Graduation Means ‘Welcome To The Rat Race!’

February 21st, 2007 Posted in Financial Literacy, General Finance

I got this from a pal, Derrick.

I totally agreed that graduation means entering into the Rat Race, as described by Robert Kiyosaki.  And 1.3 millions new “rats running the same Rat Race” each year in the US alone, with mostly without the adequate financial knowledge! 

It is alarming and worrying and no wonder there are many initiatives, awareness programs and acknowledgements from various parties ranging from government agencies, educational agencies, financial agencies to communities, mushroomed to stress the importance of financial education and try to tackle the issue at the root.

I just wonder how much influence Robert Kiyosaki’s “Rich Dad and Poor Dad” and his other works might have on the rising awareness of the importance of financial education.  Perhaps a lot?

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For Millions of People…
Graduation Means ‘Welcome To The Rat Race!’

As the 1.3 million college graduates exit academia for the work force – armed with a sheepskin and laden with debt – The Rich Dad Company, an educational products organization best known for its international best-selling book Rich Dad Poor Dad, offers this message: “Congratulations, Grads – and welcome to the Rat Race!” 

That debt – $22,221 on average… as reported by Student Monitor LLC, a leading market research firm – represents both credit card debt and student loans. Debt that, according to that company’s survey stats, will take eight years to pay off. And, in most cases, there’s more where that came from. It’ll take the shape of car loans, revolving credit, and even mortgages.  

In Rich Dad’s world, the Rat Race is that vicious cycle of living paycheck to paycheck… and the conventional wisdom that getting a good education, good grades and a safe, secure job (“with good benefits”) will lead to ‘the good life.’ Or, at least, a steady pay check to so that there’s money to make monthly payments on expenses and debt.

These new grads are in good company: millions of Americans contribute their fair share to the $100+ billions in credit card debt ($46.6 billion with Capital One Financial alone) in the US. Debt that, in many cases, will take decades to pay off.

Nearly 90% of college grads surveyed in 2004* reported that they were “prepared” for the responsibility of credit cards… over half (56%) of them didn’t know the APR (annual percentage rate of interest) on those cards. In this case, ignorance may not be bliss.

So what is Rich Dad’s answer to the Rat Race dilemma so prevalent in our society? That’s easy: Financial education. And they’re not alone in that mission.

In mid-April of 2005 the Federal Reserve unveiled a new website that Fed chairman Alan Greenspan calls “an online tool that offers students easier access to a wealth of information in the areas of economics, banking and financial services.”

In 2002, Greenspan was quoted as saying that a good foundation in math would improve financial literacy and “help prevent younger people from making poor financial decisions that can take years to overcome.” He added, “People need to be able to read, write and speak basic financial concepts in order to make informed investment decisions.”

“The challenges Americans face – with social security, consumer debt, bankruptcy law changes, and retirement planning – don’t begin at age 65,” says Kiyosaki, “They begin at age five, when kids enter school.” According to Kiyosaki, improved “Financial IQ” can equip Americans, of any age, with the knowledge and resources to take a proactive role in their financial future.

In his no-nonsense style, Kiyosaki hammers home the message: “My banker has never asked to see my report card.” What bankers want, instead, is your financial statement.

“Your financial statement is your real-world report card,” says Kiyosaki, “It reflects your Financial IQ.”

 

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