Rich Dad Poor Dad
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
Author: Robert T. Kiyosaki
My Rating: 8/10
Length: 336 Pages
Description
It's been nearly 25 years since Robert Kiyosaki’s Rich Dad Poor Dad first made waves in the Personal Finance arena. It has since become the #1 Personal Finance book of all time... translated into dozens of languages and sold around the world.
Rich Dad Poor Dad is Robert's story of growing up with two dads — his real father and the father of his best friend, his rich dad — and the ways in which both men shaped his thoughts about money and investing. The book explodes the myth that you need to earn a high income to be rich and explains the difference between working for money and having your money work for you.
The Book In 3 Sentences
Rich Dad Poor Dad is about Robert Kiyosaki and his two dads—his real father (poor dad) and the father of his best friend (rich dad)—and the ways in which both men shaped his thoughts about money and investing.
Most people work for money — rich people have money work for them. The truth is that the majority of rich people do work very hard, but they go about it differently than most people do. Rich people, and people who want to become rich, work and learn every day how to put money to work for them.
Rich people acquire assets — not liabilities they think are assets. Look at anyone who is a self-made millionaire, and there's an outstanding chance he or she spent most of their life acquiring assets that generate income. Eventually, the income being produced by those assets may be sufficient for the owner to live comfortably without having to work anymore.
Who Should Read It?
Why is it that you work? Chances are a major reason behind why you go to work is to make money. If you are someone who is struggling financially or wants to understand how to gain true financial independence — start here.
When we have any sort of problem, they usually stem from something else, such as not truly understanding the situation. Kiyosaki’s approach with Rich Dad Poor Dad is to dive into the mentality behind financial success and explain its root cause.
He goes into detail about the mindset behind his decisions and fortune, because that is what drove his wealth to become so large.
How The Book Changed Me
Going up all I heard was everybody should go to school, get high grades and then get a good job, right? That is how you make good money. Wrong! Well, at least if financial independence is what you are aiming at. Our education system is the number one cause of why so many people struggle financially. Schools teach people how to work for money, but they do not teach them how money can work for them. The result is that the majority of people get trapped in work to pay their bills (including myself) and are chasing paychecks all their life.
Rich Dad Poor Dad properly taught me how to handle money and the only way to become financially independent is to accumulate income-generating assets which can pay for your expenses. This is why the rich get richer because they pay themselves first. This was such a huge revelation for me. So every month, as Kiyosaki recommended, I first invest a certain amount of money into income-generating assets before I pay my bills.
Another huge idea Rich Dad Poor Dad taught me was to create a corporation to protect your assets and reduce tax expenses. An employee earns, gets taxed, and then spends what is left. A corporation earns, spends everything it can, and then gets taxed on what is left. This is the biggest legal loophole that the rich use!
My Rating
I gave Rich Dad Poor Dad an 8/10 because I felt it truly impacted my life and shifted my understanding of personal finance. While this book is one of the most commonly recommended financial books, I feel Rich Dad Poor Dad taught me more about mindset than finances.
Sure, there is a lot of gold in there for anyone picking up a finance book for the first time - but this book will go much further than that by actually helping you cultivating “rich” habits.
Where I felt it loses a couple of points is that Kiyosaki spends a good chunk of Rich Dad Poor Dad just discussing real estate. While that is not a bad thing by any means, I am someone who isn’t quite interested in real estate so it didn’t resonate or apply to me.
My Top 3 Quotes
"The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant." ― Robert T. Kiyosaki, Rich Dad Poor Dad
“There is a difference between being poor and being broke. Broke is temporary, poor is eternal.” ― Robert T. Kiyosaki, Rich Dad Poor Dad
“Know what an asset is, acquire them and become rich” ― Robert T. Kiyosaki, Rich Dad Poor Dad
Best Big Ideas
Have Your Money Work For You
For most people, their profession is their income. For rich people, their assets are their income. Robert Kiyosaki dives deep in Rich Dad Poor Dad with how this mentality clashes with how the rich life. He points out that the rich turn earned money (money from your job) into passive or portfolio assets. In this sense, your money is making you money. In other words, the amount of effort you put in does not generate a specific amount of earned income, but rather the money you have generates the income for you. Here are a few rules I took away:
If I want to buy something, I must first generate enough cash flow from my assets to cover these expenses. Buy luxuries last, not first.
Excess cash flow generated by my assets should be reinvested into other assets.
Do not simply aim for more income, aim for more assets.
Work To Learn – Don’t Work for Money
Rather than working for money, work to learn. As Kiyosaki puts it, “Work to learn, don't work to earn.” When you make this mindset shift, you may find that you become more aware of new and intriguing things at your workplace.
You’ll most likely start to learn more and improve faster than when you are focusing so much on the money. You will become what you study, so choose your study materials carefully. Find people who are the best in their field. Then study and emulate them.
Invest In Yourself
An investment in knowledge ALWAYS pays the best interest. Kiyosaki says to know a little about a lot. Learn something about accounting, investing, markets, the law, sales, marketing, leadership, writing, speaking, and negotiating. A trick is to fnd a job where you can learn one or more of the above-mentioned skills.
Surround yourself with people who are smarter than you, and pay them well!
The Rich buy assets
Pay yourself first. Each month, first invest a certain amount of money into income-generating assets before you pay your bills. You come up short? Use this pressure to pay to inspire you to come up with innovative ways to get enough money to pay the bills before the bill collector comes knocking at your door.
This is a difficult, but very important principle.
However, it does not mean you should be irresponsible. Always pay your bills. Just pay yourself first, not last. If you pay yourself last, you would feel no pressure, but you would probably not come up with new sources of income either.
Saying "I can't afford it" shuts down your brain. Asking "How can I afford it?" opens up your brain and triggers your financial genius to come up with a creative solution.
Cultivate A Wealthy Mindset
Every rich person has lost money at some point, but many poor people have never lost a dime. Playing not to lose money means you will never make money. "Winning means being unafraid to lose. Failure inspires winners and defeats losers.
When something does not work out the way you planned, let it inspire you to try a different approach. Learn and move on.
Be in control of your emotions. Do not let fear or the opinions of the general public dictate your actions. When stock prices decline, people run away. However, when the local supermarket has a sale, people buy as much as they can.
On the market: do not follow the crowd, and do not try to time the market. Profits are made when you buy, not when you sell.
