Rich Dad Poor Dad By Robert Kiyosaki

This week we’ll be chatting about Rich Dad Poor Dad by Robert Kiyosaki.

This book is a classic in financial education.  There’s hardly an instance where Rich Dad Poor Dad is not mentioned in discussions regarding personal finance.

I’ve read the book several times myself, and each time I read it,

I get a new insight – a new spark about what I can do

to pull myself out of the rat race.

Here are the three most critical lessons that stood out

for me as I read Rich Dad Poor Dad:

Robert Kiyosaki believes that the poor and the middle class are in the rat race because they think acquiring more money is the solution to their problems.  So they work harder and longer trying to increase their income.  The challenge with this approach, for most people, is that as their income increases, so do their expenses and liabilities. 

The pressure from the increased liabilities forces them to work even longer and even harder so they can pay off their bills.  This pattern of getting up, going to work, paying bills, getting up, going to work and paying bills is what Robert Kiyosaki calls the rat race.  This rat race is the playground of the poor and middle class.

The rich play a totally different game. 

They don’t work for money; they have money work for them.

The fundamental difference between these three types of people is that “the rich buy assets, the poor only have expenses, and the middle class buy liabilities they think are assets.”  Kiyosaki says that “Assets put money in your pocket, liabilities take money out of your pocket.  If you want to be rich, simply spend your life buying assets.”

Rich Dad Poor Dad’s first rule of wealth creation is this, “Know the difference between an asset and a liability, and buy assets.  Assets put money in your pocket, and with this money you can buy even more income-producing assets.

The primary reason the rich don’t work for money is because they want their money to work for them through the acquisition of income-generating assets.  You too can start on your way to wealth by keeping your expenses low, reducing your liabilities, and diligently building a solid base of assets.

 “Who are you working for? Who are you making rich?”

These are critical questions.  Consider your career right now, who benefits the most from your hard labour?

Rich Dad Poor Dad warns us that “Too many people forget to mind their own business.  They spend their lives minding someone else’s business and making that person rich.  To become financially secure, a person needs to mind their own business.”

The main reason people don’t mind their own business is because of fear.  “It is fear that keeps people working at a job.  The fear of not paying bills, the fear of losing the illusion of financial security,” admonishes Kiyosaki.  He goes on to say, “Winners are not afraid of losing, but losers are.  Failure is part of the process of success.  People who avoid failure also avoid success.”

Kiyosaki says that you must use your business corporation to buy assets for you.  He says, “A corporation protects the rich, certain expenses can be paid with pre-tax money.” This will give you a bigger pool of funds with which to buy assets quicker.

 “Don’t work for money?”  That’s an interesting paradox,

wouldn’t you say, considering the whole premise of this book

is to help people become richer?

The reason Kiyosaki advises you to not focus on the money is simple, “Money without financial intelligence is money soon gone.  If you want to be rich, you need to be financially literate,” he says.

Kiyosaki laments that what is missing from education

is not how to make money, but how to spend it –

what to do after you make it. 

It’s not how much money you make that makes you rich,

it’s how much money you keep. If you don’t grasp this insight,

you will soon fall back into the trap of the rat race.

“The better you are at understanding accounting

and cash management, the better you will be at analyzing

investments and eventually starting and building your own company.”

Robert Kiyosaki warns that having great talent is not enough to make you rich.  You must have a vision.  He advises that you seek work for what you will learn instead of what you will earn.  He says you must learn to be a good leader, if you fail at leadership, you will get shot in the back, and subsequently lose everything.  He also claims that the most important skill to learn in business is selling.  His argument being that on the cover of his books it says “best-selling author – not best-writing author.” Selling is the key to your success. 

And finally, learn to manage the flow of cash, learn to manage people, but most importantly, learn to manage yourself.

Kiyosaki echoes the sentiment of giving back. 

Give back and you will receive more in return.

Throughout the book Robert keeps asking,

“Why bother to develop financial intelligence?”

but he never gives the answer,

he insists that only you can answer that for yourself.

Now I ask you…

Why bother to develop YOUR financial intelligence?

How do you think an increase in financial aptitude will benefit your life?

Share your responses with us below.