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"Having money to burn, the child goes to places where other young people just like them hang out, and they meet people, they date, and sometimes they get married. Life is wonderful now, because today, both men and women work. Two incomes are bliss. They feel successful, their future is bright, and they decide to buy a house, a car, a television, take vacations and have children. The happy bundle arrives. The demand for cash is enormous. The happy couple decides that their careers are vitally important and begin to work harder, seeking promotions and raises. The raises come, and so does another child and the need for a bigger house. They work harder, become better employees, even more dedicated. They go back to school to get more specialized skills so they can earn more money. Maybe they take a second job. Their incomes go up, but so does the tax bracket they're in and the real estate taxes on their new large home, and their Social Security taxes, and all the other taxes. They get their large paycheck and wonder where all the money went. They buy some mutual funds and buy groceries with their credit card. The children reach 5 or 6 years of age, and the need to save for college increases as well as the need to save for their retirement. .
"That happy couple, born 35 years ago, is now trapped in the Rat Race for the rest of their working days. They work for the owners of their company, for the government paying taxes, and for the bank paying off a mortgage and credit cards.
"Then, they advise their own children to `study hard, get good grades, and find a safe job or career.' They learn nothing about money, except from those who profit from their na飗et? and work hard all their lives. The process repeats into another hard-working generation. This is the `Rat Race'."
The only way to get out of the "Rat Race" is to prove your proficiency at both accounting and investing, arguably two of the most difficult subjects to master. As a trained CPA who once worked for a Big 8 accounting firm, I was surprised that Robert had made the learning of these two subjects both fun and exciting. The process was so well disguised that while we were diligently working to get out of the "Rat Race," we quickly forgot we were learning.
Soon a product test turned into a fun afternoon with my daughter, talking about things we had never discussed before. As an accountant, playing a game that required an Income Statement and Balance Sheet was easy. So I had the time to help my daughter and the other players at my table with concepts they did not understand. I was the first person-and the only person in the entire test group-to get out of the "Rat Race" that day. I was out within 50 minutes, although the game went on for nearly three hours.
At my table was a banker, a business owner and a computer programmer. What greatly disturbed me was how little these people knew about either accounting or investing, subjects so important in their lives. I wondered how they managed their own financial affairs in real life. I could understand why my 19-year-old daughter would not understand, but these were grown adults, at least twice her age.
After I was out of the "Rat Race," for the next two hours I watched my daughter and these educated, affluent adults roll the dice and move their markers. Although I was glad they were all learning so much, I was disturbed by how much the adults did not know about the basics of simple accounting and investing. They had difficulty grasping the relationship between their Income Statement and their Balance Sheet. As they bought and sold assets, they had trouble remembering that each transaction could impact their monthly cash flow. I thought, how many millions of people are out there in the real world struggling financially, only because they have never been taught these subjects?
Wednesday, December 30, 2009
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