Rich Dad Poor Dad

“Rich Dad, Poor Dad”- Review

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“Rich Dad, Poor Dad” by Robert Kiyosaki is the type of book that can change your life.  This is not an exaggeration.  “Rich Dad, Poor Dad” aims to challenge the status quo on how we think and interact with money.  It analyzes the average person’s mindset on managing money and sheds light on why so many people get stuck in the lower- and middle-class cycles. 

“Rich Dad, Poor Dad” starts with an introduction of Kiyosaki as a young boy caught between the teachings of his personal father, who he refers to as “poor dad,” and the teachings of his friend’s father, or “rich dad.”  Poor dad is a teacher who received a good education and has worked to solidify his position in the world as steady contributor.  His father represents the status quo mindset. 

Rich dad is a business owner who challenges the status quo by encouraging Kiyosaki to go against the grain and develop his creative and entrepreneurial skillsets to create a better life for himself.  The contrast of rich dad and poor dad allows the author to systemically call out the financial dogmas of our society while simultaneously offering contrasting advice on how to break out of that mold and achieve true wealth.

Why is this book important?

“Rich Dad, Poor Dad” proposes a mindset shift.

“Rich Dad, Poor Dad” is one of the most important personal finance books you can read because it aims to break down your preconceived notions about money and replace it with the yearning to achieve more.  If you aren’t sure what else is out there besides your 9-to-5 job, “Rich Dad, Poor Dad” will fill in those holes.  More importantly, Kiyosaki breaks down what will actually help you on your way to wealth: differentiating between an asset and a liability.  An asset is something that puts money in your pocket whether you’re working or not and a liability takes money from your pocket.  He uses this comparison to suggest a house, a purchase most people classify as their largest investment, is actually a liability since it draws money out of your wallet every month instead of bring in money.

“Rich people acquire assets.  The poor and middle-class acquire liabilities that they think are assets.”

“Rich Dad, Poor Dad” explains why the status quo keeps people from becoming rich.

Most people focus on studying hard, getting good grades, and finding secure jobs with large companies.  This allows people to feel a sense of security and safety in regards to their money but will lead people to forever work towards someone else’s wealth.  With increased active income comes more expenses and you’re forever tied to the necessity of a job.  Kiyosaki also suggests that most people focus on how they can grow their income statement instead of growing their financial IQ, which will ultimately allow them to make sound investments that will grow passively over time.  Most people fear losing money and therefore avoid risks.   However, investments become less risky over time as your financial IQ increases.

“When it comes to money, most people want to play it safe and feel secure.  So, passion does not direct them.  Fear does.”

“Rich Dad, Poor Dad” is best for…

… getting in the right mindset to change your relationship with money.  Kiyosaki challenges the reader to stop saying “I can’t afford it,” and start asking “how can I afford it?”

Top 5 Takeaways

  1. More money will not solve your problems. Without financial intelligence, any additional money will eventually be lost.  You must learn how to grow every additional dollar you bring in.
  2. Learn what an asset is and start pursuing them.  Investments should put money back in your pocket, so seek out investments like low cost index funds, real estate, or whatever you’re passionate about to begin growing true assets.
  3. Do not solely focus on the income column.  Increasing your income is great if you know what to do with it.  Have a plan for additional income that moves it from the income column to the asset column.  Without a plan, additional income will quickly exit with through the expense column.
  4. Take calculated risks.  Educate yourself on the means to grow passive income and pursue what you’re passionate about.  The rich get wealthy by taking risks.  Sticking your money in a normal savings account will LOSE you money over time.  Invest in your financial education and risk management will follow.
  5. Pay yourself first.  Create goals regarding how much money you want to save and invest every month and take that out of your paycheck first.   This will force you to make due with what you have left and drive you to buy luxuries last.  If you don’t have it, you won’t spend it.

Best advice from the book.

“Keep expenses low, reduce liabilities, and diligently build a base of solid assets.”

What to do next?

Invest in your education and start learning about different types of passive income.   Figure out which you are passionate about and begin pursuing that.

Now that you’ve read the “Rich Dad, Poor Dad” Review, you can buy it here.

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