book summary of “ Rich Dad Poor Dad ” by Robert Kiyosaki
Rich Dad Poor Dad (1997) combines autobiography with personal advice to describe the stages to wealth and financial independence. The author believes that in this New York Times’ bestselling book, he learns things we have never learned in society. In his view, what the upper classes pass on to their children is the knowledge necessary to acquire wealth, that is, to “remain rich.” Kiyosaki tells the story of an incredibly successful investment period and his early retirement at age 47 to substantiate his claims.
Introduction to the book Rich Dad Poor Dad
Where can we learn about money? Is this possible for us at school? You have probably heard the saying that the rich get richer day by day, and the poor get poorer. Why? I feel sorry for myself when I look back and think about the teachings we were taught about money as children. In fact, they did not teach us anything about money at school.
Maybe that’s why we are used to building our lives on loans and installments from the beginning. Now that the school has no plans to teach how to make money, the only source of education for children about money will be parents. Rich Dad Poor Dad is the story of my life. My real father was a poor father who has spent his life as an employee and lives on loans and installments. However, my father has also acquired valuable possessions in life: an installment house, an installment car and entertainment at the same level; yet the rich father lived with a different belief. He believes that money should work for him rather than him for money. This belief has caused the rich father to earn more than the poor father, even in travel and entertainment.
Book summary in three sentences
- The Rich Dad the Poor Dad book is about the lives of Robert Kiyosaki and his two fathers — one the real father (poor father) and the other the father of his best friend (the rich father) — and their ways of life and thinking about money and investing.
- The book proves that you do not need to earn a lot of money to get rich.
- The rich behave in such a way that money works for them, not them for money.
5 great ideas from this book
- The poor and the middle class work for money, and instead the money works for the rich.
- It does not matter how much money you earn, but how much money you save.
- The rich are amassing wealth, and the poor are amassing commitments and installments that they think are wealth.
- Financial talent is something you can save more money with, how to keep it longer, and how to prevent others from taking it away from you.
- The most powerful asset of all of us is our mind.
The book of the rich father of the poor father has six sections. Each section has its own message and conveys its intended lesson to the reader.
- The amount of money you earn has no value, but the amount of money you save is valuable.
The amount of money you earn has no value, but the amount of money you save is valuable.
One of the most valuable statements and lessons in the book Rich Dad Poor Dad is that you need to know the difference between wealth and debt and look to buy wealth, not debt. This is the only law and the number one law. Unfortunately, people with very high social and academic literacy, such as doctors who also have very high incomes, often never learn how to deal with money and remain poor. The poor in that they have no choice but to go to work to earn money.
Our assets put money in our pockets and our debts take them out. For example, consider an installment machine that is taking money out of our pockets. Is this really an asset? In the first part of the book, Kiyosaki makes it clear that if you do not know how to deal with and manage money, you will not be able to manage your life and financial situation and get out of crises, even as your income increases. That is why, in most cases, when a person receives a large sum of money, the money he inherited or won the lottery is destroyed very quickly, and life takes it back at the same rate.
2. The poor and the middle class are always looking for money and money is always looking for the rich
looking for money and money is always looking for the rich
“Go to school, study hard, and find a good job.” We still teach this slogan, although it is an outdated advice rooted in our parents’ past thoughts. At that time, you could probably find a job as soon as you graduate, work for the same company for decades, and retire with a comfortable pension. Today, this is no longer a guaranteed way to get rid of financial problems or poverty forever. The truth is that you can work hard, get into a good university, and get a lucrative job after graduation without any financial growth, since you are still stuck in a “vicious circle.” Your bosses (not you) are getting rich because of your hard work. However, we still believe and follow this slogan for fear of not living up to the expectations that have been planted in our brains since birth. Result? We may escape poverty, but we certainly will not get richer.
If you work for money, you increase your employer’s wealth day by day, and if money works for you, you become stronger day by day. In fact, you will not make any money in your life as soon as you quit your job. However, my rich father teaches me that making money does not require spending time working. An increase in income is followed by an increase in taxes and an increase in the cost of living. This is a lesson that if I had been taught as a child, I could have achieved financial independence at the age of thirty.
3- These people are not smart people who step forward, but they are brave people
people are not smart people who step forward, but they are brave people
Most of us have a laid back attitude when it comes to painting a picture about ourselves. In reality on the other hand, the world is full of such people and most of them are poor. They lack financial intelligence, a comprehensive talent for financial matters such as accounting, investing, and the like. Unfortunately, we grow up without this intelligence. Our education system is designed to teach people a variety of useful disciplines, but financial intelligence is not one of them. Children do not learn things like saving or investing and therefore have no knowledge of things like compound interest. A good example is that even high schools today spend all their money on their cards. This educational poverty in the field of financial intelligence has not only plagued the youth, but also the problem of educated youth, many of whom make bad decisions with their money.
