Robert Kiyosaki Says Stop Saving and Learn How to Spend Money — Here’s Why
Written by
Karen Doyle
Edited by
Maria Concepcion
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Conventional wisdom says that the way to financial freedom is to save money. Parents teach their children to save for ‘a rainy day.’ Employers encourage employees to save for retirement.
According to Robert Kiyosaki, author of FAKE: Fake Money, Fake Teachers, Fake Assets: How Lies Are Making the Poor and Middle Class Poorer, says that’s simply not true. He says you must learn how to spend money instead of saving it.
Here’s what you need to know.
How Saving Costs You Money
Th reason saving money will never make you rich is tied to two things we’ve been hearing a lot about lately: interest rates and inflation. Interest rates have been rising, which should be good for savers, right? Not necessarily.
You may have been earning 0.01% APY on your savings account a few years ago, but now you can earn 4 or 5% in a high-yield savings account or a CD. However, interest rates have risen because of inflation. (The way to ‘cool’ inflation is to raise rates.) This means that the money that you’ve saved can now buy less.
If the cost of items you buy goes up 6% in a year, and you’ve earned 4% interest on your savings, your actual buying power has gone down by two percentage points. You can buy less with the money you’ve saved, even after you’ve earned interest on it.
What to Do Instead of Saving
Rather than putting your money in the bank and ending up with less purchasing power than you started with, spend it. But be sure to spend it on the right things.
Invest in Stocks
You can spend, or, more accurately, invest, your money by buying stocks or mutual funds. In this way, you buy a piece of one or more companies, whose value will hopefully increase, making your investment worth more than what you paid.
Spending your money on dividend-paying stocks will earn you more in the form of dividends, even as your investment increases in value. These stocks help you make money both ways.
Bank on Your Own Work Ethic
If you’re a hard worker with a good idea, a great place to spend your money can be in your own business. By investing in yourself and your work ethic, you can put your money to work for you, and you may see big returns over time.
Buy Gold and Silver
Precious metals, especially gold and silver, have historically increased in value over time. They are not tied to any national currency, so they are not subject to forces like inflation and interest rates.
The savings habit can be a hard one to break. But once you see how spending can make you wealthier than saving ever could, you may be convinced.
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