‘Rich Dad Poor Dad’ is one of the world’s best-selling books. It has so far sold 32 million copies worldwide. The book has been translated into 50 different languages. ‘Rich Dad Poor Dad’. And in this summary we’ll discuss 15 major points that author has conveyed in the book.
The book’s author Robert Kiyosaki who is also a successful American businessman and the founder of Rich Dad Company sets a very interesting plot for the readers of the book. He uses a comparison of two perspectives prevailing in the society concerning financial handling of matters. On one side lies his own father who though is well educated with a large number of degrees but is a poor dad. And on the other side, his friend’s dad, who is a businessman, is said to be a rich dad.
In his book, Kiyosaki effectively builds a case for the financial freedom of the people. He uses the two perspectives side by side to make the reader understand the difference. The differences between people who become rich and those who stay or become poor.
“This book can be treated as a money management guide for all the youngsters as well as those people who want to become financially independent.”
The book is written in a simplified language. The concepts is to convey the message to the readers in a straightforward manner. The book covers lessons for the readers who want financial independence and want to become rich. Some of the key lessons from the book are given below with brief details-
1. Don’t work for money, let the money work for you:
Kiyosaki mentions that two human traits stop a person from any forward movement. These traits are fear and greed. Fear of not being able to earn money and greed be of acquiring more money. Thus, leading people to work for money. Once they earn money, they spend it on non-productive things, and soon they need to do more work for more money. In Kiyosaki’s words, it is a ‘rat-race’ where poor people are trapped due to fear and greed.
2. Understand the difference between Assets and Liabilities:
Too many people are confused about the word “Asset”. Hence, Kiyosaki challenges the definition of an asset of people belonging to poor dad perspective.
According to Kiyosaki, liability keeps extracting money from you. For example, owning a big house or a car is a liability because this leads to expenditure such as electricity bill, maintenance charges, etc. On the contrary, an asset is something that earns you money like an individual. It could be a house on rent, some shares or bond, etc.
Kiyosaki believes that poor people remain flooded with liabilities whereas rich people have multiple assets and little liabilities.
3. Buy Luxuries at the end:
The virtuous effect of fear and greed lead poor people to work more and more to earn some money. Once poor people have money they immediately go and buy luxuries with that money. It could be a car, T.V, A.C, etc. Thus, they run out of money quickly and have to work in that cycle of ‘rat race’ for indefinite time. Contrarily, people with a rich dad mentality don’t buy luxuries with their earlier economic gains. Rather, they buy assets first. They earn luxuries in the end with the money earned through their assets.
4. Reinvestment of cash flow:
People with a rich dad mentality never keep money with them. This is important because after 1971, the US has taken the dollar off the gold standard and the value of money will keep on depreciating. Rich dad mentality people keep the money invested in assets.
5. Corporation over Employment:
Kiyosaki, through this book recommends to people to become corporations and strive to be an employer instead of being an employee. It is the poor and middle-class people who pay the highest amount in the taxes in the face of Individual income tax which is also higher in rates as compared to corporate taxes. So, poor people not only earn less but also pay more taxes.
6. Learn skills:
In this book, Kiyosaki gives special attention to the learning of new skills. He asks people to ‘work to learn’ instead of ‘work to earn’. Because, as soon as you get paid for your work, you start thinking like and employee. To become rich, one needs to start thinking like an employer/entrepreneur.
7. Mind your own business:
In Kiyosaki’s book of “Rich dad, Poor dad”, he states that even if we are working a job, we should have some side business which may nor require our lot of time. Something that gives us income without investing a lot of our time.
8. Stay unaffected by the detractors:
Some people are always going to fan cynicism about your project or move in terms of business. One must always stay focused on one’s work and treat the voices of detractors as white noise.
9. Keep a good company:
Being optimistic is very important so Kiyosaki, in his book, delineates that people with rich dad mentality surround themselves with good and strong-minded people who are no shirkers and stay highly positive about things.
10. Pay yourself first:
Kiyosaki wants people to pay themselves first and then do other things with the earned money. In other words, one must take money for oneself and invest in some asset and then go for paying the bills. In this case, if someone is falling short of meeting the expenses or bill, one will be motivated enough to somehow manage the bills as one has paid himself first.
11. Grab the opportunity:
A lot of people have money and resources to invest in a business, yet they fail to make the move. They just keep waiting for the right moment to invest that never arrives. The book “Rich dad, Poor dad”, briefs us that rich invented money by recognizing and grabbing the opportunity first. From Elon Musk to Dhirubhai Ambani everybody become rich because they could see the light.
12. Accept the Change:
One must always be ready to accept change. There must be a willingness to learn new things so that one stays updated and works relevant to his time. Also, one must be able to adapt to the changes occurring in society.
In this respect, the example of Nokia is paramount. At one time Nokia was at top of the list as a mobile phone seller. However, it collapsed before the very eyes of the world just because it didn’t accept change. Nokia stuck with the Symbian system and didn’t accept the change of android technology. The words of Nokia CEO Stephen Elop, on the occasion of Nokia’s acquisition by Microsoft, sums it up pretty well.
“We didn’t do anything wrong, but somehow, we lost…”
13. Learn how to sell:
Rich people learn at every point, how to sell their idea. You can be very good at your craft but if you can’t sell it then you can never be rich. And strong execution of an idea is only possible when you learn new and practical things.
14. Learn to invest:
It’s not the smart to get ahead but the bold. By this I mean, people become rich due to their financial knowledge. The right time to invest and the ability to take risk can make people rich.
15. Give and you shall receive:
Lastly, in his book of “Rich dad, Poor dad”, Kiyosaki gives the lessons from his personal experience that when one wants something one must give the same thing to other people and, as a result, the same thing will return to one in buckets.
In this very book, Kiyosaki mentions five things that will never let one get rich and that must be avoided at all cost.
- Bad habits
In this regard, Kiyosaki also criticizes schools, as they don’t provide financial literacy to students. They train students to be an employee instead of being an employer, according to Kiyosaki.
This book is nothing less than a gem for people who seek financial literacy. It is highly recommended as it provides value for invested time and money in this book. The book has an excellent flow and coherence that will lead you to keep reading the book until you have completed the book.
This article on "Rich Dad, Poor Dad" doesn't contain every specific detail from the book as it's just a summary. If you want to read the entire book then click here to buy. It is an affiliate link for you guys. If you liked this book summary and want to know more about finances then you might also like- Getting Things Done by David Allen and 5 steps to become rich | Summary: I'll teach you to be rich