Nowadays, we know that the best way to become wealthy is by working with money itself. There are various approaches -some contradictory, others complementary- on how to use money to build wealth. Today, we will analyze two viewpoints from two well-known figures in the financial community, they seem contradictory and incompatible. So, who is right about how to get rich? Robert Kiyosaki or Dave Ramsey?
Robert Kiyosaki
Let’s start with the author of the Best Seller Rich Dad, Poor Dad. The first rule that appears in his book is “don’t work for money”, this means: don’t stay in a job that allows you to live paycheck to paycheck, instead, you should get debt and invest – but not in the stock market. This may sound odd, let’s explain it in more detail.
In a 2020 interview, Kiyosaki stated that he doesn’t care about money, yet he still makes money because he understands the system. By “system,” he refers to the contrast between how money actually works and the socially accepted lie about it.
Society sets a trap for us by saying: “go to school, get a job, work hard, buy a house, save money, pay taxes, and invest in the stock market.” For Kiyosaki, that makes you poor. Instead of being educated through institutionalized education, he promotes “studying money” and taking on debt to avoid having to work in economic dependency.
We acknowledge that it is important to understand and critique the system, but we find his stance somewhat exaggerated. These are strong, controversial statements, that can be subjected to critiques such as the following:
Critics to Kiyosaki’s approach
Not everybody can borrow money to buy assets, there are some limitations inherent to the financial system, for example, it’s a possibility that you don’t pass the requirements to get a loan because there are some very specific warranties and probably high interests that require sufficiently good assets to return the money and avoid bankruptcy.
Kiyosaki also said that you shouldn’t invest in the stock market. But the reality is that stocks are business, all you have to do is look for a profitable business that will return the investment you made in the shortest period of time possible. The fascinating thing is that buying stocks allows you, while being a normal person, to buy a part of any business of your interest (as long as it runs in the stock market).
Dave Ramsey
Furthermore, Dave Ramsey is a well-known figure in the investment world, even though he has a radically different viewpoint from Kiyosaki.
Dave Ramsey summarizes what anyone seeking to build wealth through good personal financial management should do in 5 steps:
- 1st You need to have a written plan, a budget. Because no one accidentally wins.
- 2nd Get out of debt. When you don’t have any payments, you have money.
- 3rd Live on less than you make. If you are spending more money than you earn, you need to reconsider your spending habits or your sources of income.
- 4th Save money. Savings are fundamental to have a backup in case something doesn’t go as planned or something unexpected occurs, and to have a solid base to start investing with.
- 5th Be outrageous with money.
We think that this approach to investments makes it more accessible for common people like us to embark on a process of economic growth by trusting that our most valuable assets -time and money- are invested correctly.
Conclusion
As we made clear, there are some fundamental differences between Robert Kiyosaki and Dave Ramsey in terms of the strategy they believe in in order to get rich.
On the one hand, Kiyosaki believes in not saving, taking debt, and investing in business (not stocks). On the other hand, Ramsay believes in saving money, getting out of debt, and investing in stocks.
Even though Kiyosaki’s knowledge and experience is something to take seriously, in TBI we go with the Dave Ramsay approach, and that’s what we recommend to you: save and invest. That’s how you manage your money to become wealthy.
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