Wisdom of Rich Dad

I’m a sucker for tradition.  Actually, I am a fan of nostalgia – things that make you warm and gooey and bring you back to the days of your youth.  When it comes to issues of personal finance, however, nothing I was taught (even the more “traditional” lessons) really panned out for me.  While I’m a big believer in balancing the budget, following the law, and doing your share, I won’t teach my kids money lessons that are popular simply because they are old.  Here are a few examples of lessons that are still being handed down from generation to generation – but that really need to stop.

“Be a Company Man”
There are two problems with this lesson.  First, there are no company “men”.  Just as many women are pulling down a fair wage in today’s economy, and the occasional guy who spouts this lesson may also still think “women shouldn’t be in the workplace”.  The second issue I have with this is becoming more obvious in this current economy.  Companies try to take care of workers, but they can only do so much.  Be a family man.  Be a man of truth.  Be a funny man.  But don’t ever base your identity solely on the corporation who signs your checks.

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Consider the last purchase you made. Did you get what you paid for? Did you pay for things you didn’t want? It may not be entirely your fault. As much as your own impulsive or unplanned decision-making can cost you money, you also have to contend with sales tactics that companies use to increase your spending. Two common sales practices that many firms use are versioning and bundling.

Airlines engage in versioning by selling the same travel service to all customers while offering different levels of amenities for first class and economy tickets. Grocery stores bundle products together, offering a discount on the purchase of several of the same item.

Both of these techniques are used to increase sales and promote products, while offering savings to consumers. However, some instances of versioning and bundling are designed to fool and confuse shoppers into overestimating the value of an offer. To make sure you aren’t falling for false deals, you need to learn the details of versioning and bundling and the pros and cons of each tactic.

Versioning
Versioning involves selling a product to a group of consumers and then altering that product and selling it to different consumer groups. A classic example of versioning occurs when an information technology firm sells professional and standard versions of software. A higher-priced professional version may have all the features of a software program, whereas a standard version may have limited features.

Versioning can be applied to non-software goods and services as well. An automobile dealer engages in a form of versioning when it offers “fully loaded” cars equipped with options like navigation and heated power seats, while offering the same model car, without additional features, at a lower cost.

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In the wake of the financial crisis, “Sesame Street” is teaching children financial literacy. Ron Lieber talks to Elmo about saving and sharing.

Renting a home is cheaper than buying in just three of Britain’s 50 biggest towns and cities, according to a new study.
The findings highlight the stark injustice and worsening situation for millions of people priced out of the property market.

A year ago, it was only cheaper to buy in 40 out of 50 towns.

As the banking industry, rocked by the financial crisis, has tightened lending criteria on mortgages and demanded bigger deposits, it has left many more would-be first-time buyers stuck on the sidelines.

This has forced many more people to rent rather than buy, and spurred landlords to cash in on the rising demand and charge tenants more.

Average rents have been on the rise for most of 2010 and 2011.

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In his prime, Johnny Unitas was the guy you wanted quarterbacking a football team. The Hall of Famer set seven lifetime NFL passing records during his storied career. But he might not be your pick to run a circuit-board maker.

In 1984, Unitas and partners bought National Circuits for $3.5 million. The company foundered, and six years later they could only sell it for $1 million. Unitas declared bankruptcy in 1991 after he couldn’t pay back loans he took to purchase National.

“The No. 1 reason athletes lose money is they invest in areas they don’t really understand and not related to their expertise,” says Alan Lancz, a wealth manager who works with a number of professional athletes.

Björn Borg’s another good example. When he retired from tennis at the age of 27 in 1983, the Swede had won 11 Grand Slam championships. He tried to replicate his on-court success in the world of fashion with the Björn Borg Design Group; it didn’t work.

The company quickly ran into liquidity problems and shut down in 1989. Borg refused to take outside financing for fear of losing control of the company. Creditors later sued Borg, but he claimed he couldn’t pay because he was “more or less bankrupt.”

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Already, smartphones can pay for Big Macs, Girl Scout cookies, and taxi rides. With the much-anticipated rollout of Google Wallet underway, some models will also be able to spend gift cards and pay at many more locations.

Google Wallet and MasterCard PayPass, two examples of mobile money, work by storing your card data (from credit cards, prepaid cash cards, and loyalty cards) on your phone, then transmitting the info to the checkout stand when you wave or tap your device.

With new applications and improved phones making mobile money more common, this is a good time to master the basics:

Tap-and-pay systems. Google Wallet and MasterCard PayPass transmit your encrypted payment information wirelessly from your phone or a keychain gizmo to a special reader. Some systems require physical contact between your phone and the reader, but a new generation of phones hitting the market in 2012 will turn the tap to a wave.

While this may not sound like a big improvement over swiping a credit card, it might save you time and money as daily deals, coupons, gift cards, and loyalty rewards programs are integrated. Meanwhile, transit systems in London, New York, and Singapore are all evaluating PayPass as a replacement for metrocards.

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