Have you wondered about the fuss around Robert Kiyosaki’s Rich Dad, Poor Dad? It’s one of the most widely read personal financial books of all time. Rich Dad, Poor Dad was first published in 1997, but remains a best seller even today, two decades later.
Millions of people around the world have been deeply influenced by this book, which challenges many fundamental beliefs many of us have about money. Kiyosaki is a famous real estate investor, author and motivational speaker from Hawaii.
So, what’s the book all about?
Kiyosaki compares the two main male influences he had when growing up, his two “dads” – his biological father – the so-called “poor” dad and his friend Mike’s father, the “rich” dad.
The poor dad is a highly educated professional, works at a steady job all his life, while the rich dad is not educated highly, but runs a string of successful businesses. Kiyosaki talks about the money mistakes made by his “poor dad” and the lessons learned on personal finance and investing from his “rich dad”.
The key takeaway from this book is – if you were just born into wealth, have a great education, and find a good paying job, there is no guarantee that you will stay rich and wealthy.
It’s the approach to your money, your mindset, and your habits that separate the rich from the poor. Let’s quickly work through the four key lessons from the book.
Lesson #1 The Rich Don’t Work for Money
The difference between the rich and the poor is their approach to money. The “poor dad” does not think logically about money. He is motivated by “fear” – fear of losing his job and not having money to pay the bills and “greed” – making the mistake of increasing spending when he gets a raise in his job. So he is a slave to his job and hence works for money. The “rich dad” on the other hand, is an independent businessman and instead of working for his money, he makes his money work for him. He has mastered money and does not allow fear or greed to dictate his approach to it.
Lesson #2 Why Teach Financial Literacy?
In this lesson, Kiyosaki talks about what ails modern day education. The schools and colleges of today teach young people how to work for money. The whole purpose of conventional education is to make students good employees, not employers. They don’t teach financial literacy, which is why most people struggle to become financially independent despite having better jobs than their parents.
Lesson #3 Mind Your own Business
It would be a mistake to rely entirely on your job to become financially independent. Financially independent individuals often own or operate a income-generating business. You should also look into acquiring or developing income-generating assets or real assets. Stocks, bonds and mutual funds – which appreciate in value over a period of time, are examples of real assets. Rental property, royalties from intellectual property or blogs, affiliate marketing and other sources of passive income, are examples of income-generating assets.
Lesson #4 The History of Taxes and the Power of Corporations
The whole point of taxes is for the government to play Robin Hood, to punish the rich and reward the poor. However, the fact is, it is the poor and the middle class who are really hit by taxes, not the rich. The rich don’t allow themselves to get manipulated by the government and have an excellent knowledge of accounting, investing and the law that allows them to protect their assets while paying fewer taxes. If you want to learn more about what strategies people implement under this lesson, read here.
Conclusion
The rich have a different outlook towards wealth. They realize that it’s not enough just to make money; you have to grow your wealth and manage it effectively. That’s why financial literacy is so important. Every financial decision you take now will have a major impact on the rest of your life. You alone are responsible for everything that happens in your life, so get smart, take charge and be like the “rich dad” of Kiyosaki’s story.
If you liked this article, check out also How to Spend and Budget Responsibly.
And for extra information on Kiyosaki, read here.
