Rich Dad, Poor Dad - Summary Revised

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Rich Dad, Poor Dad

Book Summary

Rich Dad, Poor Dad is a an international bestseller written by the author Robert Kiyosaki
who talks about his growing up years and his lessons in financial planning given by his two
dads—his real father (poor dad) and the father of his best friend (rich dad). He talks about
how both these men whose understanding of money differed in widely varying degrees in
many ways shaped his thoughts about money and investing. He says that his poor dad went
to Stanford and earned a Ph.D., but that was never enough because his rich dad never
finished the eighth grade but had built an empire for himself. The book consists of 8
chapters, lessons that everyone must learn. The central message conveyed by Kiyosaki is that
education alone does not make you rich unless theory is used in practicality and you don’t
need to earn a high income to be rich.

Early Lessons In Financial Literacy


In chapter 1, the author talks about how he as a young nine year old, woefully informed his
father that his rich friend Jimmy had not invited him and Mike for a beach-house party
because they were considered as poor kids. He asked his Poor dad on how this could be
changed and how they could become rich to which his father replied simply, “Use your head”
clearly manifesting the academic within. The truth is that he didn’t know how to make
money. Not one to give up so easily, Robert and his friend Mike started a business, both tried
to make coins at Robert’s house to which his poor dad and his friend laughed and his poor
dad gave him a sound piece of advice telling him to take advice from Mike’s dad who knew a
lot about Money.

Soon Robert was being paid 10 cents an hour by Mike’s father which soon did not make the
cut for him and one day he announced that he would quit the job because ten cents was just
not enough to which Mike’s father told him, this was the lesson he wanted him to learn that
if he worked for money he will end his life earning much less than what he deserved.

Understanding The Psychology Of Money


In chapter 2, Robert shares how the Rich don't work for money, they make money work for
them.” This made some sense to young Robert. For poor people, the rich dad continued,
“They have a pattern, the pattern of get up, go to work, pay bills; get up, get to work, pay
bills. This is what I called the Rat Race. People’s lives are forever controlled by two emotions:
fear and greed”. So many people say “Oh, I'm not interested in money.” Yet they will work at
a job for fixed hours, fixed pay and wait for their annual raise. This is because in some way
they are resigned to fate. They have fear and ignorance that rules them and not the economy
or the government or even the rich.

He looked at them as donkeys with a carrot dangling in front of them. Their fear made them
downplay their opportunities. Robert and Mike heard with rapt attention which ultimately
led to Robert starting a comic library with comic books which were not for sale because he
understood one had to use the mind to be able to see opportunities.

Why Learn Financial Management?


In chapter 3 on the burning need for Financial Literacy begins with learning how to
differentiate between Assets and Liabilities. It is important to take into account what kind of
assets and liabilities are in our hand according to Kiyosaki who then takes us through a
diagram which reflects his ideas. The author shows a diagram to easily differentiate assets
and liabilities. According to the author, the reason that the rich continue to get rich is
primarily because they purchase assets while keeping their liabilities to a bare minimum. On
the other hand, the poor remain poor because they pile up their liabilities while investing the
bare minimum in assets.

There is a very important lesson to be learned here not just for the professionals but for the
parents of young children too. In many countries we wait for children to grow up into adult
and then make their own mistakes with their finances rather than teaching them why it is so
important to go forward and grow our businesses, our careers and more around
asset-building.

Focus on Your Assets

In chapter four that largely talks about “Mind Your Own Business’ Robert Kiyosaki says that
if a person wants to be truly financially free he/ she must take stock of their own work, their
own responsibilities and their own liabilities.

Too often we are worried about our companies because that’s how we have been taught, to go
forward and work to align ourselves with the world and in a company work along the
principles but Robert says that our employers business is not Our Business. Instead we must
learn from their business and strive to build our own business and be our own boss. To build
an asset means to buy anything of value that will enable a steady cash flow. This could be in
the form of stocks, real estate, mutual funds, royalties etc.

Financial History: A Brief Story

In this chapter Robert Kiyosaki takes a step back and goes on to dwell on the history of
various countries and corporations and tells us how capitalism makes it difficult for the
common man to grow financially.

Robert believes that while the wealthy use the massive corporate giants to enhance enhance
their assets thereby creating sufficient social and financial security, the ones with lesser F.Q
or Financial Quotient are left out. .

While using corporate to earn money the wealthy can spend as much as they want and still
be taxed minimally. This is because they have re-invested their money in a way that only a
negligible amount that is left is actually taxable. Given that the F.Q for the working middle
class is generally low and they are uninterested given that they hire accountants and
financiers to do their tax work, they end up getting taxed more often than not. The author
also recommends one to develop their financial IQ by gaining knowledge about investing,
accounting, law, and understanding the market.

Creating Financial Opportunities


In this next chapter the author deciphers how the rich are able to create money. They are so
adept with their use that they waste no time in using their talent and their financial
management skills to build on their talent.

