5 Lessons Parents Should Teach Teens About Money, According to ‘Rich Dad’ Robert Kiyosaki

The Importance of Teaching Teens About Money: Lessons from Robert Kiyosaki

A recent survey conducted by CNBC + Acorns Invest in You Survey revealed that 83% of U.S. adults believe that parents are primarily responsible for educating their children about finances. However, shockingly, 31% of parents admitted to never discussing finances with their kids.

This lack of financial education at home may stem from the fact that many parents themselves were not adequately educated about personal finance. According to Ramsey Solution’s 2023 Financial Literacy Crisis in America report, 88% of surveyed U.S. adults felt that high school did not fully prepare them for handling money in the real world, with only 17% reporting that they took a personal finance class in high school.

The consequences of this financial illiteracy can be dire, as young adults are thrust into the adult world without the necessary knowledge to manage their finances effectively. To address this issue, financial guru Robert Kiyosaki, also known as “Rich Dad,” has outlined five crucial lessons that parents should teach their teens about money.

1. Making Your Money Work for You: Kiyosaki emphasizes the importance of understanding the difference between earned income (where you trade time for money) and passive income (where your money works for you). Teaching teens how to generate passive income through investments like dividend stocks or rental properties can set them on the path to long-term financial stability.

2. Reading a Financial Statement: Kiyosaki breaks down a financial statement into four quadrants: income, expenses, assets, and liabilities. Understanding how assets generate income and how liabilities drain money from your bank account is essential for making informed financial decisions.

3. Surrounding Yourself with the Right People: Kiyosaki highlights the influence of your social circle on your financial decisions. Encouraging teens to befriend financially savvy individuals can help them develop good money habits and make smarter financial choices.

4. Differentiating Between Assets and Liabilities: Building on the concept of reading a financial statement, understanding the distinction between assets (income-generating) and liabilities (expense-draining) is crucial for effective money management.

5. Protecting Your Wealth: Kiyosaki warns about the four “wealth stealing” forces – inflation, debt, taxes, and retirement products. Teaching teens how to navigate these forces and stay ahead of financial pitfalls can safeguard their wealth and ensure financial success.

By imparting these valuable lessons to teens, parents can empower the next generation to make informed financial decisions and secure their financial future. As Robert Kiyosaki aptly puts it, “You have the power to influence your teen’s financial knowledge and habits with some important lessons.”