Dave Ramsey vs. Robert Kiyosaki:
A Take on Two Financial Philosophies
Pour yourself a cup of tea and settle in—I've got some thoughts to share about two books that have been sitting on my nightstand for years.
You know that feeling when you're scrolling through financial advice online and everyone seems to be shouting different things at you? "Cut up your credit cards!" "Use debt to build wealth!" "Save every penny!" "Invest in real estate!"
Well, I recently dove into the world of Dave Ramsey and Robert Kiyosaki, and honestly? I think I finally get why people are so divided. It's like they're speaking completely different languages about money—but here's the thing: they're both right. Just not at the same time.
Two Gurus, Two Completely Different Worlds
Let me tell you about these two guys who've basically built empires around their money philosophies.
Dave Ramsey is like that friend who grabs you by the shoulders and says, "Listen, you need to get your life together. Now." His whole thing is about getting out of debt, staying out of debt, and building wealth the slow, steady way. Think of him as the financial equivalent of meal prep—not glamorous, but it works.
His famous "Baby Steps" start with saving $1,000 for emergencies, then paying off all debt except your mortgage, then building a full emergency fund. It's systematic, it's safe, and honestly? It's probably what most of us needed to hear years ago.
Robert Kiyosaki, on the other hand, is that friend who's always talking about their latest investment opportunity over dinner. He wrote "Rich Dad, Poor Dad", and his whole philosophy is about using debt strategically to buy assets that put money in your pocket every month.
He talks about escaping the "rat race" by becoming an investor or business owner instead of just trading your time for money. It's exciting, it's ambitious, and it requires you to think about money in a completely different way.
But what exactly is this "rat race" he keeps mentioning? Picture this: you wake up, go to work, earn money, pay bills, and repeat. Forever. You're essentially trapped in a cycle where you can only earn money when you're actively working. Take a vacation? No income. Get sick? No income. Want to retire? You better have saved enough because the money stops flowing the moment you stop working.
The rat race is trading hours for dollars—and there are only so many hours in a day.
Kiyosaki's solution? Stop trading your time for money and start making your money work for you. Instead of being the hamster running on the wheel, become the person who owns the wheel (and collects rent from all the hamsters).
This means building systems—rental properties, businesses, investments—that generate income whether you're at the beach in Costa Rica or sleeping in your own bed. It's about creating what he calls "passive income streams" that don't require your constant presence.
The Great Canadian Translation
Now, here's where it gets interesting for us Canadians. Both of these guys are American, so some of their advice needs a bit of translation.
When Ramsey talks about 401(k)s, we're thinking RRSPs. When Kiyosaki mentions tax strategies, we need to consider our different tax brackets and capital gains treatment. The good news? The core principles still apply, but we get to work within our own system.
For instance, Ramsey's advice about avoiding debt makes sense here too—our credit card interest rates are just as brutal as theirs. But Kiyosaki's real estate strategies? Well, we've got our own housing market dynamics to consider, plus different mortgage rules and tax implications.
Here's What I Realized: It's All About Timing
The lightbulb moment for me came when I stopped trying to pick a side and started thinking about seasons of life.
Dave Ramsey is basically financial first aid. If you're drowning in debt, stressed about money, or have never successfully stuck to a budget, he's your guy. He's the emergency room doctor who's going to stop the bleeding and get you stable.
Robert Kiyosaki is more like a personal trainer for wealthy people. He assumes you've already got your basics sorted and you're ready to do some heavy lifting to build serious wealth.
So Which One Are You?
You might be in "Dave Ramsey season" if:
You're carrying high-interest debt on credit cards or lines of credit
Money stress is keeping you up at night
You've never successfully budgeted or you're constantly overspending
The idea of investing feels overwhelming because you can barely manage your monthly bills
You might be ready for "Robert Kiyosaki season" if:
You've got your consumer debt under control
You have a solid emergency fund (3-6 months of expenses)
You're maximizing your RRSP and TFSA contributions
You're looking for ways to grow wealth beyond just saving
My Personal Take
I'll be honest—I started firmly in Team Ramsey territory. The idea of using debt to build wealth scared me because, well, I'd seen what "bad debt" could do. But after getting my financial house in order, some of Kiyosaki's ideas started making sense.
