Skip to content

Rich Dad Poor Dad

Author -> Robert Kiyosaki

The book, ‘Rich Dad, Poor Dad’ is about the author and his two dads - his real father and his best friend’s father and the ways in which both men shaped his thoughts about money.

  • Growing up, the author went to the same school as rich kids. Being poor in a school of rich kids made him seek an answer to the question - “How do I make money?”
  • His bestfriend mike was also poor, and so a friendship was formed between the two. They tried ways to become rich, the first wasn’t a success nor legal. The first time they tried was at making counterfeit money.
  • The author’s dad told the kids what counterfeiting meant and suggested the children to ask Mike’s dad on how to make money.
  • Mike arranged a meet with his dad and the rich dad told the children that he would teach them but not in the classroom way, the boys would have to work for him. The two weren’t allowed to ask questions about the deal.
  • The rich dad offered to pay them 10 cents per hour for 3 hours of work every Sunday. After a couple of weeks boring work the author wanted to quit and told mike. Robert had to wait extra 60 mins in waiting area for Mike’s father. This infuriated him even more.
  • When the Rich dad finally came the author blurted out to him that he was treated unfairly, the wages were below average, it was against child labor laws, and that the Rich dad hadn’t taught him anything.
  • Rich dad simply looked at him and said, “You sound like my employees. The ones who had been fired or quit. If you think I am the problem you are just going to complain. Find the problem with yourself and fix it.”

Chapter 1: The Rich Don’t work for money

  • Rich dad told the author that he was happy that Robert was angry as - ”anger is a big part of the formula, for passion is anger and love combined”

  • Fear is what controls the employees and makes them exploit themselves. it’s fear that keeps most people working at a job: the fear of not paying their bills, the fear of being fired, the fear of not having enough money, and the fear of starting over.

  • Rich dad then pointed out that poor people often say they’re not interested in money. Robert Kiyosaki thought back to the times his dad would say, “I’m not interested in money. I work because I love my job.” This is how poor people often cover themselves up.

  • One of the most empowering lessons rich dad taught in this section of the Book was to

Chapter 2:

  • Growing up, poor dad recommended that Robert read books while rich dad recommended that Robert master financial literacy.

  • It’s vital to learn the subject of accounting if your long-term goal is to be rich – no matter how boring you think the topic is.

  • Rule no 1: You must know the difference between an asset and liability

    • What’s the difference?

      • An asset puts money into your pocket. A liability takes money out of your pocket.
      • Assets are income sources such as Real estate, crypto, stocks, bonds, etc.
      • whereas liabilities are expenses such as car loans, mortgages, credit card debt, school loan, etc.

  • To sum it all up,

    1. The rich buy assets
    2. The poor only have expenses
    3. The middle class buy liabilities they think are assets

Chapter 3

  • The owner of McDonald’s once told an MBA, that he isn’t in the hamburger business. He is in the real estate business.
  • Today, McDonald’s owns the most real estate in the entire world.
  • Financial hardship comes from spending your life putting money into someone else’s pocket instead of your own.
  • Without a financial foundation, you’ll be stuck to your job and its security for the rest of your life.
  • The author advices to “keep your expenses low, reduce liabilities, and diligently build a base of solid assets.”

Chapter 4

  • The poor often say, “ ‘Why don’t the rich pay for it?’ or ‘The rich should pay more in taxes and give it to the poor.’ ”

  • However, the real rich never pay taxes. The people who pay taxes are the educated, middle class.

  • Even though the masses continuously try to find ways to tax the rich, the rich consistently outsmart them.

