Rich Dad, Poor Dad was written primarily to teach people the things they don’t learn at school, such as Financial intelligence. Robert Kiyosaki explains what makes rich people wealthy and poor people more susceptible to poverty. The writer emphasizes the importance of making money work for your benefit, rather than working for it. Rich Dad is broken down into nine chapters and contains 235 pages.
Introduction Rich Dad Poor Dad
Rich Dad, Poor Dad was named after Robert Kiyosaki’s two fathers: a rich one who is his godfather and one who is his birth father. His two fathers had two different ways of looking at life, and this is what the writer uses to guide his life.
His rich father was a dropout from school, while his father was highly educated. Despite his qualifications, the poor dad faced a lack of money whereas his rich father was able to make money. His father was poor and believed that love of money was the root cause of all evil. However, his rich father used to believe that lack of money was the root cause of all evil. His father, a poor man, recommended that he study hard to get a job in a good company. However, his dad was a rich man and recommended that he study hard to purchase a good company.
Robert Kiyosaki listened to both of them before deciding what he wanted to do with his own life. At nine years old, he decided that he would listen to his wealthy father.
Lessons from Rich dad
Lesson 1: The Rich Don’t Work For Money
How did Robert become Rich?
Robert and Mike, his best friend, started their first business when Mike was nine years old. They were embarrassed by the poor classmates in their class and had to close it down. They tried the experiment they learned in science class. They were able to make lead nickel using things like toothpaste tubes, empty milk cartons, plaster of Paris, and empty milk cartons.
Robert’s friend and dad were watching them closely and told them it was illegal. His first business failed, but his dad advised him to ask Mike’s father how to become Rich. Mike and Robert started working for Mike’s dad at 10 cents an hour! Mike’s dad later made them work for him, but he didn’t pay them any money at all. He instead let them think of ways to make more money.
Robert and Mike created a way to lend the comic books to other children and charge them by the hour. They soon made 9.5 dollars per workweek. Mike and Robert learned their first lesson: The Rich don’t work for money.
Lesson 2 – Why Teach Financial Literacy?
Financial literacy is essential if people want to be wealthy. Financial literacy is not something taught in any high school.
The first rule to being rich is: Know the difference between an asset and a liability. Rich dad said that assets are bought by the wealthy while liabilities are purchased by the poor.
What’s the difference between an asset and a liability?
Robert defined asset as money that goes into your pocket. Liability is money that you take out of your pocket.
Robert challenged people who view their house as an asset.
- Property tax must also be paid by people who purchase a new home.
- They then purchase a new car, new furniture, and new appliances to match their new home.
- Their liabilities column is filled with credit card and mortgage debt.
- Most people spend their entire lives paying for a house they don’t own.
- People buy a house every few years and each time they need a new 30-year loan to pay off the old one.
- The value of houses does not always rise. A house you buy at a high price will be difficult to sell.
- A house is only a vehicle to obtain a home equity loan to pay for mounting costs.
- Robert says that an expensive house can lead to loss of time, additional capital loss, and education loss.
The writer advised people to invest in assets that will generate cash flow to purchase the house.
This writer classified people based upon their financial literacy.
- The wealthy buy assets
- The expenses of the poor are their only source of income
- People in the middle class buy liabilities they believe are assets
3: Take control of your business
A person must be able to manage his own business in order to become financially independent.
Your business revolves around the asset column. You can keep your job, but you should start purchasing real assets and not liabilities. Robert worked many years for Xerox after serving in the Marine Corps.
Real assets include the following:
- A business that doesn’t require the owner’s presence
- Stocks
- Bonds
- Income-generating real estate
- Notes(IOUs)
- Royalties from intellectual property, such as music, scripts and patents
- Anything else that is valuable, generates income, or appreciates and has a ready marketplace.
You should only buy assets you love. Robert loved to invest in small businesses and real estate.
Financial literacy is essential because it helps you to understand the basics of accounting and cash management. This will help you make informed decisions when investing and build your own business.