The key insight? They're not mutually exclusive. You can follow Ramsey's principles to get stable, then gradually incorporate Kiyosaki's strategies as you build confidence and capital.
What This Looks Like in Real Life
Maybe you start with Ramsey's debt snowball method, paying off your credit cards and car loan. You use his envelope budgeting system to get your spending under control. You build that emergency fund.
Then, once you're financially stable, you might start exploring Kiyosaki's ideas. Maybe you learn about real estate investing, or you start a side business. You begin thinking about how to make your money work for you instead of just saving it.
The Real Estate Debate: Let's Do the Math
Since we're talking about these two approaches, let me share something that really opened my eyes—Kiyosaki's "Cashflow Quadrant" concept and how it applies to real estate investing.
The Cashflow Quadrant divides people into four categories:
E (Employee): You trade time for money
S (Self-Employed): You own a job, but you're still trading time for money
B (Business Owner): You own systems that generate money without your direct involvement
I (Investor): Your money works for you through investments
Kiyosaki argues that real wealth comes from moving to the right side of the quadrant (B and I), while Ramsey focuses on building wealth steadily from the left side (E and S) through disciplined saving and investing.
But here's where it gets interesting—let's look at a real example using Canadian numbers.
The Great Real Estate Showdown: Debt vs. Cash
Picture this: You've found a $200,000 rental property in a decent neighborhood. Rent is $1,500/month. Now, you have two choices:
Option 1: The Kiyosaki Way (Using Debt)
Purchase price: $200,000
Down payment (30%): $60,000
Mortgage: $140,000 at 6% interest (25-year amortization)
Monthly mortgage payment: $896
Monthly rent: $1,500
Monthly cash flow: $1,500 - $896 - $300 (taxes, insurance, maintenance) = $304
Option 2: The Ramsey Way (Save and Pay Cash)
Same $200,000 property
Household income: $120,000
Available for saving (50% of income): $60,000/year
Time to save $200,000: 3.33 years
Monthly rent after purchase: $1,500
Monthly cash flow: $1,500 - $300 (taxes, insurance, maintenance) = $1,200
The 10-Year Comparison
Let's see what happens over 10 years from today:
Kiyosaki Method (Debt):
Immediate cash flow: $304/month × 120 months = $36,480
Principal paydown over 10 years: ~$42,000
Total benefit: $78,480
Initial investment: $60,000
Net position: $18,480 ahead
Ramsey Method (Cash):
Years 1-3.33: $0 (saving period)
Years 4-10: $1,200/month × 80 months = $96,000
Total benefit: $96,000
Initial investment: $200,000 (but spread over 3.33 years)
Net position: $96,000 in rental income
The Plot Twist: Time vs. Money
Here's what really made me think: the cash buyer ends up with $96,000 in rental income over the 10-year period, while the debt buyer gets $78,480 in total benefits (cash flow plus principal paydown).
But—and this is a big but—the debt buyer had their money working for them for the full 10 years, while the cash buyer spent 3.33 years accumulating capital before they could even start.
The debt buyer also has $140,000 less of their own money tied up in the property, which they could potentially invest elsewhere.
Now here's the real kicker when we think about the "rat race":
The cash buyer had to work for 3.33 years, saving $60,000 annually (half their household income), before they could even start building passive income. That's 3.33 years of intense saving, budgeting, and saying "no" to things they wanted. They traded 3.33 years of their life working extra hard, living below their means, to eventually escape the rat race.
The debt buyer? They escaped the rat race on day one. They immediately started receiving $304/month in passive income that required no additional hours of work. While the cash buyer was grinding away for over three years, the debt buyer was already collecting rent checks and building wealth.
The Time Freedom Factor:
Let's think about this differently. The cash buyer traded approximately 3.33 years of financial freedom (living on 50% of their income) to eventually own a property free and clear. The debt buyer sacrificed some long-term wealth to gain immediate time freedom.
