Rich Dad Poor Dad Summary

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Rich Dad Poor Dad Summary


Kiyosaki has 2 dads, they are the main characters that shaped his financial literacy, his biological dad (the poor dad) and the father of his childhood friend “Mike” (the rich dad).

Kiyosaki begins by highlighting his two dads' contrasting financial mindsets and beliefs. His poor dad was a highly educated individual, a government employee, and believed in the traditional path of going to school, getting good grades, and finding a secure job. Despite his education and stable income, Kiyosaki noticed that his poor dad struggled financially and lived paycheck to paycheck.

In contrast, Kiyosaki's rich dad, a successful entrepreneur, and investor, had a different perspective on money and wealth. His rich dad believed in the power of financial education, taking calculated risks, and building assets that generate income.

Kiyosaki emphasizes that his rich dad did not have a college degree like his poor dad, but he possessed a wealth of financial knowledge and a different mindset that enabled him to achieve financial success.

At the age of 9 Kiyosaki and his friend Mike decided to learn about making money from Mike’s dad, with a unique way of teaching the kids by experience, here are the lessons Rich dad taught the kids at that young age.

Escape the rate race

“A job is a short-term solution to a long-term problem.” — Rich Dad

People are driven by fear and desire, when it comes to money they can be afraid of being poor or driven by the greed of collecting more money and fulfilling more needs and wants. That is how most people. Those 2 motives derive most people to stay trapped in a cycle of (getting up, going to work, paying bills, and repeat..)

What is the issue here? The issue is handling emotions (fear & desire), emotions will keep driving you, But if emotions are the sole driver of your decisions, money will control your life.

You don’t want to lose your big houses and nice cars. You receive your paycheck and desire more stuff. That is how you keep trapped for most of your life.

Is being rich solve the problem? Actually no, people tend to have more fear the richer they get, if you don’t handle your emotions, with having a large pile of money you will only be a highly paid slave.

We are all employees at different levels, The advice is to be aware of the emotions that can drive you to be trapped in a situation you don’t desire on the long run.

Rich Dad highlights Financial education's importance, something we don’t learn at schools, yet it affects a core part of our life (money).

Better financial Literacy → more informed decisions → Better control of your emotions, act based on your thoughts rather than reactions to your emotions.

Make money don’t work for it

The rich invent money, the author shared a story when as a kid with his friend and partner Mike, they collected toothpaste metal tubes, melted them, and turn them into coins. Of course, as a child, he did not know that this was illegal back then. But his rich dad says that this story was the closest he got near to “making money” and not working for it.

The author explains that “making” or “inventing” money, usually does not correlate to the time you put in work, but usually happens through new ideas, agreements, or making good deals.

He lists some examples of “making money” from his own journey, like making 60k by buying and selling a house that was undervalued in a few hours with money he did not even own.

Why Teach Financial Literacy?

Your greatest wealth is not money, it is knowledge and financial intelligence. The foundation that you can start based on is strong financial knowledge.

Liabilities & Assets

Rich acquire assets, and the poor & middle class acquire liabilities.

Asset: Something that puts money in my pocket.

Liability: Something that takes money out of my pocket.

Finance Aptitude

Most people don’t know how to keep money because they don’t understand cash flow due to financial illiteracy. They know how to work hard but don’t know how to keep it or make money work for them.

Mind your own Business

The rich focus on their assets while everyone else focuses on their income.

The takeaway here is to think of yourself as an entity. think about your cash flow where it comes from and how you spend it. think about your assets vs liabilities. Most people spend their life minding the businesses of the companies they work for and give little attention to their own.

Start taking proactive steps to build wealth, create passive income streams, and grow your assets. It involves acquiring financial education, making informed investment decisions, and actively managing your money to achieve financial independence.

History of Taxes

Mike’s Dad, he explains that while taxes were introduced to help the poor by taking a cut from the rich, that is not actually what happens. In the real world due to different reasons, the middle class ends up paying taxes for the poor instead of the Rich.

In short, know your law, and Be aware of taxes. Be smart or you will get pushed away.

Work to Learn—Don't Work for Money

The author mentions multiple events in his life where he decided to quit a stable career to go learn a new skill or start a new business.

For any entrepreneur there are some sets of skills that you will need to learn, the author mentions

  • Accounting
  • Sales
  • Marketing
  • Leadership

Sacrificing a safe career or higher income for acquiring new skills can be a good idea on the long run. The mindset is “Work to learn” especially at the start of your career. after all there is no business without selling or accounting.

Overcoming Obstacles

Fighting Fear & doubt

Fear is the most common obstacle people will face, for most people fear of losing money is greater than the joy of being rich, so they never do it. Rich Dad inspires the author into embracing failures and learning from them rather than do nothing.

Failure inspires winning. or as rich dad advice try to go broke as early as possible. If you want to be rich you will need to take risks.

Knowing all of that, it is up to each person to decide how much risk they can afford to take, if you are young and willing to fail then it is probably better to maximize your chances by taking more risks. Or you can play it safe keeping your 9 to 5 and investing in low-risk mutual funds for example, it is up to each person to determine.

Fighting laziness

One difference between the two mindsets is that poor dad would say “I can’t afford it” if something is expensive. Rich dad on the other side would ask him “How can I afford it?”.

That simple difference can either keep your mind lazy or train it to always search for solutions.

Fight laziness by embracing greed, a little bit of greed is good, but too much greed will hurt you though.

My takeaway from the book

  • Find a purpose that drives you
    List your “don’t wants” and “wants”, your motives should be strong or you won’t commit to anything, for example I don’t want to stay in debt for the next 20 years, I want to reach financial freedom, I want to retire early and travel more.
  • Always learn
    Learning doesn’t stop after school, always find what is your knowledge gaps and work on filling them, find the best expert in the field around you and learn from their knowledge.
  • Build your assets column.
    Start building assets as early as you can.
  • Avoid personal debt
  • Pay yourself first
    Why? By paying yourself first, you will have less to pay bills and other commitments, this creates more pressure for you to go look for ways to increase income if necessary.
  • Actively choose to be rich and think every day
    Build spending habits that align with your goal.
    Choose what to spend your time on. learn a new skill? write a book? take a course?
  • Choose friends carefully
    You learn from your friends and surround yourself with knowledgeable skilled friends.
  • Pay your professionals well, whatever expertise you need in your journey, hire smart people, and pay them well.
  • Assets buy luxuries.
    Buy luxuries with money generated from assets.
  • Teach and you shall receive
    Always pay the knowledge forward, “if you want to learn something, teach it”.

Thanks for reading ❤️

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