Robert emphasized building an asset column strong. This means that once a dollar goes into the asset column, it will never leave. Robert stated that luxury is a reward for acquiring and developing real assets.
4: The History and Power of Corporations
In England, income taxes were made permanent in 1874, and in the United States in 1913. The tax was originally intended to punish the rich, but once the government had the money, the tax was implemented on the poor and the middle classes.
Corporations give the wealthy an edge over the poor. It allows the rich to avoid taxes.
The wealthy hire smart accountants and attorneys to persuade politicians into changing laws or creating loopholes.
Financial intelligence or intelligence comes from the following areas
- Accounting
- Investing
- Understanding markets
- The law
- Tax benefits
- Protection against lawsuits
Lesson 5: The Rich Invent Money
Financial genius requires technical knowledge and courage. People prefer to be safe when it involves money. They are afraid to take risks. People who hold on to outdated ideas are often poor financially. Financial wisdom is the most valuable asset. It can help you make a lot of money.
Robert shared his personal experiences with his readers. He bought a house for 65,000 dollars in 1989 for 45,000 dollars. He rented the house and kept 40 dollars a month. He sold the house for 95,000 dollars when the real estate market grew.
Robert presented two types investors: one who purchases a packaged investment, and the other which he called professional investors. These are those who create the investment.
The following Skills are required by professional investors:
- You might be the only one who missed an opportunity.
- Raise money
- Organize smart people
Lesson 6: Learn to learn
Many talented people make less money because they work for their money. Robert challenged people who believe that hard work is the key to success. He stressed the importance of using your financial intelligence to play smart.
Schools teach you to be a specialist if you want to succeed. But Rich dad said to Robert that he should know a lot about everything. He worked in different companies and learned about different things. People spend their lives working and struggling to pay their bills because schools don’t pay enough attention to financial intelligence. Robert instead advises young people to learn more than just how to make a living.
People should learn a second skill if they want to become wealthy.
Robert’s main focus in this chapter is learning. Learn about business and learn about money. Do not limit yourself to one area, rather learn as much as possible about all.
Skills required for success include the following:
- Cash flow management
- System management
- Management of people
- Sales
- Marketing
- Communication skills, such as writing, speaking, and negotiating
A person who wants to be rich must overcome fear, cynicism and laziness. While no one wants to lose their money, managing your loss is key to success. People are so afraid of losing money that they avoid taking risks and play safe with their money. These people will never be financially successful.
People are trapped in a rat-race because they are unable to overcome their cynicism and self-doubt. Negativity can lead to despair, so it is important to be positive. People are lazy when it is time to think about somethings. The main difference between the poor and the rich is that the poor believe they can’t afford it, while the rich force their mind to consider the possibilities of how they could afford it.
Although it is difficult to acquire wealth, it is possible if you are financially intelligent. The combination of desires and needs is what makes people want to be wealthy. We work because we want something, but not because we don’t want it. It is your choice to be rich.
Riches can be a tiring journey. Most people avoid it by saying, “I don’t care about money or I won’t be rich.” Robert called time and learning more powerful assets. Make sure you invest in education, train and make your time productive.
You are influenced by the people around you, so choose your friends carefully. Choose people with the same interests as you. Learn new things and learn from others. If you want to be wealthy, self-discipline and discipline are essential. People who have low self-esteem or are sensitive to financial pressure will not be able to become wealthy.
Here are some things to do by Robert in Rich Dad Poor Dad.
Robert urges people to take action in the last chapter of the Rich Dad, Poor Dad. He outlines the following steps.
- Don’t do what isn’t working. Instead, look for new ideas.
- Find someone who has done the same thing you want
- Learn, take classes, and attend seminars
- Get lots of offers
- For 10 minutes, visit a specific area once a month
- Find bargains on all markets
- Be sure to look in the right places
- Look for people who are interested in buying first
- Think big
- Learn from the past
- Action is always better than inaction.
Conclusion:
Rich Dad, Poor Dad could be the beginning of a new life. This book changed the way many people, me included, view wealth. If you intend to be wealthy, this book is a must read.
