Rich Dad Poor Dad: The Short But Enough Book Review
Let’s talk about the book “Rich Dad, Poor Dad” by Robert T. Kiyosaki. This is the most famous book in the world of Financial Professionals and Investors.
The “Rich Dad, Poor Dad” book is a best-selling book and written by Robert T. Kiyosaki. He is a Japanese-American guy. Now he is an American Investor, Author, Businessman, and Motivational Speaker. Robert described in the book about their two dads. One is his real dad, (Poor Dad) who is a professor at the university and believes in 9 to 5 jobs, yearly increment, and secure life. The other one is his friend’s dad (Rich Dad) who is a businessman who believes in financial freedom. His rich dad believes that,
“The primary difference between a rich person and a poor person is how they manage fear.”
Here Title “Rich dad, Poor dad” stands for comparison of the state of mind of his rich dad and poor dad.
Robert did not write about where you should invest your money and how you can make money but he writes about what is the difference in the state of mind in Rich people and Middle class or Poor people. The book is written in around 220 pages and there are nine different chapters with one Introduction. People who want financial freedom in their life must need to read this book before graduation.
Now, let’s enjoy a Powerful summary of all chapters of the book one by one.
Lesson 1: The Rich don’t work for Money
“Don’t work for money, Make money works for you.”
Poor and middle-class work for money, but Rich people have money to work for them. Rich people work very hard but they work to learn things. Once they learn things, they easily put things (ideas) to make money for them.
Once Robert asked his father (Poor Dad) to teach them how to make money and how to become rich. Poor dad replied, if you want to be rich you need to learn to make money. After that, the next morning Robert with his friend Mike found one partnership firm and started making money(Coins) by casting from old tin toothpaste. They actually started with casting coins in Robert’s garage. But, when his father comes to them their business gets distracted because they teach them that it is illegal and suggest they go to Mike’s father to find an answer to their question.
Then one day they meet Mike’s father(Rich Dad). Mike’s father offers them a job of cleaning shelves for 3 hours each Saturday with a wage of 10 cents an hour.
Beginning of Life changing Lessons:-
Initially, he enjoys it but, after some time he feels like an exploit, instead of learning how to make money. Hence, they consult his rich dad for either pay rise or quit. As a result, Rich Dad gave him the first lesson: Some people leave their job because they are not being paid enough, some stay and wait for increments. But they don’t know that this pay rise will not solve their problems. Some people are afraid of quitting and starting over. In the end, they become slaves of money and blame their boss.
Rich dad explains to Robert that being rich or making money is not a one day or a year classroom course. It takes a lifetime and can be learned only by vast experiences. They taught them first to avoid life’s trap of pay rise, and secondly, to not let emotions control their minds. They always tell Roberts and Mike that keep working, don’t worry about pay scale, and keep your mind active and working on ideas of making money. Most people are not able to see the opportunities because they are looking for money and security.
As a result after some days of working, they got an idea of an opening of a small library of comic books. They hire Mike’s younger sister for taking care of their business. Finally, they started making $9.5 per week by opening the library and by charging 5 cents per hour of reading from children.
In short, they learned how money can work for them.
Lesson 2: Why Teach Financial Literacy?
“The assets put money in your pocket and Liability takes that out of your pockets.”
In the second lesson, Robert Kiyosaki is trying to give an understanding of assets and liability. Many people cannot understand this concept in life. For most people, assets are things that have value. Many people think their own car is an asset for them but actually it’s not until you will run it for a taxi service.
For Robert Kiyosaki, Assets are that thing that can generate income for you. As per this definition, you have your own car or house that has value but it is not an asset for people. People should find the right assets and convert them into passive income. You can control that income. For example, if you have an extra house in the town and you gave on rent then that kind of property belongs to assets. If you invest money in any company through the stock market then you don’t need to go to the company but that company will work for you.
In short, In this chapter, they gave a concept of cash flow analysis. Rich people always first focus on generating more and more assets. As a result, they become richer and richer.
The conclusion of the second lesson is to understand the cash flow pattern and the most important difference between assets and liabilities.
Lesson 3: Mind Your Own Business
“Start minding your own business, keep your daytime job but start thinking of buying or generating real assets.”
In this chapter Robert started with an example of McDonald’s, everyone thinks that their business is to sell hamburgers, but actually it’s not. But They also focus on the location of their franchises, which will become the real assets for them over time. Today MacDonalds owns some of the most valuable street corners and intersections all around the globe.
