Rich Dad Poor Dad Summary (By Robert Kiyosaki)
It's obvious that most of us remain broke because of our diverse views about money.
Our views about it are that we see it as a goal, a medium to acquire premium goods and outstanding services.
Some of us even insist that money is the root of all evil.
However, rich people see money as a tool to make more money and the lack of it as the root of numerous evils. These contradictory views come from a lack of proper financial education.
That’s why we will examine the lessons from the popular financial book Rich Dad and Poor Dad by Robert Kiyosaki.
Be Bold And Take Risks
According to Robert, rich people are rich because they aren't scared to explore opportunities. They find opportunities that have perhaps come once to you, turning them into the billionaires they are now.
Robert himself narrated how he took a risk in his first investment. It was a small condominium in Hawaii that fetched him to make much from it, he became bold, and subsequently, with every deal, he got bolder.
It isn't that rich people are born with the luck of making a profit; everyone has lost money at some point, yet they have become rich. The loss only gives them experience, which is the best teacher.
Many poor people have never lost a dime in business in their life. Do you know why? Because they are afraid of losing money. Trying not to lose money means you will never make money.
Make Money Work For You
Have you ever heard the phrase "live to work or work to live"? I'm sure you would have. Most people work only to survive, nothing else. If they have money problems, they either suffer from it or ask for help, with no savings to rectify it.
Most middle and working-class people fall into this vicious circle. These kinds of people study to get a good educational certificate so that they will be qualified for more relevant jobs so they can earn more money. They are inclined toward avoiding risks for fear of being unable to pay their debts, getting sacked, or not having the money they need to survive.
Alternatively, rich people make money and don't work to earn it. In other words, they buy assets and invest in businesses that generate income.
Kiyosaki added that if you work for money, you will continually get enslaved by it. Your mind will only be thinking as an employee. However, if you start thinking differently, you will see things change the same way.
The rich work on building their assets, and every dollar in their asset file are their hard-working employees. If your money isn't working for you so that you can sleep and make a profit, you will never be rich.
Know The Difference Between Asset And Liability
Do you know what asset means? What about liability? Both may be different from how you know it. In his book, Kiyosaki defined an asset as getting money in your pocket and a liability as taking money out of your pocket. Simple.
He continued that rich people are rich because they continuously acquire assets, while poor people continue being poor because they only acquire liabilities upon liabilities. If you want financial freedom, don't buy liabilities. Most people buy liabilities thinking they are assets, but it's a lie. Things like exotic cars, high-end phones, and mansions are nothing but liabilities.
You want to be rich, then? Then leave all those and buy yourself assets; income from these assets will then give you the luxury you want.
In short, the middle class or poor buy luxurious items first whenever they get money, while the rich buy luxuries last. It's called delayed gratification.
Financial Education Is Your Greatest Asset
If you ask 99% of people today what they need, money will be number one. Don't let that be yours, also. The most powerful asset we all have is our minds. If trained well, it will create enormous wealth for you.
Kiyosaki believes that if people are prepared to be flexible and learn with an open mind. They tend to get richer. Intelligence solves many problems with financial difficulties included. With financial intelligence, you tend to get rich, while money without financial intelligence is quickly lost.
Some people get a salary raise at a time, but if you haven't grown to handle that amount of money or income, the money will disappear quickly. Being financially educated is one of the lessons this book offers because you can be highly educated, even a professor, but still be financially illiterate. If you look into the education sector today, no school teaches how to be financially ok, just formal education.
So for you to be financially alright, get financial education by reading a book like this if you haven't.
Don't Get Controlled By Emotions
Never should you allow emotion to affect your decision. Be in control of your emotions. Do not let fear or the views of others dictate your actions.
Fear usually keeps people in the trap of working hard to earn money, and it will keep repeating the same cycle just because they hope it will reduce their fear. They are scared of investing or taking a leap of faith and opening up a business. Also, some are of the type looking for quick money.
That’s why it’s essential to have a plan, either a Business Plan for your business or Strategic Investment Plan for your investments.
Making sound financial decisions is only possible if you know what you want to achieve and the time frames you have for them. If you don't have a plan when things get bad, you tend to revert to what other people are doing, what other people are saying, or what the media is telling you. So having planning aids you in not being influenced by the emotions of fear and greed.
Work To Learn, Not To Earn Money
This point is yet another lesson derived from this book. Work in a way that will be a platform for you to improve skills more, not only earn. In this book, Kiyosaki explained that work could be a platform to enhance your skills. He further quoted in the book that people are only one skill away from great wealth.
Learning can make you more knowledgeable and provide you with the necessary skills to improve your professional situation.
He suggested that you learn about the law, marketing, accounting, sales, speaking, writing, leadership, and negotiating. Investing more in your knowledge pays the best interest because getting life skills is more beneficial compared to what is taught in school.
To invest in your knowledge, you must possess a brave mind because you need to be intelligent but brave to take on the business world full of ups and downs. Great opportunities aren't seen with your eyes but your mind. So, you should acquire life skills like the ones we mentioned earlier to aid yourself on the path to financial freedom.
Failure Inspires The Winners To Put In More Effort, But It Defeats Losers
Do you want to be rich? Then, don't be afraid of failure. A failure is a step toward success, that is if you don't relent. Be bold enough to acknowledge and learn from your failures.
That's the biggest secret of today's winners. Kiyosaki explained that the rich take risks while the poor look on because they are afraid of failure. We aren't saying that the rich love failure, they are also scared of failure but, in a way, different from the poor.
Rich people know how to manage their fear. The fear of losing money is much more terrifying to some people than the joy of having it, so they back out from trying it.
Kiyosaki admonished us not to be afraid of losing and to be bold enough to admit and learn from our failures. Whenever there is a failure, it may affect the rich also as they go broke, but they are at a different level than the poor. Being broke is temporary, but being poor is eternal.
Reduce Your Spending As Much As Possible
Your debt load should be as little as possible because it may hinder your financial freedom if it's too much.
Liabilities take your money, so you should keep reducing liabilities and keep your expenses low, as both steps are a way to become wealthy.
Accumulate your assets, keep expenses down, and minimize liabilities. Grow your income instead of your lifestyle.
Stay Focused
Kiyasoki explained that an individual should remain focused on the end goal, which is financial freedom.
To gain that, you need to mind your business as well. Try figuring out different legitimate ways to build your wealth. You may have a job, so don't leave it but instead look for opportunities or invest in businesses to create more assets and generate a strong flow of income.
Minding your own business here is about focusing on your assets column instead of income statements alone.
You can use the income earned to make more returns or wealth that leads you to financial freedom.
Pay Yourself First
If you can't control your finances, you can't get rich. If you lack financial discipline, all your effort to become rich will be in vain. So, pay yourself first. Each month when your salary enters your checking account, invest a certain amount of money into income-generating assets before you pay your bills.
Kiyosaki added that even if you are short on money, use this pressure to inspire yourself and develop innovative ways to get enough money to pay the bills before it’s due. Although it's difficult, it is an important principle, as it trains your brain to think outside of the box.
More so, Kiyosaki isn't suggesting you should be irresponsible, what he is suggesting is to pay yourself first and not last. If you pay yourself last, there won't be any pressure, and there won't be any additional source of income for you, and with that, there won't be any hope of financial freedom.
Are you the type that works more than ten hours a day and still can't save enough money? Never mind when it comes to getting rich. Then this book is for you. I'm sure you've learnt a lot about the book in this article, but if you want to know more, you can purchase the book and read it yourself.
- Ivan