The Price of Security

Rich Dad's Guide to Becoming Rich... Without Cutting Up Your Credit Cards
by Robert T. Kiyosaki, Sharon L. Lechter C.P.A.

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"And for something to be up, something else must be down," added Mike. "And for something to be old, something else has to be new. As Einstein said, 'It's all relative.'"

"Correct," rich dad said with a smile. "So how does this apply to security and freedom and your being willing to pay twice the price?" asked Mike.

"Good question," said rich dad. "It's important because if you don't pay twice the price, you never get what you want anyway. In other words, if you don't pay twice the price, you do not get what you paid for in the first place."

"What?" I replied. "If you don't pay twice you don't get what you paid for?" Rich dad nodded his head and began to explain. "People who pay the price only for security may never really feel secure... like in job security," he stated boldly. "A person may have a false sense of security, but they never really feel secure."

"So even though my dad has what he thinks is a safe, secure job, deep down he never really feels secure?" I asked.

"That's correct," said rich dad. "Because he is paying only for the action but not his internal reaction. The harder he works for security, or pays the price for security, the more his insecurity grows inside him."

"Does it have to be insecurity as the reaction?" Mike asked. "Good question," rich dad commented. "No, it could be something else that is reacting. A person could have so much security that the reaction is boredom and then restlessness. They want to move on, but they don't move on because then they would give up their security. So that is why I say each of us has different challenges, each of us is unique. We're unique because we don't react to things in the same ways that others do."

"Like some people see a snake and panic, and others see a snake and get happy," I added.

"That's correct. We are all different because we are all wired differently," rich dad added.

"So what is the point of all this mental gymnastics?" I asked. "The gymnastics are to make you think," said rich dad. "I always want you to remember that everything has a price... and that the price is often twice as much as it seems. If you pay for only one side of Newton's law, you may think you have paid the price but you may not get what you want." "Can you give us some examples?" I asked.

"I can give you general ones because, as I said, each of us is unique," said rich dad. "But as a general rule, always remember there are two sides to each situation.

"For instance, the best employer has usually started his or her career as an employee. He or she uses that prior experience as an employee to develop a management style that empowers the employees he or she manages."

"So a good employer will be honest and treat his or her employees how he or she would like to be treated?" I asked.

"Exactly." Rich dad nodded. "Now let's look at an extreme example. What do you think it takes to be a good detective?"

"To be a good detective?" Mike and I repeated in tandem, thinking that rich dad was now driving down the wrong side of the road.

"Yes, a good detective," rich dad continued. "To be a good detective, a detective must first be honest, moral, and of the highest integrity. Is that correct?" "I would hope so," said Mike.

"But to be good, a detective must also think exactly like a crook, or someone who is immoral, unlawful, and unethical," said rich dad. "Always remember Newton's law. You cannot be a good detective without also being able to think like a good crook."

Mike and I were now nodding. We were finally beginning to understand where rich dad was going with this whole lesson. "So that is why a person who tries to become rich by being cheap still winds up, in many ways, as poor as someone who has no money?"

Rich dad continued, "And why someone who seeks only security never really feels secure. Or someone who seeks low-risk investments never feels investing is safe, and someone who is always right eventually winds up wrong. They pay the price for one side of the equation but fail to pay the full price. They violate a universal law."

Mike chimed in, "That is why it takes two people to have a fight. And to be a good detective you have to also be a good crook. To lower risk, you have to take risks. To be rich you have to know what it is like to be poor. To know what a good investment is, you have to also know what a bad one is."

"And that is why most people say investing is risky," I added. "Most people think that to invest in a safe investment you must also lower your return on the investment. That is why so many people put money in a savings account. They put it in for security and are willing to take less interest for that safety. But the fact is, their money is being eaten away by inflation and the interest on their money is taxed at a high rate. So their 'safe as money in the bank' idea is not such a safe idea."

Rich dad concurred. "Having money in the bank is better than not having money in the bank... but you are correct by saying that it's not as safe as they may like to think it is. There is a price for that illusion of safety." Mike then turned to his dad and said, "You've always said that it's possible to have both low-risk investments and very high returns."

"Yes," replied rich dad. "It is relatively easy to get a 20 percent to 50 percent return without paying a lot in taxes or using much of your own money, if you know what you are doing-and still have security."

"So what you're telling us now," Mike said, "is that the price you paid was higher than what the average investor is willing to pay." Rich dad nodded. "Always remember that everything has a price, and that price is not always measured in money."

The Price of Being Cheap

When I hear money gurus saying, "Cut up your credit cards, buy a used car, live below your means," I know they mean well. And for most people, their advice is good advice. But as my rich dad said, "Everything has a price." And the price for becoming rich by being cheap is that you still wind up being cheap. And living life as a rich but cheap person is, in my opinion, a very expensive price to pay.

Rich dad also said, "The problem is not the credit cards-it is the lack of financial literacy of the person holding the credit card that is the problem. Getting financially literate is part of the price you need to pay to become rich."

And that is why so many people do not like the idea of cutting up their credit cards and living below their means. I think most people, given the choice, would rather enjoy this life as rich people who enjoyed rich lives ... and they can, if they are willing to pay the price.

Copyright © 2003 by Robert T. Kiyosaki and Sharon L. Lechter

About the Author

Robert Kiyosaki a financier, author and teacher says "that the main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money... but never learn to have money work for them."

Co-author of the Rich Dad series of books and CEO of the Rich Dad Organization, Sharon Lechter has dedicated her professional efforts tot he field of education. She graduated with honors from Florida State University with a degree in accounting, then joined the ranks of Coopers & Lybrand, a Big Eight accounting firm. Sharon held various management positions with computer, insurance, and publishing companies while maintaining her professional credentials as a CPA.