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How to Escape From the Rat Race

Does school prepare children to the real world? NO.

‘Study hard and get good grades and find a job with better perks’ is the advice given by most of the parents.  Children invest most of their time at school and study subjects that they never use in real life. Parents advice their children if they get good grades at school they get into better college for higher education and then graduate to move into a good job. And if you have a good job then you are in the right path to be rich.

The world around has changed, but the advice isn’t. Getting a good education and making good grades no longer ensures success, and nobody seems to have noticed. At school, financial education has not been a key curriculum to be taught at school and without financial literacy and the knowledge of how money works; they are not prepared to face the world in which spending emphasized over savings.

When Sharon L. Letcher questioned Robert Kiyosaki (author of more than 26 books, including the international self-published personal finance Rich Dad Poor Dad series of books) about Rat Race, he defined;

“If you look at the life of the average-educated, hard-working person, there is a similar path. The child is born and goes to school. The proud parents are excited because the child excels, gets fair to good grades, and is accepted into a college. The child graduates, maybe goes on to graduate school and then does exactly as programmed: looks for a safe, secure job or career. The child finds that job, maybe as a doctor or a lawyer, or joins the Army or works for the government. Generally, the child begins to make money, credit cards start to arrive in mass, and then shopping begins, if it already hasn’t.”

“Having money to burn, the child goes to places where other young people just like them hang out, and they meet people, they date, and sometimes they get married. Life is wonderful now, because today, both men and women work. Two incomes are bliss. They feel successful, their future is bright, and they decide to buy a house, a car, a television, take vacations and have children. The happy bundle arrives.  The demand for cash is enormous. The happy couple decides that their careers are vitally important and begin to work harder, seeking promotions and raises. The raises come, and so do another child and the need for a bigger house. They work harder; become better employees, even more dedicated. They go back to school to get more specialized skills so they can earn more money. Maybe they take a second job. Their incomes go up, but so does the tax bracket they’re in and the real estate taxes on their new large home, and their Social Security taxes, and all the other taxes. They get their large paycheck and wonder where all the money went. They buy some mutual funds and buy groceries with their credit card. The children reach 5 or 6 years of age, and the need to save for college increases as well as the need to save for their retirement.”

“That happy couple, born 35 years ago, is now trapped in the Rat Race for the rest of their working days.  They work for the owners of their company, for the government paying taxes, and for the bank paying off a mortgage and credit cards.”

“Then, they advise their own children to `study hard, get good grades, and find a safe job or career.’  They learn nothing about money, except from those who profit from their naïveté, and work hard all their lives. The process repeats into another hard-working generation. “

This is the `Rat Race’.

The only way to get out of the Rat Race is to prove tour proficiency at both Accounting and Investing.

Below is a simple example by Robert Kiyosaki which will make you think;

What happens when a corporation announces a downsizing?

People get laid off and unemployment goes up. Yes, but what happens to the company, in particular a public company on the stock exchange?

The price of the stock usually goes up when the downsizing is announced and the market likes it when a company reduces its labor costs, either through automation or just consolidating the labor force in general. And when stock prices go up shareholders, get richer. Employees lose; owners and investors win.

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