Rich Dad's Increase Your Financial IQ

Picture this: you're working harder than ever, earning more money than you did five years ago, yet somehow you feel further behind financially than before. Your savings account barely keeps pace with inflation, your retirement plan feels inadequate, and despite following conventional wisdom about budgeting and diversification, true wealth seems as elusive as ever. You're not alone in this frustration. Millions of hardworking individuals find themselves trapped in a cycle where earning more money doesn't translate to building lasting wealth.

The harsh reality is that money alone doesn't make you rich. We've all heard stories of lottery winners who go broke within years, or high-earning professionals who live paycheck to paycheck despite six-figure incomes. The missing piece isn't more money—it's financial intelligence. Financial intelligence is your ability to solve financial problems, and it's measured by your financial IQ. Unlike academic intelligence, which helps you get good grades, financial intelligence determines whether you keep the money you make, grow it effectively, and create lasting prosperity. The good news is that financial intelligence can be developed by anyone willing to learn and apply five fundamental financial skills that wealthy people have mastered.

Financial intelligence operates through five distinct but interconnected areas, much like the systems in your body that must work together to maintain health. When one system fails, the entire body suffers. Similarly, when one area of financial intelligence is weak, your entire financial life becomes vulnerable to problems and setbacks.

Consider Robert Kiyosaki's own father, a highly educated man who earned his doctorate degree and became superintendent of education for Hawaii. Despite his academic brilliance, he struggled financially his entire life because he never developed comprehensive financial intelligence. He could manage an educational budget for thousands of students, yet couldn't solve his own family's money problems. When he lost his job and invested his retirement savings in an ice cream franchise, he lost everything because he lacked the complete framework of financial intelligence needed for business success.

The five financial intelligences work like this: First, you must master making more money—not just earning wages, but creating multiple income streams. Second, you need to protect your money from financial predators like excessive taxes and bad investments. Third, you must budget your money to create surplus rather than just covering expenses. Fourth, you leverage your money through smart debt and investments to multiply returns. Finally, you continuously improve your financial information and education to make better decisions. Each intelligence reinforces the others, creating a powerful foundation for wealth building.

Understanding these five areas allows you to diagnose exactly where your financial problems originate and focus your energy on the right solutions. Instead of feeling overwhelmed by money challenges, you can systematically address each area and watch your financial IQ—and your wealth—grow steadily over time.

Making money and protecting money are two sides of the same coin, yet most people focus exclusively on earning while ignoring protection strategies. This approach is like filling a bucket with holes—no matter how fast you pour water in, it leaks out just as quickly through poor financial habits and predatory systems designed to separate you from your wealth.

Take the example of Kiyosaki's experience leaving his high-paying job as a ship's officer earning the equivalent of $140,000 today to join the Marine Corps at $2,400 per year. While others questioned his sanity, he understood that his future wealth depended not on immediate income but on developing skills that would create lasting financial intelligence. Later, when he left Xerox after becoming their top salesperson, he wasn't chasing a bigger paycheck—he was positioning himself to build assets that would generate money whether he worked or not.

The key to making more money lies in solving bigger problems for more people. Start by identifying what problems you already solve in your current work, then find ways to solve similar problems for a broader audience or in more efficient ways. This might mean developing a skill that's in high demand, creating systems that work without your constant presence, or building relationships with people who can help amplify your efforts. Simultaneously, you must protect your money by understanding how taxes, inflation, and financial institutions systematically transfer wealth from uninformed individuals to those who understand the rules.

Protection strategies include structuring your income to qualify for lower tax rates, using legal entities to shield assets, and investing in assets that maintain or grow their value during inflation. Remember, it's not how much you make that determines your wealth—it's how much you keep and how hard that money works for you once you have it.

Most people budget to survive, creating plans that barely cover their expenses while hoping for leftover money to save. Wealthy individuals budget differently—they budget for surplus by making wealth creation their first and most important expense. This fundamental shift in thinking transforms budgeting from a restrictive exercise into an empowering tool for building prosperity.

When Kiyosaki and his wife Kim were newlyweds struggling financially, they hired Betty the Bookkeeper with a radical instruction: take 30 percent of every dollar that came in and put it directly into their asset column before paying any other expenses. Betty was horrified, arguing they couldn't pay their bills this way. But this forced shortage created the pressure they needed to increase their income rather than simply manage their expenses. Every month when they came up short, they had to get creative about generating additional money rather than dipping into their wealth-building funds.

