Congratulations and Welcome to the Rat Race!
For Millions of People, Graduation Means Joining the Rat Race
1.3 million college graduates will exit academia for the work force this year, armed with a sheepskin and laden with debt. This debt, $22,221 on average… as reported by Student Monitor LLC, a leading market research firm, represents both credit card debt and student loans. Debt that, according to that company’s survey stats, will take eight years to pay off. And, in most cases, there’s more where that came form. It’ll take the shape of car loans, revolving credit and even mortgages.
In Rich Dad’s world, the Rat Race is that vicious cycle of living paycheck to paycheck… and the conventional wisdom that getting a good education, good grades and a safe, secure job (with “good benefits”) will lead to “the good life.” Or, at least, a steady pay check so that there’s money to make monthly payments on expenses and debt.
These new grads are in good company: millions of Americans contribute their fair share to the $100+ billions in credit card debt ($46.6 billion with Capital One Financial alone) in the US. Debt that, in many cases, will take decades to pay off.
Nearly 90% of college grads surveyed in 2004* reported that they were “prepared” for the responsibility of credit cards… over half (56%) of them didn’t know the APR (annual percentage rate of interest) on those cards. In this case, ignorance may not be bliss.
So what is Rich Dad’s answer to the Rat Race dilemma so prevalent in our society? That’s easy: Financial Education. And we’re not alone in that mission. In mid-April of 2005, the Federal Reserve unveiled a new website that Fed chairman Alan Greenspan calls “an online tool that offers students easier access to a wealth of information in the areas of economics, banking and financial services.”
In 2002, Greenspan was quoted as saying that a good foundation in math would improve financial literacy and “help prevent younger people from making poor financial decisions that can take years to overcome.” He added, “People need to be able to read, write and speak basic financial concepts in order to make informed investment decisions.”
“The challenges Americans face – with social security, consumer debt, bankruptcy law changes, and retirement planning – don’t begin at age 65. They begin at age five, when kids enter school.”
– Robert Kiyosaki
Sources: Student Monitor research; MBNA and Capital One Financial reports; The New York Times
Lessons for Graduates:
1. Work to learn… not to earn
Sometimes a pay check is less important than the lessons you get from working.
2. Who’s giving you advice?
Most people struggle financially because they take advice from the wrong people… like sales people or poor people.
3. Learn humility
When your ego gets in the way, you miss the lesson.
4. Know the difference between assets and liabilities – and good debt and bad debt
5. What words did you learn in school?
You learned the words for your major, but did you learn the words of investing?
6. Challenge yourself to CHOOSE to be rich
Rich is a state of mind.
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