain old common sense. Buy assets, limit your liabilities, eliminate debt, and make your money make more money. While I am not necessarily learning anything new from this book, it does have me thinking more about the fact that I am not doing all of those things in my life. I don't have assets, but I don't have liabilities or debt either. So I keep thinking about how I can make my money work for me. But that is where I keep hitting the brick wall, and finding where the book is falling short [for me].
Where does the middle class come in? For many the promise that if they save money they can someday invest in assets is a realistic goal. But for many, particularly in urban areas, the Cost of Living increases more rapidly than income thereby cancelling out effective budget management and the promise of making savings work. It appears to me that the only answer is to increase income. I can't reduce my output anymore than I already have. And while my expenses are going up, my income is not. I see no choice but to get a second job, and that is just to survive, not to try and get ahead. And it isn't because I'm increasing my spending. It is because the world is getting more expensive. So just by surviving, I'm getting more and more behind.
"Rich Dad" suggests that the key to this is to increase assets and make your money work to make more money. I agree. But how is someone supposed to be able to do that when they can't reduce their spending anymore, and yet their costs are going up?
"The World is Flat" explains the impact various companies have had on the world, as well as the impact of different business practices. The one thing I have learned from both of these books is that business is a gamble, and businesses really need to invest in assets before expanding too rapidly (just like people). But I'm looking for more. I feel like there isn't a true understanding of the current middle class right now. Rich Dad explains well how to not be poor, and how to increase wealth. But I don't feel like it discusses those that are stuck in the middle adequately. We have a new middle class now. They are educated and hold good jobs. But because those good jobs are in expensive cities, they never really get ahead, which is what leads to 2 income families. The bottom line in both books is that before wealth was gained, you have to have money to make money. So how will those who are stuck firmly in the middle class suffering from a faster increase in the cost of living ever rise above?
Does anyone have a decent book they can recommend on this topic? I'd really be intrigued.
Monday, November 13, 2006
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