Which approach gave more life freedom? The debt buyer started living off passive income immediately, while the cash buyer had to delay gratification for years. However, the cash buyer eventually has more monthly cash flow ($1,200 vs $304) and owns the property outright.
Now, understand that neither circumstance is flawless. In both situations you may have vacancy. If you cash flowed the property owning it free & clear, you have less to take care of monthly when there is a lapse between tenants, or god forbid you have a tenant nightmare that does not pay. Kiyosaki’s method of carrying a mortgage means that you may be paying out of your own pocket now if you had a lapse in tenancy. You would have to ensure at that time that you’re financially stable enough to cover rents and/or repairs and maintenance. That $304 per month in cash flow can be eaten up quickly under unfortunate circumstances.
This is the heart of the Kiyosaki vs. Ramsey debate: Do you want financial security (Ramsey) or do you want time freedom now (Kiyosaki)?
What This Means for Canadians
This example shows why both approaches can work, but they require different mindsets:
The Kiyosaki approach works if you:
Can handle the risk of leverage
Have good credit and stable income
Can find properties with positive cash flow (harder in today's Canadian market)
Want to scale quickly with multiple properties
The Ramsey approach works if you:
Value security and debt-free living
Have the discipline to save consistently
Don't want to deal with mortgage payments and banks
Sleep better without leverage
In today's Canadian real estate market, finding properties that cash flow positively with debt is challenging, especially in major cities. This might tip the scales toward the Ramsey approach for many of us.
The Bottom Line
Here's what I wish someone had told me earlier: you don't need to choose between these philosophies. You just need to be honest about where you are right now.
If you're struggling with debt and money stress, embrace the Ramsey approach. Get boring with your money. Pay off debt. Build that emergency fund. Create stability.
If you're already there and ready for the next level, start learning from Kiyosaki. But do it gradually, with money you can afford to lose while you're learning.
The goal isn't to pick the "right" guru—it's to pick the right approach for your current season of life. And honestly? That might change as you grow and learn.
Your financial journey is uniquely yours. Whether you're team "cut up the credit cards" or team "leverage debt strategically," the most important thing is that you're taking action.
Book Recommendations:
By Dave Ramsey:
The Total Money Makeover – His bestselling step-by-step guide to the debt-free lifestyle.
Financial Peace Revisited – The foundation of his money principles and personal story.
Baby Steps Millionaires – How ordinary people build wealth using the Baby Steps.
EntreLeadership – Business and leadership principles from a faith-based perspective.
Smart Money Smart Kids (with Rachel Cruze) – Teaching kids about money.
The Legacy Journey – Building wealth and leaving a legacy the right way.
More Than Enough – Living a content and values-driven life.
By Rachel Cruz:
Love Your Life, Not Theirs – On comparison, contentment, and living within your means.
Know Yourself, Know Your Money – How your upbringing affects your money behaviors.
Smart Money Smart Kids (co-written with Dave Ramsey) – Teaching kids money skills.
By John Delony:
Own Your Past, Change Your Future – How your past shapes your mindset and behaviors.
Building a Non-Anxious Life – A mental health-focused book for peace and presence.
By George Kamel:
Breaking Free From Broke – Escape the traps of modern consumerism, reclaim your money, and build real wealth.
By Robert Kiyosaki:
Rich Dad Poor Dad – The classic that changed how people think about money.
Cashflow Quadrant – Explains the four types of income earners: E, S, B, and I.
Rich Dad’s Guide to Investing – Investing strategies for wealth building.
The Real Book of Real Estate – Advanced RE investing principles.
The Business of the 21st Century – Focus on network marketing and entrepreneurship.
Increase Your Financial IQ – How to expand your money knowledge.
Why "A" Students Work for "C" Students – A take on financial education vs. academic success.
Second Chance – Economic forecasting and money advice for uncertain times.
FAKE: Fake Money, Fake Teachers, Fake Assets – On what Kiyosaki sees as modern financial lies.
By Tom Wheelwright (Rich Dad’s Tax Advisor):
Tax-Free Wealth – A must-read on how the rich use the tax code to legally reduce their taxes.
The Win-Win Wealth Strategy – Shows how to build wealth while positively impacting the economy.
