Are you struggling to get ahead financially? Unfortunately, many people lack a basic understanding of financial literacy. In this blog post, I’ll discuss some of the basics. I’ll also compare two of the biggest financial gurus of our time!
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Getting your finances squared away is extremely important, whether you’re thinking about joining the military, are currently serving, or are a veteran.
In particular, if you’re currently serving in the military (and especially if you’re deployed), you have a great opportunity to save a lot of money and fast-track your goals!
I’m not a financial expert. I’m still learning and on my personal journey to financial freedom at the time of this writing.
I just thought it would be fun and interesting to take a break from my normal type of blog posts and delve into something a little different this time around, especially since personal development is going to be a big part of Phase 2 Tactical.
With that out of the way, let’s dive in!
A Brief History of Financial Illiteracy in the U.S.
Before I get into the comparison between two of the biggest names in the world of financial advice, as the title of this blog post suggests, allow me to first explain the reasoning for this unique post.
Financial literacy is extremely important for everyone of all walks of life to master. This is especially true for military personnel and veterans. Yet most people don’t even have a monthly budget and don’t know what a financial statement is! Why is that?
The reason is very simple. Our education system has failed us. The public school system in the U.S. doesn’t teach the basics of financial literacy. So it’s up to individuals to learn this critical skill themselves.
If you’re lucky and were raised by financially competent parents or have a good mentor, you may have been lucky enough to learn from them. Otherwise, you’re likely on your own here.
Unfortunately, college won’t teach this skill either. They may offer some courses on the subject of accounting or things like that. But they most likely won’t teach you much about financial literacy.
I’m not against higher education. But the simple truth of the matter is that “theory” taught by professors in an academic setting simply won’t suffice in the real world.
I have a Bachelor of Science in Business Administration. And I’ll be the first to tell you that a college education is important if you plan to get a regular 9-to-5 job that pays decent. Of course, it also depends on what career field you choose.
Some careers that pay well don’t even require a college degree. With that being said, college isn’t going to teach you much in the way of real-world skills that you’ll learn from the school of hard knocks. Again, I’m not bashing higher education.
According to Experian’s 2019 Consumer Debt Study, the total amount of consumer debt in the U.S. is $14.1 trillion! Yes, that’s a trillion with a “t”!
The average American carries an average personal debt of $90,460. And that doesn’t even include the massive amount of debt that our own government owes!
According to the Government Accountability Office, the total federal debt was $22.8 trillion at the end of fiscal year 2019!
I hate to break it to you. But for those who aren’t aware, the U.S. has a huge spending problem! So, what’s the solution, then? Financial literacy!
The Basics of Financial Literacy
I won’t get into too much detail here because it’s beyond the scope of this blog post. But in a nutshell, financial literacy is pretty much what it sounds like. I’ll use Dave Ramsey’s definition because I couldn’t have come up with a better one myself!
According to Ramsey Solutions (2021), “financial literacy is the possession of skills that allow people to make smart decisions with their money.” Notice how he says “the possession of skills,” not the possession of knowledge? That wasn’t an accident!
While the word “literacy” in financial literacy is indicative of knowledge, knowing is not enough. All of that knowledge gained is worthless if you don’t take action on it, right? That’s the point he’s trying to get across.
I highly recommend you read the blog post where I got that definition, titled What Do You Need to Know About Financial Literacy? and goes into the subject in detail.
Robert Kiyosaki has lots of good information on the subject as well. But as I’ll explain, his take on things is different than Dave’s, and they each target a very different audience. But in my opinion, the basics of financial literacy include the following:
- Creating, using, and sticking with a budget
- Saving for an emergency or unexpected event (3-6 months of expenses is recommended)
- Learning about good and bad debt, how to use debt responsibly, as well as how to monitor and improve your credit score
- Learning the basics of saving for retirement and investing
Dave Ramsey vs. Robert Kiyosaki
So whose financial advice is better? Dave Ramsey’s or Robert Kiyosaki’s? Well, the short answer is that one isn’t necessarily better than the other. As I mentioned above, they each serve a very different audience.
It ultimately depends on what you want out of life and your financial situation. With that said, let’s compare them and their financial philosophies. We’ll start with Dave Ramsey.
Dave Ramsey
I actually got started with Dave a few years ago. My stepdad had seen that I was taking an interest in getting my finances squared away. So he had bought me one of Dave’s popular books, The Total Money Makeover.
I highly recommend that book, especially if you’re just getting started on your financial journey or have a lot of debt that you need to tackle.
In addition to some great books on finance, he also offers courses and apps for things like budgeting and more. I especially love what he calls the Debt Snowball, which is a method he teaches to eliminate debt fast.
