Rich dad poor dad by Robert Kiyosaki is the New York Times bestseller and is a must-read for those who want to
1. Manage their personal finance well and become wealthy.
2. Be courageous to stand out from the crowd.
In this book, the author shares 7 lessons that he learned from his rich dad, which made him wealthy. Anyone can follow those and become a wealthy person.
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Let’s have a look at them one by one-
- Rich don’t work for money, they have money work for them.
In this part of the book, the author criticizes the current education system for just focusing on teaching students how to specialize a skill so they can get a decent job. In the author’s opinion, a job is a short-term solution for a long-term problem. The long-term solution, if you want to be wealthy, is to be financially literate. Learn to invest in real estate, gold, stocks, etc.
People’s lives are controlled by two emotions- fear and greed. Fear of losing the job, fear of losing money, fear of taking risks, the greed of the high salary job(though much of the money wastes in taxation) holds them back from growing the money they have.
2. It’s not how much money you make. It’s how much money you keep.
Here, again, earning more money doesn’t solve the problem. More the money you have, more you will spend it. Financial intelligence(how to manage money) solves the ultimate problem.
Rich people acquire assets and the poor and middle class acquire liabilities that they think are assets.
Asset– puts money in my pocket. E.g. real estate investing.
Liability– takes money out of my pocket. E.g. Your home. Many people have this misconception that home is their greatest asset. We have to pay tax on our home, it can’t be an asset.
Instead, invest your money in income-generating assets. For example, give home, car etc. for rent.
3. Mind Your Own Business.
The rich focus on their asset columns while everyone else focuses on their income statements.
If you want to be truly financially independent then, don’t work for someone else only for the entire life. The author encourages readers to buy real assets, even if he/she has a daytime job.
Long term rich people build their asset column first, and then the income generated from it buys their luxuries. Poor and middle-class people spend, then gain liabilities and then try to get rid of liabilities.
4. The history of taxes and the power of corporations.
Knowing the legal corporate structure gives rich an enormous advantage over the poor and the middle class, especially to reduce taxes legally. The corporation provides much more protection. Corporation earns and then first spends and then is taxed on whatever it leaves. But an employee, after earning, pays tax first and then he can spend the money from whatever is left.
5. The rich invent money.
In the real world, it’s not the smart who go ahead, but the bold.
Author encourages his students to take calculated risks so as not to miss any golden opportunity. There are way many financial options, but only financially literate and bold people can explore them. E.g. investing in real estate at the correct time, analyzing markets. Inventing money is taking benefits of these opportunities.
Also, the author introduces the idea-the single most powerful asset we all have is our mind. Learn to manage risk instead of avoiding it. How to manage risk? Brief answer- Keep in mind that money is not real. For a long answer please read the book.
6. Work to learn- don’t work for money.
This is the primary aim of my blog too! Learn, learn and learn from where ever you can.
Today’s world is full of talented people. But talent only can lead you nowhere. Financial intelligence is a combination of 4 technical skills- accounting, investing, marketing, and law. Sales and marketing are the greatest skills one could have.
The author also shares the idea of knowing a bit about everything rather than being skilled in a particular field. The more specialized you become in only one skill, the more it traps you and makes dependent on it.
7. Overcoming obstacles
The primary difference between a rich and a poor is how they manage fear of losing money. Along with fear, there are some more factors like cynicism, laziness, destructive habits, arrogance, etc. Author illustrates in the book to overcome these.
8. Getting started
There is one more chapter in this book for those who want to get started regardless of anything. It encourages you to find your “why”, to make daily choices, to choose friends carefully, etc. Please go through the book for that.
What do I feel?
I highly recommend you to read this book, if you genuinely want to achieve something great in your life in terms of finances. If you have read till here, that means you are open to fresh ideas. This is an excellent quality on its own.
All the best for your journey!! Please subscribe to my blog for more such content. Let me know in the comment section which book you want me to summaries!
See you soon!