Blog | Personal Finance

The 3 Types of Education

Why a good school and a good job is not enough in today’s world

Summary

• You’ll need the three types of education to become rich

• With the evolution of education, reading, writing, and arithmetic basics are no longer enough to be successful

• Investing in your financial education is the key to building wealth

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One of the biggest things parents desire for their children is a good education. For most parents, this means an education that helps their children get a good job, save money, buy a house, and invest in a diversified portfolio of stocks, bonds, and mutual funds.

If you’re nodding your head at this as something good, you have a lot to learn…both about education and how money works.

The truth is that most education is designed to prepare people to live in a world that no longer exists—the industrial age where the old rules of money apply.

The truth is that the world has changed, and so has education. In the Information Age, there are new rules of money that require three different types of education.

Academic education

This was poor dad’s favorite education. He had a PhD and worked his way up to the point where he was the superintendent of the Hawaii public school system. From the viewpoint of those who value academic education, poor dad, Robert Kiyosaki’s natural father, was very successful. He based a lot of his identity and pride on his education and his position in the government.

The problem was that poor dad had no idea how to run a business or manage money. Because of this, though he was well paid, he struggled mightily when it came to his finances for most of his life.

Later, when poor dad lost an election to be the lieutenant governor of Hawaii, he decided he wanted to go into business. Unfortunately, the endeavor failed and by the time he died, he was nearly penniless. On his deathbed, he lamented that he had so little to leave to his children. Though they assured him they didn’t need his money and that they loved him, it didn’t help the shame he had for himself.

Where academic education fails

The truth is that while academic education is important and teaches you reading, writing, and arithmetic basics, it doesn’t prepare you for the real world if you want to be rich.

Rather, it teaches you how to be a good employee. It does this by having you follow a rigid schedule, do what you’re told, and not question. If you fail, you’re reprimanded. If you question how something is done, you’re told you’re a troublemaker.

Yet, it is the very qualities that make you successful in business and money that academic education discourages—often with a lot of disdain.

The strange thing about people who did well in school, like poor dad, is that they respect academic education, but fail to respect financial education. They seem to think that, just because they hold a PhD or are an attorney, accountant, or medical doctor, business and investing should be easy for them.

This is simply academic arrogance. It is also very a expensive arrogance.

Professional education

Professional education, like academic education, is also important. It is education to earn money by being a productive member of society. For example, medical doctors go to medical school, lawyers go to law school, pilots go to flight school, chefs go to cooking school, and so on.

Growing up, Robert would have been the apple of poor dad’s eye if he had gone on to be a doctor or a lawyer. He did not want those things because he knew he wanted to be rich.

He did, however, have both excellent academic and professional educations. For university, Robert attended the Merchant Marine Academy in Kings Point, New York. After graduation, he could have taken a job in the shipping industry making over $70,000 a year, which was a lot of money in the 70’s. Best yet, he’d only have to work half the year to make that. But he didn’t want it.

Instead, he enlisted in the Navy and flew in the Vietnam War. In the military, he gained the ability to be a pilot. Again, once the war was over, he could have taken a well-paying job working for the airlines. It was tempting, but, again, he knew he wanted to be rich…not just a high-paid employee.

So, he took a job as a salesman for Xerox so that he could learn a new skill to get rich: sales.

Professional education limits

The funny thing is that most people think the way to riches is through professional education. After all, people who become lawyers, doctors, and pilots, do make a lot of money, right? The problem is though they make a lot of money, they are not rich. They pay a lot of money in taxes and do not really know how money works. So, they spend their money on liabilities rather than investing in assets or building businesses.

At best, professional education teaches you how to own a job but not how to own a business or invest your money.

Financial education

As a young man, rich dad said, “If you are going to be successful in the real world, you and your generation will need more than just academic and professional education.”

Rich dad, Robert’s best friend’s father, was speaking, of course, about financial education. Financial education is about how money works and how to make it work for you. It teaches you about debt and how to leverage it, the history of money, what a financial statement is and how to read it, the difference between an asset and liability, and so much more.

Robert has written in the past about how he would teach financial education in the school system, but unfortunately, you’ll not find that type of education in schools that teach both academic and professional education. At best, you’ll learn how to budget, open a savings account, and balance a checkbook.

To be clear, no one is suggesting that financial education is more important than academic and professional education. In fact, those who are financially educated need the help of those who benefited from both. You can’t be successful without the help of great lawyers, accountants, brokers, and more.

But the fact remains that if you want to be rich in today’s world, you need financial education in addition to academic and professional education. You need financial intelligence for success.

Chances are you have a great academic or professional equation, but hopefully you now understand the importance of financial education on top of that. Start building yours today.