Dave’s teaching style comes from a Christian perspective, based on sound financial principles and what the Bible teaches about money and finances. His approach to finances is very conservative.
For example, he’s against using credit cards and taking on debt. Don’t believe me? Try buying one of his products or services on his website with a credit card! You can’t, because he only accepts debit cards!
I don’t agree with everything Dave says. For example, I remember reading a blog post of his awhile back where he said that purchasing a home using a VA home loan is a bad idea. I completely disagree and can say from personal experience that the opposite is true!
I also disagree with him on some other things too, like that credit cards are evil. Or that your credit score isn’t important and just shows that you love debt.
With that being said, I highly respect Dave Ramsey. He’s doing a lot of good work and is helping people change their lives and financial situations. Like I said, the U.S. has a huge spending problem. And Dave has some great, common sense solutions!
Robert Kiyosaki
Robert Kiyosaki is best known for his book, Rich Dad Poor Dad. And while he offers much more than that, I cannot recommend that book enough!
It’s a great starting point to become familiar with Robert’s work and background. But more importantly, it’ll change your perspective on how you look at money!
Like Dave, Robert also offers everything from books to courses and other offerings. He even created a fun board game called Cashflow that teaches you about investing and wealth building while having fun!
Robert’s financial advice and strategies are derived from the experiences he had while growing up and the advice he received about money from his two dads.
As the title of the book mentioned above suggests, one of his dads was rich, while the other was poor. So he was able to see different viewpoints and perspectives from each of them about how they look at money.
Luckily for Robert, he took his rich dad’s advice, learned from him, became wealthy himself, and is a very successful entrepreneur and investor today.
One thing that makes Robert Kiyosaki stand out is that a lot of his advice and methods are controversial. He challenges conventional wisdom and stirs up the financial community.
An example of this is his famous quote that your house isn’t an asset (even if you own it free and clear). Or his statement that you can make money without money.
I also love how he describes the four quadrants in his second book, CASHFLOW Quadrant. It’s one of my favorite books!
It helps you identify what quadrant you’re currently in and then clearly outlines what you need to do to get to the quadrant that you want. It’s the perfect book for aspiring entrepreneurs!
The Verdict
Dave Ramsey is more tailored to beginners and those who need to learn the basics of financial literacy. He’s perfect for those who want to learn how to create a budget, get rid of debt, save for retirement, and more.
A lot of his content, books, courses, and programs also go into some advanced-level strategies and information.
But one important thing to note is that Dave Ramsey is for those who intend to work a regular 9-5 job their whole life, retire around age 65, and be well off in their golden years.
You can definitely become a millionaire by following Dave’s strategies. You’ll just do it slowly and enjoy the fruits of your labor in or around retirement.
Robert Kiyosaki can be a good resource for beginners too. But he focuses a lot more on advanced wealth-building strategies, including entrepreneurship, starting a business, advanced investing strategies, real estate, etc.
If you’re an entrepreneur or an aspiring entrepreneur, or if you want to take your financial skills and investing knowledge to the next level and go deeper with them, Robert is your man.
He’s for those who want a quicker way of building wealth, or even to get rich. He’s also for those who want to work smarter and not harder, make their money work for them, and create passive income streams.
Personally, Robert Kiyosaki is more in alignment with my financial goals and ambitions. But there’s no right or wrong answer here, and everyone is different.
With that being said, I’m also a fan of Dave Ramsey. Basically, I take what I find useful from both of them and implement it into my financial strategy and goals.
How This Applies to the Military Community and Veterans
Like I mentioned at the beginning of this blog post, you have a great opportunity to start saving a lot of money while you’re in the military. True, you don’t really make a whole lot. But your expenses are minimal, especially if you’re single and live in the barracks or dorms.
On the other hand, if you’re preparing to leave the military soon or are a veteran, it’s more important than ever to start preparing financially for your future!
I’ll end this blog post with one final thought. In Robert Kiyosaki’s second book, CASHFLOW Quadrant, he goes into what he calls the four quadrants. Everyone will ultimately fall into at least one of these quadrants in their career. The four quadrants include the following:
- E: Employee
- S: Self-Employed
- B: Business Owner
- I: Investor
Which quadrant do you currently fall under? Which quadrant do you want to ultimately be in?
There’s no right or wrong answer here. It all comes down to personal preference and what you want out of life. But regardless of which path you choose, ensure that you build a solid foundation of financial literacy so you can ultimately enjoy financial freedom in your life!
For more information and to explore our full range of resources, visit phase2tactical.com.
