This is a summary review of Rich Dad Poor Dad containing key details about the book.
What is Rich Dad Poor Dad About?
Rich Dad Poor Dad is a story about the author, his two fathers, and how they both teach him about money and investing. The book explains the difference between working for money and having your money work for you. It also promotes the importance of financial literacy, financial independence, investing, and increasing financial intelligence.
Rich Dad Poor Dad is written in the style of a set of parables, ostensibly based on the author's life. The "rich dad" is his friend's father who accumulated wealth due to entrepreneurship and savvy investing, while the "poor dad" is claimed to be the author's own father who he says worked hard all his life but never obtained financial security.
Who is the Author of Rich Dad Poor Dad?
Robert Toru Kiyosaki is an American businessman and author. He is also an investor, entrepreneur and educator whose perspectives on money and investing fly in the face of conventional wisdom. Kiyosaki is the founder of Rich Global LLC and the Rich Dad Company, a private financial education company that provides personal finance and business education to people through books and videos.
How long is Rich Dad Poor Dad?
- Print length: 195 pages
- Audiobook: 6 hrs and 9 mins
What genre is Rich Dad Poor Dad
Business, Nonfiction, Finance, Self Help, Personal Finance
What are the main summary points of Rich Dad Poor Dad?
Here are some key summary points from the book:
- "Poor Dad" represents the traditional view on work and money - go to uni, get a 9-5 job, climb the corporate ladder. This worked well in the 20th century, but not anymore.
- "Rich Dad" represents the independently wealthy views on work and money - build assets, invest wisely, work for salary only if you enjoy and have to.
- The fear of not having money makes people work hard, which in turn leads to compensation through frivolous spending. This is the "Rat Race", a never ending loop between fear and greed.
- Fear of losing makes you play safe. "Failure" is a learning experience that will make you stronger and wiser. When you recognize a great opportunity, exercise the courage to take it.
- The rich don't work for money - money work for them. They are getting rich by owning assets.
- Every dollar that you spend (and not invest) is a dollar that does not work for you. Think of each dollar as your employee that can work 24 hours a day.
- Buy assets, not liabilities. An asset is anything that produces income, appreciates in value, and does not require your active management. For example, stocks, bonds, income-generating real estate, businesses that generate profit, royalties from intellectual properties such as book, music, etc.
- Investments can often be deceptive. They can look like an asset, where in reality they are liabilities. A house, for example, is a liability if it's taking money out of your pocket and an asset when it's bringing in money. While real estate can appreciate over time, there’s no guarantee of this.
- Staying busy is often a way to avoid emotions and things you don't want to face in your life.
- Condemning money is a trained defense. Embrace it as an empowering force.
- Financial intelligence (e.g. investing, accounting, marketing, sales, communication, negotiation, etc) is key. Always develop it. Knowledge, very much like money, compounds over time.
- The journey to financial independence is less about how much money you make and more about how much money you keep.
|Poor Dad Mindset||Rich Dad Mindset|
|"I can't afford it"||"How can I afford it?"|
|Being the smartest person in the room||Hiring the smartest person in the room|
|Buys and grows assets||Grows liabilities|
|Thinks clearly around money||Gives into emotions around money|
|Needs a paycheck. Exchanges time for money||Creates income-generating assets|
|Uses dispensable income for frivolous spending||Uses income to buy assets that return more income|
|Avoids risk. Fear of losing money.||Manages risk. Embraces fears.|
|Afraid to fail and make mistakes||Failing is part of the process|
|Motivated by safety||Inspired by growth and learning|
|"I'm not interested in money." Greed is bad.||Money and greed can be used constructively.|
|How can I have a higher salary?||How can I have more assets?|
|"The government will and should take care of me"||Believes in financial self-reliance.|
|"I'm poor because of the economy and the job market."||Believes in financial self responsibility.|
|"Academic degrees will make me wealthy"||"Investing and financial literacy will make me wealthy"|
What are key takeaways from Rich Dad Poor Dad?
Takeaway #1: Why We Struggle To Leave The Rat Race Behind
Despite hating being caught up in the rat race that has you working so hard only for the reward (money) to go to your boss, the government, and on bills the major thing stopping people from breaking free of the cycle is a fear of what society will think of us if we succeed.
Takeaway #2: Fear and Greed
These are the two emotions that we have around money that cause us to make poor financial decisions. As an example of these emotions in action, imagine you get a pay rise at work. The fear of losing this extra money prevents you from investing it in stocks and shares or other assets that could bring your wealth in the future. Meanwhile, greed takes over and has you buying a new car or a new house with that extra money because it seems a 'safer' and more tangible option, despite there now being a larger mortgage, higher gas bills, and so on which leave you back in square one.
