Rich Dad's Increase Your Financial IQ summary

You're swimming in the ocean, enjoying the cool water and gentle waves. Suddenly, you feel a sharp tug on your leg. You look down and realize a predator has you in its jaws, ready to drag you under. In the world of money, financial predators are nearly as dangerous, and they're always lurking nearby, waiting to strike. The key to financial survival is learning how to spot them and protect yourself.

Financial predators come in many forms, but they all have one thing in common: they're constantly looking for ways to legally separate you from your hard-earned cash. The more money you have, the more attractive you become to these predators. That’s why the ability to protect your money – and to identify the main threats to your wealth – is a key aspect of financial IQ.

So how can you tell if you're giving away too much of your wealth to others? One way is to look at the percentage of your income that you keep versus the percentage that goes to others. For instance, someone earning $100,000 a year might pay 50% in taxes, leaving them with just $50,000. Another person with the same income might structure things differently and pay only 15% or even 0% in taxes, keeping much more for themselves. Regardless of how you feel about your tax burden, the ability to retain more of the money you earn can be considered part of your financial IQ. 

There are seven main types of financial predators. The author calls them "the B's".

First up are the Bureaucrats, which are simply the tax collectors. Their job is to take your money and hand it over to the government to spend inefficiently. They're constantly devising new ways to reach deeper into your pockets. The author cites the example of the Alternative Minimum Tax, a measure created in 1970 and which was originally aimed at the wealthy – but which now ensnares many middle-class earners as well.

Now for the Bankers, those who are meant to safeguard your money, but – ironically – have become some of the biggest predators of all. Through hidden fees, outrageous credit card interest rates, and questionable practices like subprime lending, bankers often skim far more off the top than most people realize. Even staid institutions like pension funds engage in tactics that line their pockets at the expense of the average worker. For example, pension funds sometimes enter into revenue-sharing agreements with mutual fund companies. These arrangements can create conflicts of interest, as the pension plan provider might favor funds that offer higher revenue-sharing payments rather than those that are best for the participants. To protect yourself from bankers, make an effort to understand all the fees associated with your investments and pension plans. Ask for detailed explanations and consult external advisors as necessary.

Our third financial predators are the Brokers. These are the salespeople who earn fat commissions from your financial transactions. While many are honest, others are just looking to make a quick buck and don't have your best interests at heart. These brokers may churn your account with excessive trades, or else steer you into high-fee products that benefit them more than you.

Next up are Businesses, which are always angling to get you to part with more of your cash. Store credit cards with sky-high interest rates, manipulative sales tactics, and shoddy products are just a few of the means by which they transfer your wealth to their own coffers. Even seemingly legitimate businesses like insurance providers can overcharge, while providing as little as possible in return. 

At number five we have Beaus and Brides, who can turn out to be financial predators disguised as devoted partners. These "love predators" are more interested in your bank account than your personality. Celebrities have lost huge chunks of their wealth in divorces from partners who may have married them more for money than love. Those concerned with this type of financial predator may consider prenuptial agreements to protect their assets in the event of an acrimonious divorce.

Our sixth “Bs” are the Barristers – the lawyers who use the court system to go after your assets. Frivolous lawsuits abound in our litigious society, and legal predators are some of the wiliest of the bunch. Even if you win a suit, the legal fees alone can bleed you dry.

Finally, at number seven we have Brothers-in-Law. These are the family members and others who swoop in like greedy vultures to grab a piece of your estate after you die. Without proper estate planning, your wealth can end up dissipated and not passed on according to your wishes. Plan your estate carefully with wills, trusts, and other legal instruments to ensure your wealth is distributed according to your wishes 

For anyone who wants to accumulate and preserve their wealth, swimming with the financial sharks is an unfortunate fact of life. But by learning to recognize the various species of predators, and by taking proactive steps to protect yourself, you can dramatically improve your odds of coming out ahead. It all starts with financial IQ: having the awareness to spot predators, and the determination to not become their next meal.