Roberts also explains the hole in our education system, which only prepares youth by developing them to work for the company or work for money.
Robert had started his professional career with a job in large organizations such as US Marine Corp and Xerox Corp. But Robert knows very well, he does not want to be employed for a whole life.
Meanwhile, they save some amount for their income and invest in the real estate and the stock markets. To sum up, After some years real estate income became higher than his salary.
In short From this lesson, the author is trying to say that, People must need to start to invest some part of their income, eventually, they can create their own business.
Lesson 4: The History of Taxes and the Power of Corporations.
In this chapter, Robert describes how tax structure is an enormous burden on rich people and the upper-middle class. Robert blames Robin Hood for this tax structure, because Robin Hood robbed the rich, and gave it to the poor. He said robin hood is a crook, not a hero. Like robin hood, government tax now robs the rich and gives it to the poor.
After that, they also describe how his rich father teaches them to make a company or private organization, hence it possibly saves a lot of taxes. Most of the businessmen are trying to keep their money in the corporate structure to minimize their tax because the company offers them many tax-saving advantages.
“If you work for money, you give the power to your employer. If money works for you, you keep the power and control it.”
Robert suggests that his rich dad always says that knowledge is power and the biggest bully is tax. Therefore ,If you do not have proper knowledge of saving tax and investing money, the government will rob you.
In short, the author tries to describe how the taxation system will rob you. and how you can minimize the tax by starting a corporation or company.
Lesson 5: The Rich Invent Money
“The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.”
In this chapter, the author started with the required characteristics of a rich and successful man. He says that a person requires technical expertise as well as the courage to take the risk to be rich. If fear is there then success will stay away. They also explain the importance of financial IQ.
According to the title of the lesson, here the author gives an understanding of investment. Here the author teaches to find the best opportunity of investing money. For instance, the fall down of the economy of phoenix in the 1990s. They describe at that time how they buy the bankrupt houses from the bank at a very low price and sell it to others at almost double price. The author describes some other examples too with the mathematics of returns and investment. Above all, They also explain how to reduce the amount of tax paid with a well-detailed calculation.
“Great opportunities are not seen with your eyes. They are seen with your mind.”
Lesson 6: Work to Learn-Don’t Work for Money
“You want to know a little about a lot” was a rich dad’s suggestion.”
In short in this chapter, the Author advised us to learn how to manage the company, people, and cash flow in the company. Moreover, they says, try to become extraordinary in management, communication, and marketing. In other words Everyone should need to learn as many things as possible. Because an understanding of work can help to become self-employed.
Lesson 7:- Overcoming obstacles
To sum up this chapter, the author describes five main obstacles with remedies to overcome in detail.
- Bad Habits
Rich dad believed that the word “I can’t afford it” shut down your brain, on the other hand “How can I afford it?” opens up possibilities, excitement, and dreams.
Lesson 8 & 9:- Getting started
In both chapters, the author describes how you can start with your own business? In addition what things do you need to focus most on developing your business and wealth? Likewise, They also describe 10 steps of getting started in detail.
- Find a reason
- Make daily choices
- Choose friends carefully
- Master a formula and learn new one
- Pay yourself first
- Pay your broker well
- Learn to get something for nothing
- Use assets to buy luxury
- Find heroes
- Teach and you shall receive
“Everyone had two beautiful things, your mind and your time. Use it wisely.”
In short, you must have one master key for success and that is acceptance of the risk. You have to control your emotions and you should not think about possible failure. I also agree with the author that if you have the skill to find the right time to invest your money in the right place then you can definitely earn money with proposal risk. In my opinion, you also should have petitions after investment. So, find the right time and invest your money in the right place and be patient with that.
I also found one best book for investment and the name of that book is “Intelligent Investor” by Benjamin Graham. I will give a summary of that book in the upcoming time.
Good things about Rich Dad Poor Dad Book:-
Fundamentally the best book for the people who want financial freedom. Indeed the main fundamental point of the book which I like most is that you should start saving and invest that savings in the assets that can replace your income to which you get from employment. This book describes the best fundamental lessons for financial freedom.
Bad things about Rich Dad Poor Dad Book:-
In my opinion, still lack of details in some important areas where the author can regret their decision. Kiyosaki describes some specific path that is not as easy to follow for people. Also, the Author tries to insult in lots of ways. Kiyosaki insults people who are not following their path.
If you don’t have any clear point of view about financial freedom and independent life then you should definitely read this book once. In addition It is a very helpful book for me personally. Because it helps me a lot in changing my personal point of view.
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