Blog | Paper Assets, Personal Finance

3 Smarter Christmas Money Moves

My poor dad, my natural dad, would always say, "We can't afford that." My rich dad, my best friend's dad, would always ask, "How can we afford that?" Two very different ways of looking at the world.

play cashflow now

It's the time of year when money is on everyone's mind. After all, if you're like the average American in 2020, you're planning on spending over $851 on gifts, according to the American Research Group. And if you're like the average American, you don't have that extra money to spend. You're probably going to go into some kind of debt to do it.

The media knows this, and there's no shortage of articles on how to save money during the Christmas season. From opting out of gift buying to making sure you use the best credit card to go into holiday debt, the advice runs freely this time of year from so-called financial experts.

The problem is that most of this advice is poor financial advice. By that I mean advice that keeps you in a poor mindset. It is conventional advice that doesn't work anymore, advice the rich don't follow.

Bad Christmas money advice abounds

Take for instance an article from CNN Money called "3 Smart Money Moves to Make in December". In this article, you're encouraged to:

Bad Christmas money advice #1: Give more to your 401(k)

Take stock in your cash flow and decide if you can put more money in your 401(k) for the coming year, says author Michael Douglass. "This is extra easy if you get a pay raise at the end of the year, you can make the adjustment simultaneously with your paycheck increase, so you won't even notice the change."

At Rich Dad, we've made no secret about why we despise 401(k)s. Take for instance one reason from the horse's mouth, John Bogle, the head of Vanguard:"…The financial system put up zero percent of the capital and took zero percent of the risk and got almost 80 percent of the return, and you, the investor in this long time period, an investment lifetime, put up 100 percent of the capital, took 100 percent of the risk, and got only a little bit over 20 percent of the return."

If ever there was a real life Christmas Scrooge, it’s those 401(k) funds screwing you out of your money.

Rich Dad's Christmas money advice: invest in cash-flowing assets

If you want to be rich, the last thing you should be doing is increasing your contribution to your 401(k). Instead, you should use any raise or Christmas bonus you get to build an investment account for cash-flowing assets. This is key because while you have little control over a 401(k), you have full control over investments in cash-flowing assets. And if you want the tax benefits of a 401(k) to do this, you can use a vehicle like a self-directed IRA.

The best part of this strategy is that the more cash-flowing assets you acquire, the more money you make each month from those assets that you could redirect into even more cash-flowing assets. This compounding of assets, not just money, creates true wealth—and many happy and wealthy Christmases to come.

Bad Christmas money advice #2: save your Christmas bonus

According to the article on CNN, nearly 42% of people will get a holiday bonus from their employer. "If you're one of the lucky workers getting a monetary 'thank you' from your boss, it's a no-brainer to put that money in savings," writes Douglass.

Rich Dad's Christmas money advice: savers are losers; spenders are winners

Rich dad’s mantra was, "Savers are losers." He didn't mean it as a personal insult to people who save their money. Rather, he meant it literally. If you bet on saving money as a path to financial security, you will lose.

In an article I wrote called “Saving vs. Investing in 2019,” I shared this: "In an economy where almost everything is built to take your money, saving it is of little value. From inflation to taxes to hidden fees in your 401(k), the system is stacked against you."


"Money is not backed by anything. It is a currency, which like a current of electricity, is always moving. Today, money flows from one sector to another. If it stops moving, like a current it dies. If your money isn't moving, it is dying, slowly, losing value day by day."

In the new economy, it is spenders who are winners. Not those who spend on liabilities that take money out of their pocket each month, but rather those who spend money on assets that put money in their pockets each month.

Again, as I mentioned earlier in this post, you should be stuffing extra money into an account meant specifically for investing in assets. This could be construed as savings, but it is a very different way to save. It is saving to spend. The aim should be to move that money as quickly as possible into assets that generate money rather than to let it sit and die.

Bad Christmas money advice #3: give experiences; not gifts

As mentioned before, the average person will spend $851 this Christmas season on gifts. Go cheap, says Douglass, and give experiences like a walk in the woods. "Let's say you reduce your holiday spending by $500," he writes, "and instead use that money to pay down credit card debt that you've been sitting on for awhile."

Rich Dad's Christmas money advice: Learn to increase your means, not cut them

There's actually a lot of good in the idea of experiences over stuff. Both Kim and I love to go on trips and see the world together, for instance. But the problem with this advice—besides the fact that experiences are still liabilities—is that at the core it still keeps you poor. It's about cutting expenses rather than increasing your means. If you want to be able to buy a bunch of nice gifts for your loved ones, you should be able to do that. Focusing on cutting expenses will never put you in a place where you can.

My poor dad would always say, "We can't afford that." My rich dad would always ask, "How can we afford that?" Two very different ways of looking at the world.

If you're going to cut back on the Christmas gift giving this year, by all means do it (and if you have bad debt like credit card debt, you should pay it off). But use the extra money to invest in something even more important than experiences. Invest it in financial education. Whether it's books, classes, or a coaching session, learning how to shift your mindset from "I can't afford it" to "How can I afford it?" will pay big dividends in the future. Just imagine if you could give lavishly and enjoy amazing experiences. You can, if you learn how to harness the power of investing in the right assets.

Original publish date: December 12, 2016

Recent Posts

Here’s Why You Need Passive Income to be Financial Free
Personal Finance

Here’s Why You Need Passive Income to be Financial Free

During hard economic times, it’s really easy to identify the vast differences between investors. Despite honest efforts, not all investments are wise.

Read the full post
Women: Should You Live Below Your Means?
Personal Finance

Women: Should You Live Below Your Means?

Here’s why living below your means has nothing to do with having a secure and financially healthy life.

Read the full post