Rich dad poor dad summary

Rich dad poor dad summary

The book Rich Dad Poor Dad is written by Robert T. Kiyosaki.

It is one of the best books on personal finance. Language in this book is very simple but the lesson you can get from this book is very powerful.

This was the first book I read when I started reading personal finance material. 

In this book, Robert tells us about his two dad and their teachings about money. One was his own dad and the other was his best friend’s father.

This book teaches you how financial education is more important than money itself. You can have more money but if you don’t know how money works then you will be trapped in the rat race.

His rich dad is interested in money and always talks about money at the dinner table.

One dad said, “Love of money is the root of all evil”. Others said, “lack of money is the root of all evil”.

When it comes to money one dad said,” play it safe, don’t take the risk”, others said, “Learn to manage risk”.

This book has 6 lessons for your financial education.

Lesson1: Rich don’t work for money

Rich don’t work for money: Rich have money to work for them.

The poor and middle-class work for money for their whole life. They trade time with money. The more they work the more they are paid.

Money is all about the mindset. If You work for money then you think like an employee. You always worried about your paycheck.

A man works his whole life for the government or company hoping that after retirement they will take care of him.

Most people get trapped in the rat race because of instant gratification, they want everything quick and fast.

Most people are controlled by two emotions: FEAR and greed. Fear of not having enough money and when they get money greed starts to think about all the wonderful things money can buy.

Rich people take risks with money: the poor and middle class always plays it safe.

People always say” I am not interested in money” Yet they work at the job for eight hours a day.

Most people live their lives chasing paychecks, pay raises, and job security because of the emotions of fear and desire.

Fear and desire is a live trap, it is controlling your thinking. To spend your life living in fear, never exploring your dream, is cruel.

To work hard for money thinking that will make you happy is also cruel.

Our school system never teaches us about money, it prepares us to be an employee.

“Learn to use your emotion to think, not to think with your emotion”.

Lesson 2: Learn the difference between Asset and Liabilities

“It’s not about how much money you make, it’s how much money you keep”.

In this chapter, you will learn about the difference between ASSET and LIABILITIES.

Most people struggle financially because in their whole life they bought liabilities and think that it is an asset.

ASSET is something that puts money in your pocket.

Liabilities are something that takes money out of your pocket.

Rich people acquire assets. The Poor and middle class acquire liabilities that they think are assets.

Most people struggle financially because they do not know the difference between assets and liabilities.

“Cashflow tells the story of how a person handles money”

The cash flows tell the story of a rich and poor person. Rick buys assets first and the poor and middle class buys liabilities. And if you want to be rich then you have to acquire assets. 

Rich always focus on acquiring an asset. And their assets pay for their luxuries. Poor people always spend their money to buy liabilities in the first place due to a lack of financial education.

“A person can be highly educated, professionally successful, and financially uneducated”.

If you want to be rich start accumulating income-generating assets for yourself.

What is wealth “Wealth is a person’s ability to survive so many numbers of days forward- or If I stopped working today, how long could I survive?”.

The rich acquire an asset. Poor only have expanses, 

The middle class buys liabilities they think are assets.

Why the rich are getting richer?

The rich are getting richer because their assets have grown enough to pay for their expenses. No matter whether they work or not, their assets pay for their liabilities.

Lesson 3: Mind your business

Rich focus on their asset column while everyone else focuses on their income statements”

You should keep your day’s job, but start building your own asset. Take charge of your financial future.

Some Assets are :

·       The business that does not require you

·       Stocks

·       Bonds

·       Income-generating real estate

·       Royalties from intellectual properties such as music, patents, books, etc,

Lesson 4: The history of taxes and the power of the corporation

My rich dad just played the game smart, and he did it through cooperation- the biggest secret of the rich.

Taxes can be one of the biggest expenses. You should learn to manage taxes.

Rich often pay less in taxes than the poor and middle class by the percentage of their income.

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

If you buy assets your money will work hard for you.

“Each dollar in my asset column was a great employee, working hard to make more employees and buy the boss a new Porsche.”

Your financial education consist of learning of these 4 things

  • Accounting
  • Investing
  • Understanding the market
  • The law

Lesson 5: Rich invent money

THE single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.”

Often in the real world, it’s not the smart who get ahead, but the bold.

You have to invest in your financial intelligence. Financial intelligence is all about having more options, getting the opportunity.

Most people only know one solution: work hard, save, and borrow.

This is the age of information, and wealth lies in the information.

Lesson 6: Work to learn don’t work for money

Our focus should be to learn new things, new skills not just to take a job and work for your entire life.

Job is an acronym for “ Just over broke”.

Job security meant everything to my educated dad, Learning meant everything to my rich dad.

When it comes to money, the only skill most people know is to work hard.

The worker works hard enough not to be fired, and the owner pays just enough so that the worker won’t quit.

“You can’t teach an old dog new tricks.” Unless a person is used to changing, it’s hard to change.

The world is filled with talented poor people. All too often, they struggle financially or earn less than they are capable of, not because of what they know, but because of what they do not know.

The most specialized skills are sales and marketing.

Communication skills such as writing, speaking, and negotiating are crucial to a life of success.

Be a learner. Devote most of your time to learning new things.

Overcoming obstacles

The primary difference between a rich person and poor person is how they manage Fear.”

Overcoming fear

The fear of losing money is real. Everybody has it. Even the rich. But it’s not having fear that is a problem. It’s how you handle fear.

If you start young, it’s easier to be rich.

Overcoming cynicism

Our doubt often paralyzes us. We play the what-if game.

You should not let your doubt and fear close your mind.

Overcoming laziness

Busy people are often the laziest.

The cure for laziness is a little greed.

Overcoming bad habits

Our lives are a reflection of our habits more than our education.

Overcoming arrogance

“What I know makes me money. What I don’t know loses me money. Every time I have been arrogant, I have lost money. Because when I’m arrogant, I truly believe that what I don’t know is not important.”

Key takeaway

·   Poor and middle-class work for money, Rich have money work for them.

·   The rich person always Invests their money. The middle class always spend their money.

·   You should know the difference between assets and liabilities. And you should acquire an asset.

·   The asset is something that puts money in your pocket, liabilities are something that takes money out of your pocket.

·   Financial education is important. This is the high time to learn about money.

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Shubham Pal

A student and an investor. Shubham has a passion for investing in the stock market. He loves to talk about investing, money, and the stock market. He is a follower of Warren Buffett. He loves to read personal finance and investing books.

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