11 Biggest Gen Z Money Traps, According to Robert Kiyosaki
Written by
Laura Gariepy
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Rebekah Evans
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Well-known personal finance expert Robert Kiyosaki has been publishing his thoughts on money management for decades. The author of “Rich Dad, Poor Dad” recently penned a blog post aimed at the newest members of the workforce, Gen Z, offering several nuggets of wisdom to help them start adulthood on a solid financial footing. If you’re a Gen Zer, here are 11 of the biggest potential money traps you should avoid — and what to do instead.
Following Financial Advice From Previous Generations
Kiyosaki warned that the old life path may not work for the new generation. Sure, your parents may have:
- Gone to college
- Got a good job
- Bought a house
- Invested steadily for decades
- Retired at age 65
But so much has changed in the world that you may need to take a different route to prosperity. Kiyosaki encouraged young people to embrace the digital economy and chart a course for themselves that aligns with modern circumstances.
Having the Wrong Money Mindset
Rich people are often portrayed as greedy and immoral in the media, so it’s natural to have this worldview. However, maintaining this position, Kiyosaki warned, is a mistake — and one that could prevent you from building wealth.
Instead of viewing money as evil, embrace it as the tool that it is. You can use it to do amazing things for your family and community.
In addition, you may look at people in poverty (or maybe you grew up in it yourself) and believe that there’ll never be enough money to go around. While it may be challenging, you need to give up this scarcity mindset.
Practice envisioning an abundance of resources available to you. You’ll have to work to get them, but they’re there.
Relying on One Job
In the not-too-distant past, people landed a job right out of college and kept it for decades, gradually moving up the ranks and increasing their paychecks. Now, people rarely stay in one job for more than a few years and with the rash of recent layoffs, tenure at a company is even less stable.
Relying on one job to get ahead financially and build wealth is too risky, warned Kiyosaki. Instead, you should try to cultivate multiple income streams, which could include your primary job, a side hustle or small business and a rental property, for example.
Not Investing in Assets — Including Themselves
If you’re like many young people, as soon as you get your paycheck, most of the money is already spent. You have to cover rent, utilities, a car payment, groceries, insurance and other necessary expenses. Plus, it feels good to get takeout some nights, hit the bar with friends or shop online.
But at the end of the month, you have nothing to show for it. Kiyosaki challenged Gen Zers to invest some of their income in wealth-building assets — including themselves. So, set aside at least a few dollars every month to buy shares of an index fund, save up for a down payment on a rental property or take a class that will help you boost your earning potential.
Delaying Long-Term Financial Planning
When you’re 25, you may not be thinking about what life will be like at age 65. You might be too preoccupied with finishing college, launching a career or dating to focus on the distant horizon.
However, according to Kiyosaki, completely ignoring the future in favor of the present is a costly mistake. If you start investing a small amount of money every month now, compound interest can turn your cash into a sizeable nest egg by the time you retire. But if you wait ten or 20 years to get started, you’ll have to save so much more each year to catch up.
Not Taking Massive Action
Many 20-somethings are playing small. Maybe they’re going to school or working a full-time job, but that’s it. But just coasting by isn’t going to cut it, warned Kiyosaki — especially if you have big dreams.
Now’s the time to make a massive push toward your goals. Start a side hustle (or two), launch a business or invest in real estate. Lay down a strong foundation you can build on for the rest of your life.
Not Automating Investments
If you have to manually transfer money from your checking account to your savings, retirement or brokerage account, you’re probably going to miss some months or the amount you transfer will be smaller than you’d like. That’s because if the cash lingers in your checking account, you’ll likely spend it.
You can make saving and investing easier — and increase your odds of amassing wealth — by automating those transfers, Kiyosaki said. Pick a date every month for the money to move, preferably the day after a payday. Look at stashing cash as paying a bill — only you’re paying yourself.
Trying To Pick Individual Investments
Investing in individual stocks is risky — especially if you don’t do extensive, time-consuming research beforehand. If the company tanks, you could lose all your money.
Fortunately, you can benefit from built-in diversification by investing in total market funds, which expose you to a variety of companies, advised Kiyosaki. If one firm fails, your investment account value won’t be as severely impacted.
Skipping Househacking
When you think of buying a house, do you imagine a single-family home with a white picket fence and a private backyard? Many people do.
However, with property prices and interest rates so high, you may want to explore househacking for your first real estate purchase, Kiyosaki said. With househacking, you buy a multi-family home, live in one unit and rent out the others. The rent you collect will pay your mortgage, effectively reducing your monthly housing expense to zero.
Borrowing Too Much for School
You see people of all ages struggling to afford their student loan payments. The burden postpones or prevents some folks from buying a home, starting a family or launching a business.
Kiyosaki encouraged members of Gen Z to find ways to get a degree for less. For instance, you could attend a community college to complete your prerequisite courses or hold down a job while studying, allowing you to pay some of your tuition in cash. It’s also important to choose a major with sufficient earning potential to justify the cost of attendance.
Trying To Keep Up With Social Media Influencers
If you spend a lot of time scrolling on your phone, you probably see people with fancy new houses, shiny new luxury cars, flashy new jewelry or exciting vacation plans. You may sigh and wish you had that life.
But what you don’t see on Instagram is the influencer’s bank statement, Kiyosaki advised. They may be under a mountain of debt and freaking out behind the smile you see plastered online. Trying to keep up with the Joneses on social media will almost certainly lead to financial struggle and unhappiness.
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