Rich Dad Poor Dad by Robert Kiyosaki Review
Today I want to discuss with you all about a book that changed my life. That book is Rich Dad Poor Dad by Robert Kiyosaki. In a nutshell, Kiyosaki does an amazing job at defining personal finance, and how the rich stay rich, while the poor remains poor.
Rich Dad Poor Dad by Robert Kiyosaki talks about two influential figures in his life; one being his rich dad, and the other being his poor dad. His poor dad is his biological father and a highly intelligent educated man who managed to obtain his PHD and has a well-paying job, but struggles financially. His “rich dad” is his father’s friend and had only an 8th grade education, but went on to become one of the richest men in Hawaii. So the book basically breaks down the differences between the two men, and how their way of thinking ultimately shaped their own success.
Kiyosaki spends a lot of time discussing the differences between assets and liabilities. Assets are something that works for you and generate income, even when you are not working. For example, let’s say you own real estate that you rent out that nets you $1000 per month in profit. This can be considered an asset becomes you invested your money into buying this “asset” and now it is providing you profits each and every month. Now on the other hand we have liabilities. A liability is something that sucks your money and not providing you any profit. For example, let’s say you buy a brand new car; the value of the car depreciates daily and therefore you are only losing money. Not the best examples, but hopefully you get the idea.
Now let’s look into the main 3 lessons that Kiyosaki covers:
The first lesson is what most parents teach their kids, and that is to go to school (vocational/ college) and get a great job to support yourself and live a “stable” life. His poor dad was very smart and well educated, but lacked knowledge in finances and didn’t quite understand how money works. On the flipside, his rich dad taught him that he should go to school and learn as much as possible, but with the mindset that he would one day buy a business and/or start his own business. The rich father was shaping Kiyosaki’s mind to understand finances and start a business, rather than trying to work for someone else.
The second lesson he talks about is what to do after you finish college. What sort of jobs should you take? The key here is that the people that think rich, simply do not take jobs for the money, but rather for the experience to enhance their assets. The term assets here being used to describe investing in your own knowledge, or yourself. This by far was my favorite lesson.
The third lesson he describes is how to invest or spend your money and how important it is to “pay yourself first”. Just think about this, how many people do you know that make decent money but they are still broke in terms of the number of assets they own? Here’s what I mean. Poor people have income coming in each month, but most often spend on expenses. They never pay themselves by way of assets, so their money is constantly depleting/ refilling and so on. However the rich pay themselves first. When they receive their income, they invest a portion of it into their assets. Their money is “employed” and the rest of their money is used for expenses and liabilities.
Now it is important to note that this is only my interpretation of the book, and only a snapshot of the many lessons taught. Overall, I highly recommend any serious entrepreneur to pick up Rich Dad Poor Dad by Robert Kiyosaki! The simple concepts will definitely change the way you think about money and how owning your own business can help the overall quality of your life.
Feel free to check out more details about this book here.