It may be too late for you, but maybe you can save your children.

This article was first posted December 1, 1999.

Working hard and getting a good education has been part of the American forklore for quite some time. Most parents stress this theme. Unfortunately, economic rewards don't always flow to the "brightest" or "hardest working."

The problem is financial literacy. It's only rarely taught in school and many parents don't know enough about the subject to discuss it with their children at the dinner table. (Surprisingly, there are even graduates of well know business schools that are clueless on the subject.) Author Robert Kiyosaki address the problem in depth in Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor & Middle Class Don't. It's among the most entertaining books available on the subject.

The book describes what young Robert Kiyosaki learned as a child from his two "Dads." His real father, a Ph.D school administrator with degrees from several elite universities (the Poor Dad), and the father of his childhood friend Mike who owned several small businesses and never finished the eighth grade (the Rich Dad.)

Kiyosaki's "Poor Dad" spent his life worrying about the next pay raise at work and spent his money "keeping up with the Jones'." His "Rich Dad" thought working in "a job" was stupid and spent his money acquiring income producing assets. Kiyosaki provides a few insights on how to join the latter group. As the author observes:

"The poor and the middle class work for money. The rich have money work for them."

Expanding on this theme, Kiyosaki explains his "6 lessons" for turning the tide in your favor.

• 1) The Rich Don't Work for Money - holding down a "job" and earning a paycheck is unlikely to make you rich, or even financially secure. The rich prefer to spend their time acquiring or improving their own assets. Working for a salary will only succeed in making someone else "rich."

• 2) The Rich Teach Financial Literacy to Their Kids - you need to know the difference between income and expense, and an asset and a liability. The poor and middle class have much of their net worth tied up in their personal residence (a liability) and think it's an asset (it's not, unless you're renting it out for income.) The rich have balance sheets dominated by stocks, bonds, and income producing real estate. Personal residences make up only a fraction of rich folks' net worth.

• 3) The Rich Mind Their Own Business - Even if you hold down a job (many rich people work at jobs because they enjoy it, not because they have to) you still need some kind of business on the side. Kiyosaki lists eight "real world assets" that fit his description of "business." (Among them; stocks, bonds, mutual funds, real estate.) Surprisingly, he doesn't list the traditional owner managed small business as a "business." Kiyosaki points out that "if I have to work there, it's not a business. It becomes my job."

• 4) The Rich Understand Taxes and the Power of Owning Your Own Corporation - the key is to make sure your expenses are paid "pre-tax" (e.g., as business deductions) and that your income and assets grow tax deferred. If you're collecting a salary, you can't do this.

• 5) The Rich Invent Money - they are alert to opportunities where you can "turn a sow's ear into a silk purse" with very little effort. Kiyosaki gives several examples of where the application of a little "financial literacy" can create "assets" much larger than someone "working hard at a job" can imagine.

• 6) The Rich Work to Learn - They Don't Work for Money - Kiyosaki makes a convincing case for choosing jobs that allow you to develop a valuable skill, even if the job pays little or nothing. He's particularly fond of multi-level marketing jobs as a way to build sales skills. Amway anybody?

The final chapter in the book "How to Pay for a Child's College Education for Only $7,000." is an interesting description of how one of Kiyosaki's friends educated his four children by withdrawing $7,000 from their $12,000 college fund and investing it in real estate. In five years, he'd run the $7,000 up to $330,000 in a series of real estate transactions and was well on the way to paying for college and retiring early.

Kiyosaki can't guarantee that this strategy will work for everyone, but then it doesn't have to. An earlier book he authored seems to argue you may not need to go to college at all.

Robert Kiyosaki's ideas are contrarian and controversial, but well worth your consideration. He seems to emphasize real estate, Retire Early favors the stock market. We agree on the wisdom of buying assets, avoiding liabilities, and developing the ability to tell the difference between the two. It's not taught in school.