Rich Dad, Poor Dad | Robert T. Kiyosaki

Summary of: Rich Dad, Poor Dad
By: Robert T. Kiyosaki

Introduction

Step into the world of Rich Dad, Poor Dad, a compelling story centered around young Robert Kiyosaki and his journey to financial knowledge. This book summary will walk you through the invaluable lessons imparted by Robert’s ‘rich dad,’ a financially savvy mentor who helps him understand the difference between assets and liabilities, and guides him towards a wealthy future. Discover the keys to financial intelligence and learn how the rich stay ahead of the game by creating money opportunities and breaking free from the ‘rat race.’ What awaits you in this summary is a tale of life lessons, wealth-building strategies, and the daring attitude required to attain financial success.

The Story of Rich Dad Poor Dad

Robert Kiyosaki’s childhood experiences with his “poor dad” and “rich dad” taught him valuable financial lessons that went against the common advice of “go to school and get a good job.” Through his mentorship with his friend’s father, Robert learned that working for money does not equate to wealth and that the rich acquire their riches through smart financial decisions and investments.

The book “Rich Dad Poor Dad” by Robert Kiyosaki tells the story of a curious 9-year-old boy named Robert and his friend Mike’s desire to become rich. After receiving misguided advice from Robert’s “poor dad” to study and attain a good job, Robert is left questioning whether this traditional mindset would lead him to financial freedom. Fortunately, he meets Mike’s father, a wealthy businessman who agrees to teach Robert about financial literacy in exchange for his help at a measly 10 cents per hour.

During his mentorship, Robert learns that working for money alone is not a path to true wealth. He realizes that smart financial choices, such as creating assets that generate income and investing for long-term growth, are critical in building wealth. These concepts go against the traditional advice of “go to school and get a good job” that many still adhere to out of societal pressure and fear of uncertainty.

“Rich Dad Poor Dad” offers a refreshing perspective on financial literacy and entrepreneurship, encouraging readers to challenge the traditional mindset of working for money and instead invest in creating assets that generate income. The book stresses the importance of financial education and encourages readers to take control of their financial future by expanding their financial knowledge. Through the story of Robert and his “rich dad,” readers learn the secrets of successful wealth creation and the key differences between those who work for money and the rich who make money work for them.

The Rich Don’t Work for Money

The book explains how the rich become rich by buying assets that generate income, while the poor and middle-class tend to buy liabilities that drain their income.

The book conveys that the rich don’t work for money. Instead, they make their money work for them by buying assets that generate income. Unlike the poor and middle-class, who put their salaries towards covering immediate expenses and liabilities like mortgage, school loans, and credit cards, the rich invest in stocks, bonds, or real estate to rent out to tenants. The outcome of this re-investment is compounding wealth, enabling the rich to keep getting richer.

The author illustrates the importance of distinguishing between assets and liabilities. Rich dad taught the two boys that anything that adds money to your wallet is an asset, while anything that takes money away is a liability. The author highlights that a house bought with a mortgage is not an asset but a liability because it takes away money from your wallet through mortgage payments and property taxes, which could have been invested in more profitable assets.

By keeping expenses and liabilities low, individuals can invest their extra money in assets. Through this well-established practice, they can increase their income and amass wealth over time. Rich Dad said that to become wealthy, one needs to identify true assets and buy them, not liabilities, which most people buy, thinking they are assets.

In conclusion, the book aims to convey that the rich become rich because they use their money wisely. By investing in assets instead of liabilities that drain their income, and letting their assets generate new income, the rich keep accumulating wealth, while the poor and middle-class struggle to make ends meet.

Minding Your Own Business

In “Rich Dad Poor Dad,” Robert Kiyosaki stresses the importance of “minding your own business” and making money through assets rather than just promotions and raises. Your profession is what you do to pay bills, while your business is what you invest in to grow assets. Kiyosaki learned this lesson early, as his rich dad advised him to buy assets rather than just focus on finding a secure job. Kiyosaki worked for large companies but always kept his expenses low, invested in assets and eventually built a portfolio of income-producing assets that made him rich. To get rich, one must learn to distinguish between their profession and their business, and invest in the latter.

The Way the Rich Stay Ahead

Robert’s rich dad opposed the Robin Hood story because it inspired a tax system he abhorred. According to him, the middle class shouldered the burden of taxation while the rich were too adept in deflecting tax with their sophisticated tools, such as corporations. By using corporations, the rich can avoid paying tax like the middle class and the poor do while limiting the amount they can lose if their enterprises go under. The lesson here is that the rich always stay ahead of the systems designed to rein them in by understanding the tax code and the legal system.

Educating yourself on Financial Intelligence

The lack of financial literacy education is a pressing problem for both young and educated adults. In Robert Kiyosaki’s story, Rich Dad taught him and his friend Mike about successful business dealings, which took up so much of their time that they struggled with school. Society tends to prioritize hard work and studying but fails to educate people on saving and investing, resulting in a population that is clueless about basic financial concepts like compound interest. This lack of education is reflected in the fact that even high schoolers max out their credit cards. It is evident that society has not prepared us for financial success, which is why Kiyosaki emphasizes the importance of financial literacy. The key lesson is to educate ourselves and start developing a financial strategy.

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