  • Financial IQ is made up of four key areas:

    • Accounting: ability to read numbers
    • Investing: the concept of money making money
    • Understanding markets: knowing supply and demand
    • The law: knowing the tax advantages and protections your corporation can provide
      • Tax advantages: corporations can pay expenses before taxes, which employees can’t do. A corporation can spend everything it can and be taxed only on everything left over. You can expense car payments, insurance, repairs, health club memberships, and most restaurant meals.
      • Protection from lawsuits: The rich use corporations to protect their assets from creditors, whereas the poor and middle class try to own everything themselves.
    • Difference between Business owners and employees
    Business Owners Employees
    1. Earn 1. Earn
    2. Spend 2. Pay Taxes
    3. Pay Taxes 3. Spend

Chapter 5: The Rich Invent Money

  • when we’re so afraid that we start doubting ourselves, we fail to push forward. Instead, it’s the bold who get ahead.

  • The result of gaining financial literacy and taking risks is “having more options.”

  • It is possible to have the money yet still struggle to move ahead financially.

  • The strategy of the average person is: “Work hard, save, and borrow.”

  • The people who get rich the fastest are those who realize that money isn’t real.

Takeaways from the #### Chapter:

  • People’s fear of losing causes them to not be rich.
  • Three skills of an investor:
    1. Find an opportunity that everyone else missed: see with your mind instead of your eyes
    2. Raise money: know how to raise capital outside of a bank
    3. Organize smart people: hire people more intelligent than you

Chapter 6: Work to learn

  • During an interview with a journalist, the journalist expressed her wish to become an author but she had tried and failed once.

  • The author suggested that she should do a sales course so that she could promote herself.

  • She became defensive and took it in offensive way, to which the author pointed towards his book and said, I am the ‘best selling author’ not the ‘best writing author’

  • This only infuriated her more and she left.

  • The world has many successful and talented people: doctors, lawyers, dentists. And still, they struggle financially.

  • But as a wise business consultant once said, “They are one skill away from great wealth.”

  • If you took your skillset and paired it with financial intelligence, accounting, investing, marketing, or law, you could achieve great wealth.

  • Rich dad says, “You want to know a little bit about a lot.” In school and at work, you’re expected to specialize.

  • Management Skills Needed for Success:
    1. Management of cash flow
    2. Management of systems
    3. Management of people

Chapter Seven:

  • There are five core reasons why even the financially literate don’t become financially independent:
    1. Fear
    2. Cynicism → when you think worst about situations and people and fail to see good in them
    3. Laziness
    4. Bad habits
    5. Arrogance

  • Like all those times you fell off a bicycle before you learned how to ride it.

  • Before people became rich, they lost money.

  • Most people are more afraid of the pain of losing money than the happiness of becoming rich.

  • To be successful, you’ll need to be focused, instead of balanced.

    • FOCUS: Follow One Course Until Successful
    • When it comes to financial education, you need to know the difference between good debt and bad debt. Analyze instead of criticizing.

  • Instead of saying, “I cannot afford it” think about ways by which you would be able to afford it.

Chapter 8

  • A gold miner in Peru once told Robert Kiyosaki

  • 10 Steps to Develop Your God-given Powers

    1. Find a reason greater than reality: the power of spirit
    2. Make daily choices: the power of choice
    3. Choose friends carefully: the power of association
    4. Master a formula and then learn a new one: the power of learning quickly
    5. Pay yourself first: the power of self-discipline
    6. Pay your brokers well: the power of good advice
    7. Be an Indian giver: the power of getting something for nothing
    8. Use assets to buy luxuries: the power of focus
    9. Choose heroes: the power of myth
    10. Teach and you shall receive: the power of giving

10 Line Summary

  1. The opportunities are fleeting, so you need to jump on them when they arrive.
  2. The poor and the middle class work for money. The rich have money work for them.
  3. It’s not how much money you make. It’s how much money you keep.
  4. Rich people acquire assets, the poor and middle class acquire liabilities they think are assets.
  5. The rich focus on their asset columns while everyone else focuses on their income statements.
  6. Often in the real world, it’s not the smart who get ahead, but the bold.
  7. The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.
  8. The primary difference between a rich person and a poor person is how they manage fear
  9. There is gold everywhere. Most people are not trained to see it.
  10. Your destiny relies on how you spend your money and your time. Your family’s future will be determined by your choices today.