Rich Dad poor dad is the story of Robert Kiyosaki (the author) growing up and following the contrasting advice from his highly educated poor father (biological) and his best friends rich father who didn’t make it past eighth grade.
I put off this classic that has sold over 26 million copies for so long partly because everyone said read it. I’m a rebel at heart like that.
What we learn are the mindsets and beliefs that make the rich, rich and keep the poor, poor.
Lesson 1: The rich don’t work for money
This seems like a peculiar statement right. Don’t the rich do exactly that. That is why they are rich?
The rich actually invest in assets so their money works for them. Building up passive income from sources like real estate, bonds, stocks and shares is a way to get rich.
Start saving a portion of your salary every month and don’t have it all sitting in the bank. Let it make money for you and in 5 or 10 years you will literally be able to live off it and enjoy the luxuries you’ve always wanted.
I’ve started doing this and I’m reaping the rewards. I always imagine where I’d be if I had this information earlier.
Take this information and take action on it. Do research on a variety of assets and start investing.
Lesson 2: Learn financial literacy
Financial literacy is the ability to understand how to make, keep and manage money.
Our education system does not teach us this and I wonder why that is. It’s fundamentally simple and a lot of people would be richer if they did.
The core basic is to know the difference between assets and liabilities and buy assets. Assets add to your income whereas liabilities deplete it.The poor and middle class buy liabilities prematurely and confuse the difference between an asset or a liability.
Many people think a car is an asset. It isn’t. A car loses 25% of its value as soon as you drive it. Other examples of liabilities are credit card debt, loan repayments and maintenance costs. So the idea is to invest in enough assets that make enough to cover the liabilities you want.
Wealth is also not so much about your income but your pattern of spending. People that increase their income can still find themselves broke because their spending increases at the same time. People that win the lottery tend to find themselves back in the same situation they were in before after a couple of years because of this.
Lesson 3: Mind your own business
Keep your asset column strong.
The poor and middle spend their time working for others like their company, the government (taxes) and the bank through mortgages and loans.
We can use the money we earn through our work and invest in businesses (your asset column) so one day they will earn you a significant amount.
There’s always a ceiling in terms of what you can earn when your work for someone else but not if you have your own business or businesses. The richest people in the world always work for themselves.
Lesson 4: Taxes
Taxes can take away a significant chunk of your income and there is a difference between how the rich and the poor manage them.
The poor get taxed as individuals which means before expenses and the rich form corporations so they get taxed after expenses and that makes a huge difference to the amount of money you keep for yourself.
Lesson 5: The rich invent money
Develop financial intelligence so more opportunities to make money are available to you.
The poor believe that the only way to make money is to work hard, save and borrow.
Your mind is your most valuable asset and as you learn you will realise that there are more opportunities to make money out there. You can invest through experts e.g. stockbrokers and investment bankers or seek out opportunities yourself.
You have to take risks in order to be rich but if you are informed and understand investing it will pay off.
Lesson 6: Work to learn – Don’t work for money
To be successful you need to master many different skills.
Take the long term approach sometimes it is more valuable to earn less in the moment and learn great skills like sales, marketing and communication.
A lot of professionals could earn a lot more than they do if they invested in these areas. Robert Kiyosaki reminds us that he isn’t a best writing author but a best-selling author.
Having read many many books this is the first one I’ve read about money. It gave me a lot of lightbulb moments and realise blind spots I had been missing financially. It’s more of a money mindset book and not a step by step guide if that’s what your expecting.
I suggest everyone reads this book, it is a great introduction into how to make and keep money which will lead to more freedom letting you live a life on your terms.