Rich Dad Poor Dad is the story of Robert Kiyosaki.
He had two dads in his life [one is real and the other is his friend’s].
One had a .Ph.D. while the other had only finished 8th grade.
Poor Dad always struggled with his finances while Rich Dad was on his way to becoming one of the wealthiest men in Hawaii.
Kiyosaki started to notice fundamental differences in the way rich dad and poor dad thought, spoke and acted:
“I noticed that my poor dad was poor, not because of the amount of money he earned, which was significant, but because of his thoughts and actions,” he wrote.
If you don’t have rich parents, or rich mentors to guide you on your road to wealth, then you can use the principles from Rich Dad Poor Dad as guide-signs.
So, here are five timeless lessons Robert learned from rich dad that helped him master his money, build wealth, and ultimately retire comfortably at the age of 47:
1. Financial Education is Important:
“Education is more valuable than money, in the long run.” -Robert Kiyosaki
I think more than anything else this book served as a firm reminder that the more time you spend on your education and, in this case, your financial education, the more financially independent you’ll be able to be.
In other words, you become what you study.
Rich dad believes that money without financial intelligence is money soon gone.
Therefore, he stresses the importance of financial education.
Schools only teach people how to work for money. But, they do not teach them how money can work for them.
They are designed to produce good employees instead of employers.
What’s lacking in formal education is the so-called financial aptitude – what you do with the money once you make it, how to keep people from taking it from you, how long you keep it, and how hard that money works for you.
If you want to become financially independent, you have to know and understand your numbers.
The key to intelligent risk is developing financial intelligence, Kiyosaki writes: “There is always risk. It is financial intelligence that improves the odds.”
He recommends reading up on accounting, investing, and the markets to start becoming more financially intelligent.
“Your financial genius requires both technical knowledge as well as courage” Kiyosaki says.
Financial literacy is the number one reason why the rich get richer and lack of it is the reason why the poor get poorer.
2. The Rich Don’t Work for Money
“Know what an asset is, acquire them and become rich.” -Robert Kiyosaki
Let’s take an example.
Toby is mad at life. He works 8 hours a day in his job but can never figure out why he’s not getting ahead in his finances. He never has enough money.
Then there’s Richard. He makes the same amount of money as Toby does but is far ahead of him financially.
What does he do differently? He spends a lot of his time looking for assets to add to his portfolio, much different than Toby, who keeps buying stuff he doesn’t need every week.
The rich don’t work for money. They have their money work for them.
They understand what assets are and what liabilities are.
The easiest way to differentiate them is that assets put money into your pocket, and liabilities take money out of your pocket.
If you want to get rich, it does not matter how much you make, or how you make it. What matters is how you spend what you make.
“If you work for money, you give the power to your employer,” Kiyosaki writes. “If money works for you, you keep the power and control it.”
I have heard from many people around me that their expenses always seem to keep up with their income.
They do not understand why they earn more than they used to but still have no money left at the end of the month.
They struggle financially because when their income goes up, their expenses also go up.
However, their assets do not increase, but their liabilities do!
They work to make their boss rich, they work to pay government taxes, and they work for the bank as they pay off their debts.
Working harder means that you will have to hand over an even bigger share of your efforts to these three parties.
The rich get richer because their assets generate more than enough income to cover their expenses, and part of the income is then reinvested into new assets, thereby, increasing the generated income even further.
Reinvesting income into new assets triggers the power of compound interest, to which Albert Einstein once famously referred to as the “eighth wonder of the world“.
3. Be Bold to Get Ahead:
“Intelligence solves problems and produces money, but money without intelligence is soon gone.”
“In the real world outside of academics, something more than just grades is required,” Kiyosaki writes.
“I have heard it called many things: guts, chutzpah, balls, audacity, bravado, cunning, daring, tenacity, and brilliance. This factor, whatever it is labeled, ultimately decides one’s future much more than school grades do.”
As important as it is to take risks to accumulate wealth, it’s equally important to be smart about risk-taking, which is why Kiyosaki emphasizes “managing” risk.
Blind risk won’t get you anywhere, but intelligent risk — in your which education and experience play a key role — is the mother of reward.
Rich people play to win, which, much like having your money work for you, requires an element of risk-taking and comfort with uncertainty.
4. Mind Your Own Business
“The rich focus on their assets while everyone else focuses on their income statements.” -Robert Kiyosaki
Your profession and your business are different from each other.
You should not rely on your job to become financially secure; instead, focus on your own business and develop your assets.
As Kiyosaki puts it, “financial struggle is often directly the result of people working all their life for someone else. Many people will have nothing at the end of their working days.”
Acquire assets and use them to purchase income-generating, real assets.
Rich dad further noted that real assets are anything with value – stocks, bonds, mutual funds, income-producing real estate, notes, royalties from intellectual property, etc.
If you have a big and strong group of financial assets, you’re following this principle properly.
5. Train Your Mind to Make Money
“Remember, your mind is your greatest asset, so be careful what you put into it.” -Robert Kiyosaki
The most important resource that controls your life is not only the one you take most for granted but is also the one you rely on the most.
It’s your mind.
Each of us understand how important it is to take care of our bodies, but you rarely hear people telling you to take care of your mind.
Most people don’t think of their mind as a “resource”, but if you think about it for just a moment you’ll realize that it’s true.
Your mind is your greatest asset. You rely on it for just about everything you do.
If you maintain your mind and keep it ready for wealth, it will make your dreams come true.
You can do this by having a statement you repeat twice a day, or a vision board with pictures of things that represent wealth to you.
If you keep thoughts of wealth in the forefront of your mind, you will find ways to reach those goals.
You will keep finding opportunities, investments and other ideas to get you the wealth you desire.
It’s not difficult to do this, you just must break that chain of negative things and come out of years of inertia.
“Financial intelligence is simply having more options,” Kiyosaki writes.
“If the opportunities aren’t coming your way, what else can you do to improve your financial position? If an opportunity lands in your lap and you have no money and the bank won’t talk to you, what else can you do to get the opportunity to work in your favor? It is not so much what happens, but how many different financial solutions you can think of to turn a lemon into millions.”
Hope you enjoyed reading this review.
If you want to read more, you can get a copy for yourself which you can later make your kids read too, on Amazon.