To overcome fear and greed you must take it upon yourself to increase your financial knowledge yourself because no one else will. Learn accounting, learn how to save, learn how to invest, learn what all the terminology such as compound interest means, and learn how to secure your future with a pension fund. The earlier you educate yourself financially, the better since the later you leave it the more catching up you have to do.
Takeaway #3: Taking Risks
You probably learned from your parents or the media that it's bad to take risks where money is concerned (no one wants to lose their fortune) but know that everyone who is financially successful has taken a risk in order to get to where they are.
To grow your money you can't play it safe and keep it in a regular checking or savings account. This is where the risk of investing whether in stocks and shares or property comes into play, do you want to remain stuck where you are or do you want to take a calculated risk that could grow your income substantially?
Takeaway #4: Keep Motivated
The road to financial abundance is often a long and winding one, you need to be in it for the long-run and keep going despite the hurdles the pop up along the way.
Create a financial list of what you do want and what you don't want – It might be that you want to pay off your mortgage within 5 years, that you want to be financially independent – not relying on your partner or the government for help, and that you don't want to end up in the same financial situation as your parents. When you get discouraged, pull this list out and remember your reasons for increasing your wealth.
Another way to motivate yourself, although this must be done carefully, is to treat yourself before your earnings go on paying the bills. If you paid your bills first you would be unlikely to motivate yourself to earn the extra money to treat yourself afterward, figuring that you'd postpone until next month... and the next month. When you look after yourself first, whether that's with buying yourself some finance education (a book or a course) or something more frivolous, you'll have to come up with the money to pay the bills later – Just don't allow yourself to use credit cards as a way to find that extra money!
Takeaway #5: Avoid Laziness and Liabilities
There are two pitfalls to watch out for as you go further along the road of financial success. Laziness can look, from the outside, like you're being very productive but you may actually be burying your head in the sand. You also have to be aware of arrogance, this can be defined as ignorance + ego and will get you into financial trouble with shady 'too good to be true' investments.
Be sure to know the difference between an asset (something that makes you money I.e income from real estate (rental properties), a business, stocks, bonds, and royalties) and a liability (something that costs you money) i.e a house bought with a mortgage that requires upkeep.
Takeaway #6: Why You Must Build a Business
A profession and a business are two different things when discussing personal finances. Your profession pays your day-to-day living costs, your business grows your assets. Your profession and your business, or side hustle, can be two completely unrelated things – Let's use the example that your profession is in real estate and your business (funded by the leftover money from your profession) is trading stock. You know that your day-to-day expenses are covered, but in order to grow financially you need to grow your assets which is done through your business. Eventually, you'll be able to drop your profession and live on the income from your assets, but only if you've learned and understood the legal loopholes of the tax system in your country – Don't hand your money away when it's not necessary!
What are the chapters in Rich Dad Poor Dad?
Chapter 1: Lesson 1: The Rich Don’t Work for Money
Chapter 2: Lesson 2: Why Teach Financial Literacy?
Chapter 3: Lesson 3: Mind Your Own Business
Chapter 4: Lesson 4: The History of Taxes and the Power of Corporations
Chapter 5: Lesson 5: The Rich Invent Money
Chapter 6: Lesson 6: Work to Learn—Don’t Work for Money
Chapter 7: Overcoming Obstacles
Chapter 8: Getting Started
Chapter 9: Still Want More? Here Are Some To Do’s
What are good quotes from Rich Dad Poor Dad?
"Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success... 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."
"Whenever you feel ‘short’ or in ‘need’ of something, give what you want first and it will come back in buckets. That is true for money, a smile, love, friendship."
"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"
"Workers work hard enough to not be fired, and owners pay just enough so that workers won't quit"
"People struggling, often working harder, simply because they cling to old ideas. They want things to be the way they were; they resist change."
"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. the fear of starting over... Most people become a slave to money… and then get angry at their boss."
"I can't afford it' shut down your brain...'How can I afford it?' opened up the brain."
"Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets"
― Robert T. Kiyosaki, Rich Dad Poor Dad - What The Rich Teach Their Kids About Money
Tal Gur is an impact-driven entrepreneur, author, and investor. After trading his daily grind for a life of his own daring design, he spent a decade pursuing 100 major life goals around the globe. His journey and most recent book, The Art of Fully Living - 1 Man, 10 Years, 100 Life Goals Around the World, has led him to found Elevate Society and other impact-driven ventures.