Robert Kiyosaki: Why the Cheap Will Never Get Rich
Written by
Daria Uhlig
Edited by
Nicholas Morine
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What you don’t know about your money can have a devastating effect on your finances. In fact, a recent survey from the National Financial Educators Council found that lack of knowledge about personal finances cost respondents an average of $1,506 each last year. While that figure is down from $1,819 in 2022, it still represents a financial literacy crisis.
Robert Kiyosaki, personal finance expert and author of “Rich Dad Poor Dad,” addressed that very topic in a post on his “Rich Dad” blog, noting that people’s major money mistakes often stem from lack of financial education. One of those mistakes is spending money based on affordability, rather than value.
In the post, Kiyosaki told a story about a friend who tried to purchase a home after the price dropped from $780,000, which was beyond her and her husband’s budget, to $215,000, which they could afford. However, the home was in a deteriorating neighborhood with crime-ridden schools, which made it a poor value in Kiyosaki’s opinion.
“Only cheap people buy on price… Just because something is cheap doesn’t mean it’s worth the cost.”
Kiyosaki: Always Buy Value
Kiyosaki explained to her that he buys value, even if that means paying more. “Value rather than price has made me rich,” he said.
Ultimately, the deal fell through. However, the friend was still looking to buy cheap, and that, Kiyosaki said, might have kept her from ever getting ahead financially.
One reason is the tendency for “cheap” to be an emotional trigger. As Kiyosaki wrote, people tend to make the biggest financial decisions during the most emotional times of their lives — when they’re getting married, buying a home or having children. When it comes to major purchases and investing, following your head is a better strategy than following your heart.
The other issue is getting advice from people who tell you what you want to hear, instead of what you need to know. Kiyosaki believes most people listen to salespeople who’ll profit from the advice they give, whether or not it brings success. He recommended listening to rich people, instead.
So how do you avoid making the same mistake on your path to building wealth? It all comes down to educating yourself, so you can identify opportunities and risk. “To be rich, you need to see the good and the bad, the short- and long-term consequences of your decisions,” Kiyosaki wrote.
Educational materials from (rich) experts like Kiyosaki, Dave Ramsey and Suze Orman are a good starting point. Although they do sell books, courses and coaching services, they also give a lot of good advice, based on their own experience and success, for free.
Other resources include:
- How Smart Are You?, a free financial literacy resource from the Federal Deposit Insurance Corp.
- Introduction to Investing, a free guide from the Securities and Exchange Commission for novice and experienced investors
- Financial Literacy for All, a business-sponsored financial education site for consumers of all ages.
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