Tag: Critical Thinking

Rich Dad, Rich Life 

Rich Dad, Poor Dad by Robert T. Kiyosaki taught me that a job is only a short-term solution to a long term problem.

A job is an acronym for ‘just over broke’ according to Robert T. Kiyosaki. In Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! the author advocates for financial literacy, critical thinking, and fundamentally poses the theory that the poor and the middle class work for money while the rich have money work for them. Essentially, favors to invest in income-generating, true assets. Pay yourself first and buy more income-generating assets so you can get out of ‘the rat race’.

The first edition of this book was published in 1997. As 2024 draws to a close this seems a lifetime away. The financial independence, retire early (FIRE) movement has grown significantly since then. With this in mind, I will briefly address only two aspects of this book: (1) financial literacy and (2) ten steps the author recommends to reach financial freedom. 

Kiyosaki makes a case for building financial literacy early on. He defines financial IQ as something made of knowledge of four broad areas of expertise: 

  1. Accounting
  2. Investing
  3. Understanding Markets
  4. Laws

To break this down, accounting is the ability to read and understand financial statements, records and balance sheets in addition to basic knowledge of business transactions. He combines investing with understanding markets to showcase a need for understanding economic principles, market making strategies, and – in a sense – to develop a general interest in (stock) market dynamics. Lastly, he highlights the need to utilize available business vehicles such as the proper form of incorporation and knowledge of tax avoidance (not evasion – big difference!) strategies. To illustrate this last point, he provides the example of a poor decision maker investing into liabilities, i.e. things that continue to cost money (think mortgage and property tax for a house) versus a rich decision maker moving all their assets into a corporate vehicle to shift the tax burden towards the corporate entity and take advantage of tax breaks these organizations often enjoy in America. Financial literacy is of utmost importance and while we can debate the areas of expertise, Kiyosaki certainly raises enough awareness to get started learning either of those areas.

The concluding chapters of his book focus on the ten steps to reach financial freedom. Here are the steps: 

  1. Find a reason greater than reality
  2. Making daily choices
  3. Choose friends carefully
  4. Master a formula and then learn a new one
  5. Pay yourself first
  6. Pay your brokers well
  7. Be a giver
  8. Use assets to buy luxuries
  9. Have heroes
  10. Teach and you shall receive

As one can tell from their name, the steps are over-simplifying and vague. This section was the least interesting to read for his narrative jumps from story to story without conveying much. Perhaps the most controversial or misunderstood section is ‘pay yourself first’. It seems he’s building an argument for always paying yourself first ignoring debtors or other financial responsibilities. Hypothetically, someone could read this as subtracting ‘your salary’ before you pay anyone else. However, he concludes this section by stating he would never get into consumer debt and when he pays himself he’d readily invest into true assets who in turn generate the income to pay off liabilities. It’s a confusing and contradicting section. It fails to outline steps someone can take who does have consumer or student debt or who still is in the early stages of their entrepreneurial journey.

In conclusion, I still wish I had read this book earlier in my life. I heard about it here and there. I was aware of some of his principles, but it seems different to read this book knowing what I know now versus having read it when I was 15 years old. That being said, the book certainly has aged and some principles seem a little dated through today’s lens. Kiyosaki also leans strong into the narrative of ‘being poor is a choice’ completely ignoring financial inequalities that burden some and financial privileges enjoyed by others. Nevertheless, I still find this book an easy yet insightful read with principles that inspire and encourage to learn more about finance. Any form of financial education is welcome and much needed in today’s society. 

Can You Trust Your Gut Feeling?

In life, we sometimes make critical and trivial decisions based on our intuition. But how can we be sure our lack of deliberation serves our interests? Are we better off without a lengthy thought-process? Shoot from the hip more often? In ‘Blink: The Power of Thinking Without Thinking,’ Malcolm Gladwell explores these and other questions, providing insights on the quality, or lack thereof, of these brief yet critical and often trivial decisions.

At its core, Blink is about intuitive decision-making. Gladwell explores a plethora of situations where we have limited information yet our decisions formed based on those thin slices of data will often lead to accurate or beneficial outcomes. Therefore, decisions made very quickly can be every bit as good as decisions made cautiously and after long deliberation. 

To illustrate his concept, he tells the story of Paul Van Riper, a retired Marine Corps general known for his unconventional strategies. Van Riper became the leading figure during the Millennium Challenge 2002 military exercise, which was designed to explore critical warfighting challenges at the operational level of war that will confront United States joint military forces after 2010. Van Riper oversaw the hostile forces during the exercise. Instead of following established military protocol, he deliberately chose to rely on his intuition, experience, and simple but effective strategies. In contrast, his opponent chose to follow established military strategies, data-heavy analytics, and to rely on technology. Van Riper communicated with his team using basic methods like motorcycle couriers and coded signals, bypassing his opponent’s forces’ sophisticated surveillance tools. His quick, decisive actions—guided by gut instincts rather than exhaustive deliberation—allowed him to exploit his opponent’s forces’ rigidity and outmaneuver them, achieving unexpected victories in the early stages of the exercise. Gladwell highlights the paralyzing effects of over-analyzing, deliberation, and adherence to military hierarchy. Van Riper leveraged a decentralized command structure allowing his forces to act autonomously when his opponent expected coordination. However, Gladwell also cautions the reader to exclusively rely on intuition, but rather make context and skill-based decisions. Van Riper leveraged a combination of experience, skill and bravado to achieve his results. Therefore, context and skill-set of the decision-maker determine the speed at which a decision can be made.

And this contradiction is my main problem with Blink. By and large, it’s a book that builds a case for trusting your gut and making rapid decisions. On the other hand, Gladwell cautions against making rapid decisions depending on the context and the decision-maker. But, how can we refine our intuition to mitigate possible failure? How can we better identify context when thin-slicing advocates against analysis? And, when can we be sure we are sufficiently competent to be the decision-maker for the situation-at-hand rather than merely supremely confident? Blink leaves these questions largely unanswered. Gladwell oversimplifies the complexity around our cognitive abilities and the psychological depths of our biases to an extent that it contradicts him. Personally, I would have preferred fewer stories with more depth and explanation. In addition, I would have preferred a clearer structure outlining intuitive decision-making, long deliberation, and an overview of potential biases that prevent or support either.  

I read Blink in parallel to Talking To Strangers, which helped to see the broader context of Gladwell’s thinking when he wrote these books. The latter struck me as more developed, thought-out, and polished. The former reads more like a raw compendium of psychological theories applied to real life stories. This density of everything makes it a formidable base for further idea exploration, but altogether it seemed capricious to ask the reader to switch context time and again. For example on the importance of contempt, he introduces the concept of the Four Horsemen of Marriage as theorized by American psychologist John M. Gottman. In other publications, Gladwell would offer a basic understanding of the concept of discussion before diving into a specific element of it, but in Blink, he rarely brings along the reader before moving on to the next concept. Gottman’s theory embraced criticism, defensiveness, contempt, and stonewalling as the most destructive and biggest predictors of divorce and separation. 

Would I recommend it? If you can get a copy for under $10, I’d recommend it. Any other price exposes Blink to other publications, e.g. Think Again by Adam Grant, which is more recent, clear and more comprehensive.