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Today we are looking at “Rich Dad, Poor Dad” by Robert Kiyosaki. One of the very famous books on personal finance.
I will quickly take you through the gist of what the book is all about.
This book was first published in 1997, and the overarching theme of this book is How to Make Money as a Tool for Wealth Development.
This is a very interesting book because it destroys the age-old beliefs that you and I inherited from our forefathers. It also denies the fact that the majority of rich people are born with a silver spoon!
Table Of Contents
1.)Quick Summary
2.)Rich Dad Poor Dad – Wealth Creation
3.)Six Lessons From Rich Dad Poor Dad
4.)Stay Rich!
5.)Rich Dad Poor Dad – Steps For Financial Genius
6.)Assets vs Liabilities – Insights From Rich Dad Poor Dad
7.)Concept Of Tax
8.)Rich Invent Money
9.)About The Author
10.)Conclusion
1. Quick Summary
Rich Dad and Poor Dad revolves around three main characters: Poor Dad, Rich Dad, and Son (the author himself as the narrator of the book).
The Rich Dad is the father of his best friend who happens to be an eighth-grade dropout, not qualified and did not study well, but this dad believed in financial education, not just academic education. The Poor Dad is actually Kiyosaki’s biological father.
His biological father is highly qualified and very well educated, and he believes in the principle that you must study hard so that you get good grades, this is what typically happened with all of us when we were children, especially in India. Right?
2. Rich Dad Poor Dad – Wealth Creation
The book explains the principles of cash flow, balance sheet, income statement, assets, and liabilities in an easy-to-understand manner. The author hopes that everyone was taught the fundamentals of finance from childhood, as he was, which is one of the reasons he wrote this book.
This is a given that parents always persuade you to study hard, and get good grades, so that you get a good job, a well-paying job. Despite all of this, his poor dad did not do financially well, which basically talks of the fact that your qualifications, your profession, and your job may not guarantee wealth creation.
Please remember I’m using the word ‘wealth creation’. Your good grades, your good job, your profession, and your job title could perhaps guarantee good income. You may be earning well, but you may not necessarily create wealth
3. Six Lessons From Rich Dad Poor Dad
If you look at the book, he talks about six lessons that he has learned from his Rich Dad about making money, and he also talks about the mistakes made by his Poor Dad.
That’s also important, right? For example, if you want good health, you should know what are the foods that you’re supposed to eat. Equally important is that you also should know what to avoid. Similarly, what are the lessons that he has learned from his Rich Dad, and what are the mistakes made by his Poor Dad so that you and I don’t make the same mistakes?
Lesson 1: The wealthy do not work for a living.
Lesson 2: Financial Literacy
Lesson 3: Take Care of Your Own Business.
Lesson 4: The History of Taxes and Corporate Power.
Lesson 5: The Wealthy Create Money.
Lesson 6: Work to Learn, Not to Make Money.
4. Stay Rich!
“It’s not just about becoming rich, it is also important to stay rich”.
What are the obstacles that have to be overcome to become rich and stay rich?
- Apprehension
- Cynicism
- Laziness
- Poor Habits
- Arrogance
Shortcomings motivate the Fearless Man since they provide a learning experience from which they might improve. The Lazy and arrogant do not achieve financially because the agony and misery of losing money outweigh the delight of being wealthy.
They chose a life that is basic, safe, and little. They may buy large houses and expensive cars, but they do not prioritize large investments. The bulk of people suffer financially because they play to avoid losing rather than to win.
5. Rich Dad Poor Dad – Steps For Financial Genius
“The poor and the middle-class work for money, and the rich have money work for them”.
There are 10 steps that Robert Kiyosaki talks about in his book to develop your financial genius. This is in a nutshell what the book is all about, and these are some of the lessons from his book.
6. Assets vs Liabilities – Insights From Rich Dad Poor Dad
The necessity of understanding the distinction between assets and liabilities and focusing on investing in assets is highlighted throughout the book and referred to as the “one and only rule.”
Most of us, when we learned assets and liabilities, we were taught that assets are those which increase in value, and liabilities are those which reduce in value.
Robert Kiyosaki talks about an additional point.
“That assets produce income and they also appreciate”.
They produce income, appreciate, liabilities, and take money out of your pocket. That is why he also talks about our own personal real estate. The house that we stay in may not be an asset because you are living in that house and it’s not producing any income for you.
- Look After Yourself!
He also talks about minding your business, which is basically looking at yourself, trying to pay off your debts as much as possible, being in zero debt, and starting investing in assets that can produce income.
The book discusses looking at yourself first and trying to pay off your debts before investing in assets.
7) Concept Of Tax
The book talks about the concept of tax in a very beautiful way. The equation is very important to understand. He says that between salaried versus business owners, which is self-employed.
Companies, business owners, self-employed. The formula is, Earn → Spend → Pay Tax. Spending can be taken as an expenditure in the business. You are left with a very limited, little amount of taxes to be paid. You and I are salaried employees.
We work for companies. We also earn, but we pay tax because there’s also TDS that already takes away money. Then what remains we spend.
So, self-employed, people have flexibility. They can structure their expenses. The equation is beautiful. Earn → spend → Pay Tax.
If something remains, you pay tax, otherwise, you don’t even pay tax. You and I have no choice because there’s a TDS.
8) Rich Invent Money
In this book, Robert Kiyosaki talks about the rich inventing money. They identify opportunities that other people have not found and they work with intelligent people..“I recommend to young people to seek work for what they will learn, more than what they will earn. Look down the road at what skills they want to acquire before choosing a specific profession and before getting trapped in the Rat Race”.
Again, this is very interesting, “It’s not learning to work, it is working to learn”.
which means you don’t work for money. Identify skills that you want to acquire before you choose a profession.
Isn’t it true that the majority of us have ended up in our profession by chance? Robert Kiyosaki says to pick a profession, and then figure out what abilities you want to develop so that you may be the highest earner in that profession.
9) About The Author
Robert Kiyosaki grew up in the small Hawaiian town of Hilo. In New York, he attended Kings Point Merchant Marine Academy. Following graduation, Robert turned down a well-paying position with Standard Oil to join the Marine Corps as a helicopter pilot during the Vietnam War.
Following his military duty, Robert went to work for the Xerox Corporation. His wealthy father advised him that the key to every successful firm is sales.
Robert rose to become Xerox’s top seller. His entrepreneurial instinct took over from there. He and his brother founded the company Rippers. Rippers was the first firm to commercialize the nylon and Velcro “surfer” wallet.
Robert and his wife, Kim, invented and launched the CASHFLOW board game in 1996 to teach people about money and investing creatively and excitingly.
In 1997, Robert published Rich Dad and Poor Dad, and they established The Rich Dad Company. The book and the board game are now more popular and relevant than ever.
Robert has written 27 books. He has appeared as a featured guest on media channels all around the world. He is the podcast host of the Rich Dad Radio Show, a world-renowned speaker, and a life-long learner.
10) Conclusion
This book questions your thought process. Robert Kiyosaki has talked about overcoming obstacles, and how to get started, and there’s a to-do list also that he provides.
Rich Dad Poor Dad is available in multiple languages for readers. The first step before handling your finances is to improve your financial literacy. One of the best ways to improve financial literacy is by reading books.
“The more you read, the more you will learn.” “The more you learn, the further you will travel.”
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