This pay-yourself-first strategy works because it creates artificial pressure that forces you to increase your financial intelligence and income. When you prioritize your asset column, you naturally find ways to earn more money, negotiate better deals, or create additional income streams. The key is treating your future wealth as your most important creditor—one who gets paid before anyone else. Start with whatever percentage you can handle, even if it's just three percent, and gradually increase it as your income grows.

Once you've created surplus, the next step is leveraging those assets intelligently. Leverage means using other people's money, time, or resources to amplify your results. This might mean using bank financing to purchase rental property where tenants pay your mortgage, or investing in businesses where employees and systems generate income while you focus on strategy. The goal is creating assets that produce cash flow and appreciate in value while requiring minimal ongoing effort from you.

Financial genius isn't an inborn trait—it's the result of coordinating all three parts of your brain to work in harmony toward wealth creation. Most people have internal conflicts where their logical mind knows what to do, their creative mind imagines possibilities, but their subconscious mind sabotages their efforts with fear and limiting beliefs developed during childhood and school years.

Kiyosaki discovered this principle while studying how different people learn and succeed. He noticed that traditional education primarily develops the left brain through reading, writing, and mathematical logic, while largely ignoring right-brain creativity and subconscious emotional intelligence. Meanwhile, the subconscious mind—the most powerful of the three—often runs programs that were installed during childhood experiences with money, authority, and success that directly contradict conscious financial goals.

Developing financial genius requires finding environments that engage all three parts of your brain simultaneously. This might mean joining investment clubs where you practice with play money before risking real funds, taking courses that combine theoretical knowledge with hands-on experience, or finding mentors who can guide you through real-world financial challenges. The key is moving beyond theoretical learning to practical application in supportive environments where mistakes become learning opportunities rather than catastrophes.

Start by identifying which part of your brain dominates your financial decisions. Are you overly analytical but lacking in creative solutions? Are you creative but poor at execution due to fear? Are you paralyzed by subconscious beliefs about money, risk, or your own capabilities? Once you understand your patterns, you can deliberately seek experiences and environments that strengthen your weaker areas and integrate all three aspects of your mental capacity for maximum financial effectiveness.

The most liberating truth about wealth creation is that it requires intelligence far more than money. Every day, young entrepreneurs with no capital build million-dollar companies using nothing but good information, creative thinking, and the intelligence to coordinate resources effectively. Meanwhile, lottery winners and inheritance recipients often lose everything because they received money without developing the intelligence to manage and multiply it.

Consider the story of the Vietnamese gold seller whom Kiyosaki encountered during his military service. This elderly woman, with no formal education and stained teeth from chewing betel nuts, possessed superior financial intelligence to young American pilots with military training and steady incomes. She understood global gold markets, local economic conditions, and the real value of currencies in ways that allowed her to prosper regardless of external circumstances. Her intelligence, not her initial resources, determined her success.

The fastest way to develop this kind of financial intelligence is through solving progressively larger financial problems. Start with your own money challenges, no matter how small they seem. Can you reduce expenses by ten percent without reducing your quality of life? Can you increase income by creating value for others? Can you invest small amounts in ways that teach you about markets and economic trends? Each problem you solve increases your financial IQ and prepares you to handle bigger opportunities and challenges.

Focus on developing your ability to recognize trends, understand market cycles, and identify when assets are undervalued relative to their income-producing potential. Study how successful investors think about risk, return, and time horizons. Most importantly, build relationships with people who have superior financial intelligence and learn from their thinking patterns and decision-making processes. Intelligence compounds faster than money, creating sustainable wealth that survives economic changes and market volatility.

Your financial future isn't determined by how much you earn, where you went to school, or what family you were born into—it's determined by your financial IQ and your willingness to develop it continuously throughout your life. As this book demonstrates, financial intelligence is a learnable skill set that anyone can master through dedicated study and practical application of five key principles.

The path forward is clear: start where you are, use what you have, and focus on developing your financial intelligence rather than just accumulating money. "Intelligence solves problems, and if you solve problems, you and your money problems become more intelligent. The larger the problem you can solve, the larger your income." This means every financial challenge you face is actually an opportunity to become smarter and wealthier, provided you approach it with the right mindset and tools.

Begin today by assessing which of the five financial intelligences needs the most development in your life, then commit to one specific action that will improve that area. Whether it's reading one financial book per month, joining an investment club, starting a small side business, or simply tracking your expenses more carefully, the key is consistent action guided by growing intelligence. Your future wealthy self is counting on the decisions and learning you commit to today.