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March 06 2013

Education Vs Financial Freedom

In the “About Me” section of my blog (which I wrote 5 years ago), I spoke about how “if you want to get rich, don’t go to school”. I think this point is worth bringing up again. Especially at a time when US Student Loans has exceeded the US$1 trillion mark!

Its quite worrying that such large numbers of young adults are barking up the wrong tree when trying the make their way in the world. I assume that most rational young adults go to school and choose careers because they eventually want to achieve financial freedom. If that is their true objective, then a key strategy is to spend less than you earn and to invest the difference over time.  So it alarms me that the majority of young people are doing the complete opposite. I can’t think of anything worse than starting a working career in debt.

I was watching this Ted Talk below by Sugata Mitra over the weekend. Its a fascinating story about how to design the school of the future and how children have the ability to spontaneously learn if given the opportunity and encouragement.

But the most memorable part of the talk for me was in the introduction when Mr Mitra explained the origins of the modern education system. It was a designed about 300 years ago during the time of the British Empire. In order to control the vast empire without computers, telephones with hand written notes and ships, the British Empire required large scores of people who could read, write and do simple mathematics. This education system was designed to create identical graduates so that they could be integrated into the “bureaucratic administrative machine” that keeps the British Empire running.

Mr Mitra goes on to say that that this education system is still working fantastically well today, except its completely obsolete. We’re not going to school thinking “hey, I want to be part of the bureaucratic administrative system”. But that is exactly what we’re doing – learning to be a rat in the rat race.  Somewhere along the way, we have programmed into our collective thinking that more education means more income. I think this myth is easily debunked when you look at the chart below:

student loan Education Vs Financial Freedom

The chart shows that despite massive growth in student loans, the rate of growth in household income is actually declining. Also, most people by now, can see that the riches people on the planet today are mostly college dropouts. The usual examples include Bill Gates, Steve Jobs, Richard Branson ..etc

Today, people are paying top dollar to schools, colleges and universities that teach a lot of “stuff” but does not specifically teach a person how to make money or live a successful life. Most school programs teaches you the “stuff” you need to get a job. And sadly, a job where you trade time for money is not how you get rich or achieve financial freedom. Is that really what you want to get into debt for??

Getting a “Proper” Education

So what’s the best way to get a “proper” education? I don’t profess to have the ideal answer but I have 2 young kids of my own (5 and 3 years old) and the answer to this question is extremely important to me. So here’s what I think…

I think the best education starts at home where we teach our kids that they can do ANYTHING they want to. Not just things that make money but anything that helps other people and makes them happy at the same time. If you didn’t get this nurturing belief instilled in your childhood, get over it and teach it to yourself! Don’t blame anyone or anything and take responsibility to change it now.

Here’s a video that expresses this idea very well:

jd bookeeping 224x300 Education Vs Financial Freedom

My son doing his own personal book-keeping at age 4.

I also believe in apprenticeship. As an entrepreneur and information marketer, I do want to expose my kids to all that I do every day. So I hope that by the time they are 13 or 15 years old, they would be at a higher level of proficiency in what I do currently.

I have them play in the office while I work. I introduce them to my clients whenever the opportunity arises and have them talk to them too to learn communication skills. I teach them about the value that we provide to our clients and why they happily pay us some money back in return. I’ve already taught my elder son keep a ledger of his income and expenses and teach him how to always set aside a of his income (mostly gifts and payment for chores) as long term savings. I feel that all of this IS their life education. And so, whether they go to college or university, is entirely optional.

So I think that if you are doing well at something, teach it to your kids. If they do display a keen interest (quite likely), then encourage the to learn that skill that they would then use for life.

If you are not already an entrepreneur or have already achieved financial freedom, then find a growth area to expose them to. A very obvious one is in creating a business in the information age.  Whether you have young kids or even if YOU want to learn something new, learning to code or making a business in digital information marketing is a great area to start. Here’s another great video explaining the opportunities in the Information Age:

 Conclusion

If you’re a young adult or if you have kids, please teach them the principles to achieve financial freedom. Teach them how to become investors and business owners. Please do not rack up student loans thinking that a job will make you financially free. Spend less than you earn and invest the difference. Start by monitoring your income and expenses.

If you’re already a product of the education system (like me), you need to “unlearn” the “stuff” that does not bring you life success and start focussing on learning new things that do. I went back to school to study nutrition to start a wellness centre and I taught myself to create ecommerce websites and build apps to market digital products (among many other things).

Find something you love to do and that adds value to others and get really good at doing that. Then monetize it. If you have the propensity for it, learn to code or create a business in information marketing. This is a very obvious growth area in the Digital Information age. Heck, I know people making a lot of money selling ebooks on knitting! You could turn almost any interest into a great digital product if you really had the passion for it (e.g. apps, ebooks, software..etc).

Above all, take responsibility for your life. Choose to unlearn disempowering beliefs and adopt new beliefs that empower you towards your life goals.

Don't be the product, buy the product!

Schweinderl