Politicians, for example, are generally considered to be the smartest and most educated people in society, but it is not without reason that countries incur terrible national debt. Most ruling politicians have little financial intelligence. Ordinary people may also have an extremely poor financial management situation, as exemplified by their lack of planning for retirement. In the United States, for example, 50 percent of the workforce does not have a pension, and among the rest, about 75 to 80 percent have an inefficient pension. Undoubtedly, society has weakened us in terms of financial knowledge, and so we must educate ourselves.
When we are looking for wealth in a time of great economic transformation, it is very important that we seek good financial education ourselves. When you leave university, it really does not matter that you have passed it with very high grades. The fact is that in order to succeed in life and get rich, you need something beyond high scores. It is very bad that people, after 20 years of education, are just realizing this. In this section, Kiyosaki emphasizes that in order to get rich, you have to take a little risk.
Of course, he also emphasizes the need for the necessary training on risk management. The key to managing risk is the financial intelligence that everyone needs to develop. In this regard, Kiyosaki considers learning accounting and investing in different markets a prerequisite for financial intelligence in individuals; it is therefore advisable to get the necessary training on investment risks, because the lack of financial training and its placement along with the desire to gain wealth faster can lead to disaster.
4. Businesses are the biggest secret of the rich
Many people think that their business and job should be the same. Yet, there is a difference in personal finances. Your job is to do 40 hours a week to pay for bills, buy groceries and pay for other living expenses. It usually gives you a specific title like “restaurant owner” or “seller”. Your business, on the other hand, is what you spend time and money on to help you grow your assets. Because a job only covers your expenses, it alone is unlikely to make you rich. To make a fortune, you have to start a business while working. For instance, consider a chef who goes to a food-decorating university and knows all the ins and outs of the job.
Although he earns enough money from his job (cooking) to pay his rent and support his family, he still does not get rich. So he invests in a business: real estate. Spends extra income each month on income-generating assets, apartments and communal buildings that can be rented to a tenant. On the other hand, consider a car dealer who puts the rest of his monthly income on buying and selling stocks. In either case, their jobs generated enough income to cover their monthly expenses. But by spending extra income on their business, these people also increase their assets and move towards wealth. When this happens, your assets (not your job) become your main source of income. This is undoubtedly a sign of real financial independence.
5. Rich people focus on their wealth and poor people focus on their income
This whole part of the book points out that by keeping the job you are in, you should think about investing and gaining wealth as soon as possible. You need to eliminate debt as soon as possible, keep costs down, and get started quickly to raise funds. It is the habit of the rich to build their own pillars of wealth first, and then to make the luxuries of their lives from the high incomes derived from this pillar of wealth. At the same time, the poor and middle class people in the society are using the money they earn with hard work and sweat to build the luxuries of their lives. The author advises that our expenses should be derived from the income from the investment, not from spending our salaries and income on the expenses.
6. People who are always preventing failure also hinder success
It is interesting to know that most rich people have reached this point only because of some of the fractures they have had in life. If it were not for these failures, perhaps these successes would not have occurred to them. In this part of the book, Kiyosaki points out precisely that people never win as they are always afraid of failure.
To better understand this lesson, you must return to the process of life. There is no training or success in life without failure. Children have to fall over and over again to walk. You have to ride a bicycle to learn to ride a bicycle. This is a great principle even in real life. Be sure to use it as a yardstick and enjoy it in your financial life. Losses and mistakes cause you to learn more, but if you are afraid of failure and live with that fear, you will not get into many games, and failure is the only thing you will achieve in these situations.
Valuable book quotes
- There is a big difference between being poor and failing. Poor is something eternal, but failure will be temporary.
- Money comes and goes, yet if you learn how to work with money, you can succeed.
- People’s financial lives are always affected by two factors: fear and greed. Fear of empty pockets forces people to work hard, and monthly paychecks make them look for more work with more greed. They get used to waking up early in the morning, going to work, paying their bills, earning more money, paying more bills, and still going through this process in life.
- Many people claim that they have no interest in money, while they work eight hours a day to earn it.
- You are only poor when you give up. Many people actually do nothing to get rich; they are always dreaming!
- Lack of money is the root of all evil; The love of money is the root of all evil.
- Workers work hard enough not to be fired, and instead employers only pay enough to keep workers.
- Do not lie to yourself by thinking that a job can make you safe.
- You need to know the difference between an asset and a debt and buy an asset.
- More money rarely solves people’s financial problems.
- A person can be very educated and at the same time very illiterate.
- Wealth is the ability of individuals to live without income. If you want to know how rich you are, you have to answer the question, how many days can you survive if you have no income today?
- Robert Kiyosaki believes that work that requires his physical presence is not a business; rather, it is his job that is being lost.
- The best thing about money is that it has the ability to work tirelessly 24 hours a day and generate income.
- Kiyosaki’s wealthy father did not see Robin Hood as a hero, but as a swindler.
- Gold is everywhere, but most people are not trained to see it.
The key message of the book Rich Dad Poor Dad
This book tells us that due to the fact that we were not taught financial intelligence at school, we have to create this trait in ourselves. The possibility of gaining wealth or financial independence increases only when we have high financial intelligence and a strong mentality and ambition behind it. Ultimately, whatever you invest in your mind will be successful for you, because the mind is your most important asset in any financial situation.