Rich Dad Poor Dad Summary

Rich Dad Poor Dad Summary

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

Rich Dad Poor Dad“Rich Dad Poor Dad” by emma_lopez_proelt is licensed under CC BY-NC 2.0

Rich Dad Poor Dad is a book that was written by Robert Kiyosaki and was published In 1997. In it, he talks about the lessons he learned from his rich dad who was his best friend’s dad, and the poor dad who is his biological father. The two had two different ways of looking for money. While the poor dad believed in investing in his son’s education so that he can get a good job after graduating, the rich dad who never finished 8th grade believed that for one to be rich they had to be financially educated.

The Rich Don’t work for money

Kiyosaki talks about how parents teach their children to go to school work hard and earn a decent salary. This is the same thing that his poor father taught him. There are six lessons that we can get from this book of which the first is that the rich don’t work for the money they let the money work for them. This is done by investing and then letting the money multiply. The poor on the other hand will get a day job that requires them to work for little money that leaves their hands as quickly as it landed there because it is spent on bills and taxes. His poor father who had a Ph.D. was later in debt because of his mentality. He was taught to treat money as the root of all evil whilst the rich dad knew that the secret to getting more money is in getting a financial education. Learn how money works and soon you will be making your own.

Why Teach Financial Literacy

Secondly, Robert talks about financial literacy. People should be taught how to make money so that they may make responsible choices. At the core of this is the lesson on assets and liabilities. Here he distinguishes between an asset and a liability. An asset is something that has value, produces income, appreciates, and has a market where the asset can be easily bought and sold. A Liability on the other hand takes money out of your pocket because of their costs. Here he emphasizes why it is important to spend money on accumulating assets which will then earn you more money than spending on things that will rob you of your income. In other words, the secret to financial prosperity is accumulating more assets than you do liabilities. Avoid spending on things like cars that will make you lose more money than you earn. That is how a lot of people lose their money. The car will need things like servicing and fuel for every trip you make which costs a lot of money.

You don’t learn to become rich at school

Robert Kiyosaki says people outside academics/school use their greatest asset which is the mind. He explains that it takes guts to do so and such people are bold and smart.

To become rich, they invest money in businesses, projects, real estate, stocks, and bonds to create more money.

Kiyosaki states that the mind determines one’s future much more than what school grades do.

Financial education is not taught in schools and due to this a lot of educated people make poor financial choices.

Understand the difference between an asset and a liability

An asset brings in money in the pocket while a liability takes money out of the pockets.

Rich people usually acquire assets and poor people acquire liabilities hence the poor work for money to cover their expenses and the rich people have the money.

Robert Kiyosaki in his book rich dad poor dad explains that you cannot be financially independent if you are working for someone.

Mind your own business

Lesson number three is called mind your own business. In it, there are two things that one can take away. The first being that one should be able to pay off their debts and start investing in income-producing assets as soon as possible. The second one is that being financially healthy will require one to spend their time and investing most of their money in possible assets. Rich people get where they are by spending assets. For example, buying a building that you can then rent out and will bring you monthly revenues.

History of Taxes and the power of corporations

The fourth lesson has to do with the history of taxes and the power of corporations. Here he distinguishes how employees who work for corporations and business owners pay taxes. The employee will earn, their tax will be subtracted from their salary, and will finally have what’s left to spend. Business owners on the other hand will earn, spend and pay taxes in the end. Kiyosaki also introduces something he calls ‘financial IQ’ which constitutes knowledge on accounting, investment strategy, Market law, and law. The rich are smart In a way that they look for loopholes in the law about tax that allow them to spend as little as possible on tax. Kiyosaki has always been one to boast about paying zero taxes. He describes how he bought a car( a Porsche) free of tax by finding the loopholes in the system.

Kiyosaki now invites us to take into consideration the main components of what he calls financial IQ

Accounting

This is the ability to read and understand financial statements, it allows a person to identify the strengths and weaknesses of a business

Investment strategy

According to Kiyosaki, this is the process of money-making money. People invest to generate more money.

Market law

There are two types one fundamental analysis which deals with the economic sense of the investment based on current market conditions and the second one is a technical analysis which is the study of emotion-driven price movements and indicators.

Law

This means a person who is knowledgeable in corporations, accounting, investing and can get rich much faster than someone without that knowledge. This person understands taxes and avoids lawsuits.

The rich invest money

The fifth lesson is called the rich invest money. This basically means that they have developed a skill that allows them to look for investment opportunities that other people would otherwise be blind to. The poor on the other hand will find a personal finance manager who will decide on which assets they can invest in which are usually shares. Here he distinguishes two types of investors the formal pertaining to the rich and the latter pertaining to the poor.

Kiyosaki outline 5 obstacles that can hurt you in your quest for financial freedom

Fear

do not act solely based on what you think is a “sure” thing. The rich do not accumulate their wealth through never losing money but they learn to limit their losses and they turn those losses into opportunities. Robert Kiyosaki advises people to never allow fear to keep them in the rat race.

Cynicism

This is unchecked doubt and fear, a cynic person always criticizes instead of analyzing, and they also always give excuses.

Laziness

Lazy people pretend to be busy to avoid problems they do not want to face. Overcoming laziness can be the right step to gain financial freedom.

Bad habits

To obtain financial freedom one needs to overcome bad habits that hinder your own growth and start taking care of yourself physically and financially.

Arrogance

Some people use ego and arrogance to hide their own ignorance. Arrogant people believe that what they don’t know is not important as a result such arrogance can lead to financial ruin.

Rich Dad poor Dad Criticism

Rich dad poor dad downsizes the importance of school in building wealth. This idea sends different conflicting ideas since other people view education as the means to get a high-paid job and get more opportunities.

Conclusion

The book rich dad, poor dad by Robert reflects much on personal finance and the rules of money that should be taught to children by their parents.

The author Robert Kiyosaki advises people to start investing early in life in real estate, assets, companies so that they can accumulate more wealth.

Where to Get Rich dad poor dad pdf

You can download the rich dad poor dad audiobook and other versions on Apple, Google.

Rich dad poor dad quotes

“If you work for money, you give power to your employer. If money works for you, you keep the power and control it.”

“The rich keep staying rich because they know that money is an illusion just like a carrot in front of a donkey.”

“Rich people buy luxuries last while poor and middle-class people tend to buy the luxuries first.”

“Be smart and you won’t be pushed around as much”

“The poor and the middle-class work for money. The rich have money work for them.”

More to explorer