Rich Dad Poor Dad - Book Summary
Being born in a middle class home we grew up with certain assumptions about money, but this book by Robert Kiyosaki has opened our eyes to see things we never thought of before. There are 6 basic financial concepts in the book and other tips and hints that are well worth considering. Here is my review:
Lesson One: There are things that the wealthy teach there children about money that the poor or the middle class don't. It makes sense because the wealthy have become wealthy because of what they know. This is also why wealthy people get wealthier. Lesson one is that rich people don't work for money like everyone else, money works for them. Most people slave their whole life to earn enough to pay their bills and put something aside to retire on. They are in effect a slave to money. The wealthy have learned however to handle money in such a way that money is a slave to them. They have gotten out of the rat-race.
Lesson Two: It is what we "know" that makes us rich. Our greatest asset is in fact our knowledge - our minds. The wealthy know this and so they teach their children to be financially literate, to understand how money works and how to work money. There are many examples in the book about this.
Lesson Three: Robert teaches that each of us must "mind our own business." He is not being rude but rather saying that each of us must have a business. This can be real estate, or stock trading or some other such thing. It is our business that will make us rich and it is our business that will make money. Otherwise we are simply an employee, a slave who will work for money all our lives. We must also manage our business and be in control of it.
Lesson Four: In this lesson Robert talks about taxation and how the tax rules of most countries tend to favour the rich. This is because the rich, through their investments and businesses provide jobs and housing. The government of most nations has an interest in housing and employment because it gives a nation stability. The lesson here is that we need to understand taxation and take advantage of the tax laws. Most tax laws suit business and corporations. Fortunately, its easy to own our own corporation. In most cases its just a paper document, and it saves thousands of dollars in tax. Learn how this works and make it work for you.
Lesson Five: The Rich invent money... you really must read the book. What most people do is to take their income and pay their bills first and then invest if anything is left. The rich however invest first and then pay their bills second. They then generate income from their investments hence "inventing money." The money they "invent" they turn back into investments compounding their passive income.
Lesson Six: Work to Learn. Many people are arrogant, or ignorant or afraid of investing. All of these come from a lack of knowledge. When we know a lot about a subject we lose our fear and are able to approach it properly. The key to financial success is to be teachable, willing to learn and to make the effort to constantly learn new things.
For those of you hoping to get a formula for instant riches out of Robert's book, you will be disappointed. He subscribes to the theory that you must change the way you think and they you will see the results in your bank account. At the end of the book he has a heap of little financial tips and ideas... to read those you will have to
I hope you enjoyed this book summary.