Book Review - Rich Dad Poor Dad by Robert T. Kiyosaki
Rich Dad Poor Dad by Robert T. Kiyosaki is a New York Times Best Seller first published in 1997. It has been one of the most popular business books since then, and I’ve personally read it at least five times. The book offers stories from the author’s childhood in which he explains that he was raised by two dads. His real dad was highly educated, had a PHD, completed four years of undergraduate work in less than two years, and earned a substantial income, although he struggled financially. His other ‘father’ (his best friend’s dad) never finished the eighth grade, although he became one of the richest men in Hawaii.
Throughout the book, Robert Kiyosaki explains that he received advice from both men, and worked to understand why their advice was so different. Although he respected both men, at the age of nine, he decided to listen to his “rich dad” about how to make money.
Some of the rich dad's guides to investing in Rich Dad Poor Dad are:
- The poor and the middle-class work for money. Wealthy people have money that works for them.
- It’s often not how much money you make. It’s how much money you can keep.
- Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.
- One of the most important keys to becoming rich is financial literacy, in other words, learning how to handle money.
One of the biggest lessons I took from the book is the difference between an asset and a liability. An asset is something that puts money in your pocket. A liability is something that takes money out of your pocket. This is one of the most significant principles to become rich. For example, if you buy a boat, this boat will require payments, insurance, maintenance, etc to be enjoyed. This is a liability. If you buy a boat business, where other people rented your boat out, therefore paying all the expenses and allowing for a profit for you at the end, this is an asset.
The author goes on to explain how the financial statement of the rich differs from that of the middle class and poor. I could explain the differences but it would be much more valuable to read about it and view the diagrams in Chapter three.
Another topic that stood out is about how the rich benefit from taxes. Rich people will often own corporations that first earn, then spend, and lastly pay taxes. The poor and middle class who work for corporations do something different. They earn, then pay taxes, and lastly spend. As part of the overall strategy, the author recommends owning your own corporation wrapped around your assets.
He advises to work to learn, as opposed to working for a paycheck. You must understand money in order to grow it. Chapter eight discusses the main reasons why people still struggle even after they have financial literacy. These include: fear, cynicism, laziness, bad habits, and arrogance. I recommend reading the book to hear the stories in which the author describes each one of these challenges, and how to avoid it.
In Chapter nine, the author shares principles on how to get started on a path to abundance. The number one step is to have a clear reason for why you want to be rich. Robert Kiyosaki explains, as other books do, that without a big enough reason, you are more likely to quit. Knowing the reason why you aim to be rich is the key to success.
If your intent is to make more money than you currently do, and take the path that other rich people have already taken, then read this book. I think I will go and read it again now.
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