Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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U.S. teenagers lack financial literacy

By Barbara Hagenbaugh, USA TODAY WASHINGTON — U.S. teenagers are making little headway when it comes to financial literacy, a survey out Wednesday shows. High school seniors on average answered 52.4% of a 30-question financial survey correctly. That was up from 52.3% when the survey was last conducted two years ago but down from 57% in 1997, the first year for the survey, according to the Jump$tart Coalition for Personal Financial Literacy.”Financial literacy is still a very significant problem. It doesn’t seem to be getting any better,” says Lewis Mandell, a professor at SUNY Buffalo School of Management who oversaw the survey, which was conducted in December and January. It includes topics such as investing and managing personal finances. He said the lack of knowledge was troubling given that today’s high school seniors likely will be more responsible for their own financial well-being when they retire given trends away from company pension plans and an uncertain future for Social Security benefits. But the study suggests students are unprepared for such a task, Mandell says. In one question, only 14.2% of the students correctly answered that stocks would have the best growth potential for money over an 18-year period. That was the lowest percentage in the survey’s history. “In the 21st century, the only person you can really count on is yourself,” he says. The results of the survey taken by 5,775 high school seniors in 37 states were unveiled at a news conference in the boardroom at the Federal Reserve. Fed Chairman Ben Bernanke called improving financial education “vital to the future of our economy.” Survey details: • White students answered an average 55% of the questions correctly vs. 44.7% for blacks and 46.8% for Hispanics. The gap between whites and blacks was the widest in the survey’s history. • Students from families with incomes of $80,000 or greater answered 55.6% of the questions correctly on average vs. 48.5% for those with incomes less than $20,000. The gap between the two income groups was also the largest in the history of the survey. • Nearly 17% of the seniors had taken a money management or personal finance class, down from 20% in 2004. Surprisingly, students who had taken a class actually fared worse than those who did not. Students, however, who had played a stock market game, in which they used play money to pick stocks, fared better than students who had not participated. • There was little difference in financial literacy based on gender. Boys on average answered 52.6% of the questions correctly vs. 52.3% for girls. Students aren’t the only whose financial literacy is lacking. In a...

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Cashflow game – lessons learnt

If you think playing the Cashflow game is just like playing another silly round of Monoploy, then you need to seriously think again.  Cashflow boardgame is not just like a game, it is a educational tool for you to sharpen your finanical acumen and you get to learn different lessons each time you play the game.   The author of Rat Race Escapes (ratraceescapes.com) shares his learnings from his recently cashflow game: Sue, Bob, Terry and I played Cashflow 101. I played the teacher. Because the monthly cash flow is lower than occupations I normally play, it was much longer before I started taking big deals. Things moved pretty slowly for me for quite some time, buying 400 shares of MYT4U at a reasonable price of $10, even though I immediately landed on charity and in my next 3 roles I had for paychecks. Shortly thereafter, I partnered with Bob and Sue on a limited partnership with a doctor’s office and then immediately I was downsized. Things were looking great when I bought a “great deal” for $35,000, a government owned home with a tenant, for $2000 down and $220 per month cash flow. Just before my next turn, a buyer appeared and I sold the house for $135,000, putting $102,000 in my pocket. I paid my bank loan plus my credit card and retail debt and still had $90,000 in cash! On my next turn I drew a Big Deal and it was the 60 unit apartment building. Perhaps I should have passed on it. It was initially a net neutral deal for my monthly cash flow: with a down payment of $200,000, I borrowed $110,000 to make up the difference in the cash I had on hand but the $11,000 in monthly cash flow covered the loan. I still had a decent monthly cash flow of about $1600. Had I passed and taken a different big deal on a subsequent turn, I’d have retained cash, increased my cash flow and I may or may not have exited the Rat Race sooner. After a couple more turns, and starting a software company in my basement, received a paycheck and borrowing more money from the bank, I got laid off again. My cash flow shrank to less than $100 and on a subsequent turn to about -$300. I survived and then sold the limited partnership, double the money for myself and partners and then sold the MYT4U stock for $40 after a split. After paying debt down, I was back to good cash flow and still had cash. In the mean time, Bob exited the Rat Race getting $600,000 as his initial Cash Flow Day. Bingo, now there was a...

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2008 Predictions – Part 4 of 4

This is my favorite predictions clip. I have known Mike Maloney for a few years now and he never ceases to amaze me with his knowledge of economics, gold, silver and currency....

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