The book Rich Dad Poor Dad consists of lessons for financial security. Many people work very hard in their life, few people work more than 10 hours a day but eventually do not save much and never get rich. Robert Kiyosaki author of the book Rich Dad Poor Dad explains smart ways to escape this “rate race”. The rat race is an endless quest where you have to work hard to catch up with bills and taxes. Sadly, many individuals are aware of this rate race and hate to be part of it but are scared of the backlash from society, so they keep racing anyway.
We’ve all heard conventional advice: “Go to school, study hard, get a good job, and everything will be all right.” The truth is, this advice is a clear indication of how the poor and middle-class see financial security. The rich don’t see things that way. This is no longer the recipe for a free of financial struggles. Good education and high grades no longer guarantee success.
Financially ignorant people allow emotions to control their decision-making. For instance, the fear of losing money prevents them from investing in assets or stocks because of the risk involved.
Greed encourages spending money to improve lifestyle, which may seem like a safer option to invest in assets. Fear and greed hinder people from becoming wealthy in the long run.
Robert Frost’s poem “The Road Not Taken” conveys the idea of a hard choice between the two unknown options we make at least once in a lifetime: shall you choose one path, you can never go back and choose the other one instead.
Here are the important lessons from the book (Summary).
- Rich Dad Poor Dad book teaches that for rich people, assets and investments are their income.
- The emphasis is to buy luxuries last, not first.
- Excess cash flow generated by your assets should be invested again to acquire more assets.
- Do not simply aim for more income, aim for more valuable assets, keep repeating the circle.
- Reduce your expenses low and cut your liabilities. Expenses and liabilities beyond means are not good.
- Study the history and structure of corporations and make your own.
- Know a little about everything. Learn something about accounting, investing, markets, law, sales, marketing, leadership, writing, speaking, and communication. Know little about anything you can.
- Work to learn, don’t work to earn. Find a job where you can learn skills.
- Do not simply buy investments. first, learn how to invest as no one else can do it better than you.
- You become what you study, so choose your study materials carefully, read a lot.
- Every rich person has lost money at some point, but many poor people have never lost a penny. Playing not to lose money means you will never make money. “Winning means being unafraid to lose.“
- Do not be afraid of losing and be bold enough to admit and learn from your failures.
- Be in control over your emotions. Do not let fear or opinion of anyone dictate your actions.
- Most sellers ask too much. It is rare that the asking price is lower than something is worth.
- Surround yourself with winners. Sit with people who are smarter than you and you can learn a lot.
- Saying “I can’t afford it” shuts down your brain. Asking “How can I afford it?” opens up your brain. Change your questions to change your life.
- Pay yourself first. Each month, first invest a certain amount of money into income-generating assets before you pay your bills. Short of money, use this pressure to keep yourself on your toes to generate more cash.
- Dream big, have a clear game plan in your mind.
- Develop a skill to listen. Listening is more important than talking. Do not constantly argue, instead listen and observe. Ask questions and try to gather as much knowledge as you can from others.
- Do not follow the crowd, Profits are made when you buy, not when you sell.