Page 115 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

Just like housing, as the Dow is going up in price, its purchasing power
is actually coming down. This loss of monetary purchasing power makes

the financial future of most workers less secure. These charts say their
future will cost them more money and become more expensive.
Without leverage, most workers cannot put enough money aside for their
future, because the more money they save the less valuable it becomes.

There is a funny story about the German economy just before Hitler came
to power that illustrates this concept. The story goes that a woman took a
wheelbarrow filled with money to the bakery to buy a loaf of bread. After
negotiating a price for the bread, she came out of the bakery to get her

money, only to find that someone had stolen her wheelbarrow and left her
money. This is happening to the American saver.
How much will a retired person need in savings to afford retirement in
such an inflationary economy? What happens if you are retired and need

lifesaving surgery, which government medical programs will not pay for?
What do you do if your problem is not having enough money to retire on?
This is why financial IQ #4: leveraging your money, is so important.
Leverage makes your money work harder for you by using other people’s

money, and if you have a high financial IQ #3, you can pay less and less in
taxes.

What Is Leverage?

In very simple terms, the definition of leverage is doing more with less. A

person who puts money in the bank, for example, has no leverage. It’s the
person’s money. A dollar in savings has a leverage factor of 1:1. The saver
puts up all the money.