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The Importance of Facts Versus Opinions

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Why people struggle financially

"The only thing that is an asset or a liability is you." - Rich dad

I run into my fair share of people that think I'm totally wrong when it comes to money. Often these people are very loud and adamant in their disagreements with me, and they want to argue their point.

I always hope that I'll get arguments with facts involved. I'm happy to engage with, and learn from, facts. Unfortunately, a lot of times what I get is a bunch of opinions.

Rich dad loved facts too. He said, "If you want to be successful in life, you've got to know the difference between facts and opinions. You can't blindly accept financial advice."

Common financial opinions

Often I hear the same financial opinions repeated over and over again—the common sense of money. Here are a few:

The numbers tell the story

Rather than deal with opinions, I prefer to deal with facts. Rich dad taught me that the most important thing was not what people were saying but what the numbers were saying. "The numbers will tell you the facts," said rich dad. "Your financial survival depends upon the facts, not some friend or advisor's wordy opinions."

When I was younger, to drive this idea home, my rich dad asked me a simple question: "What is your family home worth?"

"Oh, I know," I replied quickly. "My parents are thinking about selling so they had a real estate agent come in and do an appraisal. They said the house was worth $36,000. That means my dad's net worth increased by $16,000 because he only paid $20,000 for it five years ago."

"So, is the appraisal and your dad's net worth a fact or an opinion?" asked rich dad.

At that moment I realized they were opinions, and if acted on as facts, could be potentially disastrous financially.

Opinions and financial education

The reality is that we won't always have perfect knowledge and facts to work from. We will all have to work with opinions. The trick is to make sure we have a solid financial education to allow us to adjust quickly when we do have the facts.

Ultimately, as my rich dad said, "The only thing that is an asset or a liability is you." This is because you are the one who acts on both facts and opinions. Many smart people have made horrible financial decisions by not understanding the difference between facts and opinions. In the process they've ruined perfectly good opportunities and make a lifetime of financial liabilities.

Take stock

Today, I encourage you to take stock of where you are on your financial journey. Are you following opinions or facts when it comes to your financial decisions? Do you feel confident in your financial education to know the difference?

We all have more that we can learn. It is a process that never stops—unless we decided to make it stop. Keep learning, keep doing, and keep growing. And never settle for opinions when you can learn the facts.

Original publish date: October 22, 2013

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