According to Kiyosaki mentioning exactly what he did in the earlier chapters, talent is
suppressed because of fear and self-doubt. Everyone is talented and everyone has the ability
to get ahead but Not everyone is bold and adventurous. The working class does not win
financially because they are unable to convert and tap into opportunities simply because they
are afraid to take the risks.

According to Kiyosaki the reason for such attitude is because the financially illiterate are
wasting their time waiting for the Perfect Opportunity to land straight in their lap whereas
the truth is every opportunity is perfect in itself.

Learn Before You Earn


In Chapter Seven, Robert Kiyosaki talks about an interesting episode that occurred in his life.
While at one of the book launches, as people were lauding him for his efforts a young woman
with a Masters degree in the English language came up to him,

The woman had a question that almost every good reader and wannabe writer would have.
She asked Kiyosaki questions on how he wrote and how he had become a bestselling author.
She was overawed but not for long. The author picked a book and asked her to check what
was written. She read it as #1 Bestselling Author. Kiyosaki explained to her that while he was
a mediocre writer (or so he felt!) his marketing team and publishers had done a fantastic job
marketing it, which is what made the book so popular.

Now while the answer may seem reasonable to the reader, the lady was quite offended with
the callous thought of the author and walked off in a huff.

Kiyosaki says that it is important to work to learn before you can begin to earn. Our
knowledge and wisdom is inexhaustible but our money is. And which is why we must learn to
allocate and invest our time learning about money.

Fear and Favour

In this next chapter, the author highlights five limitations that interfere with human
progress, namely, fear, cynicism, bad habits, laziness and arrogance. He says that in the
normal course of life, fear is but natural but one can overcome it with some smart financial
literacy lessons.

On the other hand those who believe that they know everything are arrogant and again fall
back because of some petty thinking. He talks about how when he talks to people on
investing and working on real estate they think that its all about plumbing and fixing toilets
which showcases their ignorance.

Such people are beyond repair. The author says that people are more invested in the outcome
than the process which disables them. They are interested in reaping the rewards even before
they have learned to solve the problem at hand. While the rich are able to handle their
problems with minimal issues the wannabes are only interested in the superficial nature of
the problem and cannot handle it leaving them perpetually in a dilemma.

Theory into Action

The culminating chapters of the book now focus on the application of all ofKiyosaki’s lessons
in the reader’s ultimate reality. In chapter nine, Robert focuses on building personal wealth
while overcoming all the odds with the help of some worthwhile insights and tips.

He says that only the focus on the future will help to build a financial mindset because one
has to find a reason greater than your current reality to motivate you. For this to happen he
believes further that it is essential to feed your mind and motivate it to learn. Risk-taking is
the hallmark of rising finances and without taking swift action towards this goal it is possible
that one will end up leading a simple 9-5 life with minimal money and maximum expenses.

A very important point here is that he advises the reader to be selective in choosing friends
because those who are not afraid to take risks will inspire their friends to do the same. On the
other hand, a community of talent that refuses to move beyond the traditional job will find it
difficult to talk about money and miss the great lessons one learns.

Another important concept here is to pay yourself. While this may sound a little odd because
well if its my business why do I need a pay? The idea is to keep yourself grounded,
accountable and transparent with yourself and minimising liabilities all at the same time.

Earn-Learn and Earn Again!

In this final chapter, Kiyosaki goes on to offer insight on how to maximise personal wealth.
Robert believes that it is important to differentiate between what works and what doesn’t.
He continuously stresses that once identified the reader must immediately put paid to all
those things that are no longer viable. While this is also an essential part of taking the risks
it implies - No Risk, No Productivity

Evolving new ideas, and evolving with every new experience, keeps the learning curve alive.
One can easily do this by indulging in practical learning, through taking courses, attending
seminars, and taking notes while listening to other successful people in the industry.
Replicating success is not difficult if you are willing to learn. After all, the more you learn, the
more you can earn.

Kiyosaki’s book is filled with rich insights, practical wisdom and learning that can easily be
incorporated in a reader’s life. All in all a book worth revisiting from time to time as you
progress in your professional/ business journey.

Key Quotes:

“In school we learn that mistakes are bad, and we are punished for making them. Yet, if you
look at the way humans are designed to learn, we learn by making mistakes. We learn to walk
by falling down. If we never fell down, we would never walk.”
“You’re only poor if you give up. The most important thing is that you did something. Most
people only talk and dream of getting rich. You’ve done something.”

“If you’re the kind of person who has no guts, you just give up every time life pushes you. If
you’re that kind of person, you’ll live all your life playing it safe, doing the right things, saving
yourself for something that never happens. Then, you die a boring old man.

“I’d rather welcome change than cling to the past.”

“Stop blaming me, thinking I'm the problem. If you think I'm the problem, then you have to
change me. If you realize that you're the problem, then you can change yourself, learn
something and grow wiser. Most people want everyone else in the world to change
themselves. Let me tell you, it's easier to change yourself than everyone else.”

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