Rich Dad Poor Dad Book Summary and Review: If you’re only going to read one book this year, I’ll recommend you to read “Rich Dad Poor Dad” by Robert Kiyosaki. This is one of the best personal finance books that you’ll ever read with many key concepts explained on investing, budgeting, finance, and more.
Today, we are going to look into Rich Dad Poor Dad book summary and discuss a few of the best concepts covered in the book that will help you in your financial life. Keep Reading.
Rich Dad Poor Dad Book Summary
Rich Dad Poor Dad was originally written in 1997 by Robert Kiyosaki and Sharon Lechter. Ironically, the sub heading of the book is “What the Rich Teach Their Kids About Money That the Poor and Middle Class”.
In the book ‘Rich Dad Poor Dad’, Robert Kiyosaki describes personal finance by taking instances of learnings from his two fathers. Don’t think much, he didn’t exactly had two fathers. One was his real dad on the other hand other was his friend’s dad who differs a lot in their ideologies. Here are some of the key characteristics of both his fathers:
|POOR DAD||RICH DAD|
|He was a highly educated person with a PhD degree.||Rich Dad never finished his 8th Grade.|
|The Poor Dad gained a good substantial salary from his job.||The Rich Dad used to build and run businesses.|
|He was financially ignorant and used to struggle financially.||He was going to become one of the richest men in Hawaii.|
|The Poor dad always said ‘I cannot afford it’.||The RICH dad used to say ‘How can I afford it?’|
|He was going to leave huge bills to be paid for his next generation.||He was going to leave a huge fortune for his next generation.|
At a very young age, Robert Kiyosaki decided to follow his RICH dad instead of his highly educated POOR dad.
The book describes the lack of financial education given to the kids. The reason for the low financial literacy in the society is because it isn’t taught in school. Hence, the families have the responsibility to teach it to their kids. However, the trouble is that unless your parents are in the top 1%, they are going to teach their kid how to be poor. This is not because the poor don’t love their kids. It’s because they don’t know even know themselves about true financial literacy,
Anyways, through this article, let us learn from Robert Kiyosaki about financial knowledge that he learned from his RICH Dad.
The Rich Dad taught Robert that first he need to learn how to read financial statements. Here is how the RICH Dad taught Robert about the difference between an asset and a liability in simplest words:
- An Asset is anything that puts money in your pocket.
- A Liability is anything that takes money from your pocket.
Easy, Right? Now, the trouble is, anything can be an asset or a liability depending on whether it is taking money inside or outside your pocket. In the book, Robert argues that ‘Your house is not always your asset’. Let us understand what he means by this.
If you own a luxury house and you pay heft expenses for running the house, then it is a liability. The house is taking money out of your pocket. However, if you own a house and it brings thousands of rupees a month by renting it, then it is an asset. The house is putting money in your pocket.
The RICH Dad taught Robert Kiyosaki to always invest in assets. Assets can be a business, real estate, paper assets like stocks, bonds, etc. On the other hand, liabilities can be your expensive car, a big house bought on the mortgage, ,expensive watches etc.
RICH DAD POOR DAD Book Summary: 3 Most Important Lessons
LESSON 1: What Kind of Education to Get?
|Poor Dad advised Robert to get a high education so that he can get a good paying job.||RICH Dad advised Robert to get a great education so that he can start his own business.
|Poor believe in conventional education.||Rich believe in financial education.|
LESSON 2: What Kind of Work you should do?
|POOR work only for money (they believe is getting a job and work entire life).||RICH do not work only for money.
|They work for corporates, government & bank.||They make money work for them. RICH owns business and leverages employees, government & bank for their advantages.
|They are driven by FEAR & GREED. Fear of losing the job and greed of their next pay check.||Rich are driven by themselves.|
LESSON 3: How to Invest and Spend your money?
|The poor only have expenses.||The middle class buy liabilities (but think them as assets)||The Rich majorly only buys assets.|
|They can't pay themselves.||They pay themselves last.||They pay themselves first.|
“RICH always pay themselves first” this is the key point that the RICH Dad taught Robert. Further, he also added, “It’s not how much you make, it’s how much you keep.”
If you haven’t read the book, I highly recommend you to buy ‘RICH DAD POOR DAD’ through amazon at this link: Rich Dad Poor Dad: What the Rich Teach their Kids About Money that the Poor and Middle Class Do Not!
In this post, we covered the Rich Dad Poor Dad book summary and looked into a few of the top learning from his book. Here is a quick recap of what we learned today:
- Financial Education is just as equal important as professional education.
- Invest in Assets, not liabilities.
- Do not work for money. Make your money work for you.
I hope this post on RICH DAD POOR DAD Book Summary was an interesting read for you. We’ll definitely recommend you to read it. The book helps all those who do not have a RICH Dad, but want to learn what the rich teach their kids about money that the poor and the middle class do not. Further, do comment below what’s the best learning for you from this book. Have a great day and Happy investing.
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