Book – Rich Dad Poor Dad (What the Rich teach their kids about money, that the poor and middle class do not)
Author – Robert Kiyosaki
Genre – Personal Finance – Non-Fiction
Published in – 1997
Whether you just started working, working for a while or working for a long time and don’t seem to be getting ahead financially, Rich Dad, Poor Dad will help you understand the reason, and provide guidance to gain financial independence.
With perspectives on money and investing that often contradict conventional wisdom, Robert has earned an international reputation for straight talk, irreverence, and courage and has become a passionate and outspoken advocate for financial education.
He claims that one of the reasons the rich get richer, the poor get poorer, and the middle-class struggles in debt are that the subject of money is taught at home, not in school.
About The Book –
Rich Dad, Poor Dad shares an unconventional yet powerful perspective to look at money, how it works, and we must make it work for us, rather than working for it if we ever want to attain financial well-being.
In this best-selling book, he shares what he learned from his two dads, One rich (His friend’s Dad) and one poor (His real dad) starting from age nine. Though both were successful in their respective work, one flourished financially and one struggled.
Robert claims money is one form of power. But what is more powerful is financial education. Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth.
The book is about mainly six lessons he learns from his rich dad, which were repeated to him over 30 years in various forms. I loved the way Robert turns complex topics into simple way with simple pictures and words, which makes learning fun, effective and memorable.
Here are Excerpts From Each Lesson
Robert doesn’t claim these lessons to be answered, but guideposts that will assist you and your children to grow wealthier no matter what happens in a world of increasing change and uncertainty.
Lesson # 1 – The Rich Don’t Work For Money – The Rich Have Money Work For Them –
- Rich dad told mike and Robert that rich don’t work for money, they work to learn, and build asset, which in turn generates cash flow, whether they work or not.
- On the other hand poor and middle class’s lives are forever controlled by two emotions: Fear and Greed. The fear of not having enough money to survive, and once they have enough, greed & desires take over and keep the person trapped in rat race. Get up, go to work, pay the bills.
Lesson # 2 – Financial Literacy –
- If you want to be rich, you need to be financially literate. Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.
- You must know the difference between an asset and a liability, and buy assets. Definition of Asset & Liability: An asset puts money in my pocket. A liability takes money out of my pocket.
- Robert defines Financial aptitude as, what you do with the money once you make it, how to keep people from taking it from you, how to keep it longer, and how to make that money work hard for you.
Lesson # 3 – Mind Your Own Business –
- Financial struggle is often direct result of people working all their lives for someone else. Many people will simply have nothing at the end of their working days to show for their efforts.
- When Robert says mind your own business, He means to build and keep your asset column strong. Once a dollar goes into it, never let it come out. Think of it this way: Once a dollar goes into your asset column, it becomes your employee. Keep your day job, be a great hardworking employee, but keep building that asset column.
- The rich focus on their asset columns while everyone else focuses on their income statements. An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.
Lesson # 4 – The History of Taxes and The Power of Corporations –
- The reality is that the rich are not taxed. It’s the middle class, especially the educated upper income middle class, who pays for the poor.
- The taxes were initially levied on rich and eventually applied to middle and poor class people. By the time taxes were normalized, it was only middle and poor class who were paying more in taxes than rich. Rich saved on corporations by routing their income through it.
Lesson # 5 – Rich Invent Money –
- With the help of many real estate deal examples in the book, Robert explains that Rich invent money by putting together deals, which is not seen by financially untrained eyes.
- Robert explains that it is possible as Rich well-verse themselves with four most important skills of making money. Accounting, Investing, Understanding Markets, and The Law.
Lesson # 6 – Work to Learn, Don’t Work for Money –
- Robert suggests that in spite of being talented at particular skill, many people struggle financially. He suggests that most people are one skill away from building wealth.
- He insisted to learn little about a lot, rather than a lot about little and also encouraged them to learn to manage people, as that is one of the toughest tasks in running business.
- The world is filled with talented poor people. All too often, they’re poor or struggle financially or earn less than they are capable of, not because of what they know, but because of what they do not know.
Overcoming Obstacle to Become Wealthy
The primary difference between a rich person and a poor person is how they manage fear.
Robert claims that there 5 main reasons for most people despite getting financially literate, doesn’t build strong asset columns that produce large cash flow. Fear, Cynicism, Laziness, Bad Habits, Arrogance.
1) Overcoming Fear –
- Roberts claims that I have never met anyone who really likes losing money. And in all my years, I have never met a rich person who has never lost money. But I have met a lot of poor people who have never lost a dime—investing, that is.
- The reason most people don’t win financially is because the pain of losing money is far greater than the joy of being rich.
2) Overcoming Cynicism –
- All of us have doubts: “I’m not smart.” “I’m not good enough.” “So-and-so is better than me.” Our doubts often paralyze us. We play the “What if?” game.
- His point is that it’s those doubts and cynicism that keep most people poor and playing it safe. The real world is simply waiting for you to get rich.
3) Overcoming Laziness –
- Robert claims that the most common form of laziness: laziness by staying busy. Most people who claim to be busy being busy, are avoiding real issue they know they should be dealing with.
- Rich dad believed that the words “I can’t afford it” shut down your brain. “How can I afford it?” opens up possibilities, excitement, and dreams.
4) Overcoming Arrogance –
- Robert explains what I know makes me money. What I don’t know loses me money. Every time I have been arrogant, I have lost money. Because when I’m arrogant, I truly believe that what I don’t know is not important.
- Roberts suggests learning what we don’t know, rather than ignoring what we don’t know through our arrogance.
Few Suggestions to Get Started
1) Stop doing what you’re doing – In other words, take a break and assess what is working and what is not working. Stop doing what is not working, and look for something new.
2) Find someone who has done what you want to do – It is much better to seek people who have done, what you want to do, and ask for suggestions, guidance. When you genuinely seek guidance, you often find it.
3) Take classes, read, and attend seminars – Robert suggests that one should take classes, read more books, and attend a seminar to constantly learn. Robert claims that he is wealthy and free from needing a job simply because of the courses he took.
I have also created video of few quotes from the book – Hope you like it. Please do subscribe to my You Tube channel – Myread4change
Rich dad, poor dad is one of the best books on money. It will give you a fresh perspective on money and encourage you to move in the right direction of wealth building.
If you have money concerns and are open to digging into the subject of money, this book will lay a great foundation.
Hope this summary helps understand money better. Please leave your suggestions/feedback in the comment section.
Thank you for Reading.