Rich Dad, Poor Dad

Today’s author, Robert Kiyosaki, had two fathers from whom he took most of his influence: the rich dad and the poor dad. The rich dad is his best friend’s father. This man had an honest work ethic that states that a person should get good grades and gain a lot of experience in order to find a high-paying job in the future. The poor dad thought very much in the same way. The only difference between the two is that the rich dad invested his time in financial education to have a good understanding of how money works. By doing so, he was able to become a millionaire. The story has a very nice moral that teaches you smart ways to make money, just like the rich dad did, while avoiding the mistakes the poor dad made. Today, we will discuss rich dad, poor dad, and the importance of financial Literacy.

Going Through the Chapters:

1. The Rich Don’t Work For Money:

In reality, most rich people work very hard, but they approach it differently than most people. Every day, rich people and those who want to become rich learn how to make their money work for them. Just like the rich dad says in the book, “those in the middle class and the poor work for money.” A regular job is only a short-term solution to creating wealth and financial freedom, which is a long-term challenge. The author notes that the rich have money working for them. The only thing keeping you in your place is fear, according to Robert. Fear of not being able to pay the bills, running late on your rent, risking losing your current job that’s paying for everything, starting all over again but all of the above leads to success if carried out the right way. Taking the risk to invest in something that will become a money magnet later on will compensate for all of the effort and time you’ve invested.

2. Why Teach Financial Literacy?

In the second chapter of the book, the author explains what an asset and a liability are. This chapter emphasizes that the amount of money you keep is more important than the amount you make. Assets are valuable, produce income or appreciation, and have a market where they can be easily traded.

In contrast, liabilities are costly, which means they take money from your pocket. This statement caused a lot of controversy when the book was first published. In other words, unless the value of a personal residence increases enough to offset ownership costs, a home isn't an asset. In contrast, rental properties are assets since they generate passive income that exceeds the costs associated with operating and financing a property.

3. Mind Your Own Business:

This chapter pretty much tells you to do two things. First of all, get rid of all of your debt as soon as possible and invest in an income-producing asset. Then, keep it all healthy by investing more money into the assets you currently possess so they can give you more profit. The author notes in this chapter that most people confuse their business with their profession or their field of work. Consequently, they are staying in their jobs and making money for other people when they should be using their skills to create their own businesses.

4. The History of Taxes and the Power of Corporations:

This chapter teaches you how to be a smart and wise investor. You have to know how things work on the inside to be able to use every legal means to your advantage to lower your taxes. Therefore, instead of making the money, spending it on taxes, and then taking the rest for yourself, you can make money, spend it, and then pay your taxes. The monster won’t be after you if you play it smart and turn things around to your own advantage.

This chapter also introduces us to the four main factors of financial intelligence, law, market law, investment strategy, and accounting.

5. The Rich Invent Money:

In this chapter, the author sheds light on all the opportunities that you can use your unique skills to find. These opportunities are always out there, and they are made especially for you because others don’t have the required knowledge and resources to find them. Use that to your advantage.

We get introduced to two types of investors in this chapter. The first type is the person who buys an investment package and lets someone else do the work for them. The second type is the professional investor who looks after their own investments, does a study to have enough awareness and understanding to make their own plan, then hires a professional to take care of it according to plan.

6. Work to Learn, Don’t Work for Money:

This chapter tells us how the poor dad never made it because he was always focused on maintaining a sense of job security, while the rich dad became a millionaire by focusing on growing and learning. This behavior made the rich dad unique enough to notice the opportunities around him and invest his time, effort, and money in them, and that’s exactly how he made it to the top.

The author moves on to mention the management skills that are required to be successful in business. These skills are system management, cash flow management, and, finally, people management.

6. Overcoming Obstacles:

Here, Robert tells us that one of the main differences between the rich dad's and the poor dad's mindsets is the way each one of them handles fear. To be more specific, fear of losing money. Robert moves on to introduce us to the five main obstacles a person can encounter on their quest to success, financial freedom and security. They include arrogance, bad habits, laziness, cynicism, and fear.

Bottom Line:

You can be special enough, good enough, or unique enough for anything you set your mind to. All you have to do is work hard and honestly to get what you want. And remember that patience is the key.