Rich Dad Poor Dad is a very well-known finance book by Robert Kiyosaki, and it has grown quite the following. This Rich Dad Poor Dad summary will also include popular quotes, an overview and what you can find in this book and some tips provided by the author in regards to how you can get started.
The first time you read this book you’ll fee inspired. You’ll want to run out and start following these ideas, but is it really that easy?
The Six Lessons You’ll Find Inside
The title of the book refers to the two influences the author had as a child. His father was poor and working class, working a steady job. While his rich father figure, who was the father of one of his friends, ran a number of businesses. The majority of this book is told from the perspective of the author learning from his friend’s dad, or the “rich dad” regarding how to make more money. It’s also about how the author’s “poor dad” made many money mistakes. The first portion of the book covers six lessons that were taught to the author by his rich dad.
Lesson One: This lesson, called The Rich Don’t Work for Money is a title with a couple of different meanings. If you read the title, putting an emphasis on the word work, that’s the wrong one. The rich do work for their money. The way the title should be read is with an emphasis on the word money. They work hard to learn things, and what they learn can be applied to make a lot more money.
The author discusses how his rich dad actually lived quite frugally. While he had a lot of money, he drove a cheap car and lived in an average home. Most people tend to equate riches with material things, so we liked how the author shows that being rich isn’t always about an excessive amount of material possessions and fancy cars, instead, it’s more about never having to worry about paying your bills.
Without a doubt, this is the best part of the book, even with the out of place, short rant regarding the golden standard.
Lesson Two: This section is titled Why Teach Financial Literacy. When discussed, this portion of the book tends to cause a lot of controversies. Basically, this chapter of the book redefines the term asset. For most people, an asset is something that’s valuable. This section works to redefine the word asset. To the author, an asset is something that’s able to generate income. A liability is anything that has costs. So, in other words, your home is a liability instead of an asset. While your home may have a cash value, it doesn’t generate income. An asset should be considered a form of passive income that you control, such as intellectual property or a rental property.
So, what’s the lesson here? Basically, you can become rich by accumulating assets.
Lesson Three: This lesson is titled Mind Your Own Business. The point of this section is that you should be investing as much as possible in assets. This is another of the author’s lessons that most readers enjoy. In a nutshell, pay off your debts as fast as possible and invest your money into something that can generate revenue.
Lesson Four: The lesson titled The History of Taxes and The Power of Corporations talks about how the author decided to follow in the footsteps of the rich dad. The author describes a lifestyle of buying expensive cars and living the high life. Considering his previous stories of his rich frugal dad don’t exactly jibe with this type of spending, it left us confused in regards to how exactly he was following the same path of focusing on investing in assets.
Additionally, the lesson goes on to misrepresent several of the fundamentals regarding taxation. Basically, if you begin claiming cars like a Porsche as part of a required company expense, then you’re bound to get audited. There is a huge difference between buying a company car for company use and forming a personal corporation, but the IRS is very clear on what they consider rational spending.
In this chapter, the author mentioned a variety of tax dodges, but most of them aren’t even tax dodges at all, just tax delays. With the majority of them, you’ll either have to hold onto your assets until you die, or you’ll be hit with a huge tax bill. If you ever have to liquidate your possessions for cash, playing this type of game means that the IRS will tear you apart.
There are some advantages of keeping your money in a corporate structure, but these advantages mostly relate to reducing taxation on reasonable expenses that are related to the money you earn independently of employment. It doesn’t mean that you can begin buying Porsches.
Lesson Five: The lesson titled The Rich Invent Money is another chapter that provokes discussion amongst readers. The author tells a story about a real estate deal he made, which resulted in earning $40,000 in just five hours. The overall lesson of this chapter is you can invent money. However, the easy way to do so is through creating your own intellectual property. With the internet there are a number of ways to monetize and distribute your intellectual property by creating sites out of your ideas, selling crafts or other types of products you can make or selling your performances or music.
Lesson Six: This lesson is titled Work to Learn-Don’t Work for Money. While most readers agree in general with this lesson, there’s a tone in this chapter that seems almost insulting towards people who choose to join the working class. These individuals are often referred to as hamsters.
The next section of the book is called Beginnings, the title of which seems to indicate that it’ll go over how you can begin to apply the lessons learned throughout the book to your life. But instead, this section is mostly filled with personal productivity tips. Here is what you’ll find:
How to Overcome Obstacles and Getting Started
The reader may have expected this section to include how to get financially prepared to take action and accomplish the type of investments this book discusses. However, the obstacles discussed here are mainly psychological. This isn’t to say that overcoming laziness, fear, arrogance, and cynicism aren’t worthy goals, but even the most humble person will still not be in the position to take advantage of the lessons the author discussed earlier in the book.
The chapter called Getting Started is another chapter that looks promising initially, but it actually doesn’t focus on how to accumulate assets. Essentially, this section focuses on productivity. However, there are some important points that can help with life management. The author goes on to say that a person’s life has three choices: a person can put their money in the bank, earning them nothing, a person can waste their money on consumer goods, or they can get rich. However, the author fails to further discuss how these riches can be obtained, and what changes need to be made in order to reach financial success.
The book ends with a very brief section that outlines another of the author’s unbelievably good financial victories.
Rich Dad Poor Dad Quotes
This book works as a firm reminder for many that the more they put into their education, especially when it comes to their financial education, the more independent they will be. One of the book’s biggest points is the fact that many people get stuck working that nine to five job, living paycheck to paycheck without any type of financial freedom.
A person will go to school to land a safe job that offers many benefits and the possibility to advance and save a little money. They’ll be able to pay their bills on time and spend what little they have left over, but this cycle tends to repeat itself endlessly for the rest of their lives, without any signs of moving ahead, earning more for retirement or affording a new car, or a better home.
The author argues that there are many ways you can become financially independent. He urges you to stop working for money and to instead make the money work for you. He discusses the stock market, real estate, and a higher return on investments. If the reader takes the time to learn more about finance, it can be just what they need to finally pull ahead.
While we all know that money itself won’t make you happy, it can certainly help you to realize your dreams. So until you’re able to buy this book, here are some popular Rich Dad Poor Dad quotes that will leave you feeling inspired and motivated.
• “Education is more valuable than money, in the long run.”
• “I have found that the more I teach those who want to learn, the more I end up learning.”
• “These days, I often meet new people who are too busy to take care of their finances, while others are too busy to take care of their health. But the cause is the same. They’re busy and they remain busy as a way to avoid the things in life they don’t want to face.”
• “Failure will inspires the winner, while it defeats losers. Failure is winner’s biggest secret, it’s the secret that losers don’t know. The greatest secret is that it inspires those who win, which is what makes them unafraid of losing.”
• “If you want to be rich, serve more people.”
• “If you want to go somewhere, then it’s best to find someone who has already been there.”
• “In a world of investing, business, and money, we have too many preachers.”
• “In this rapidly changing world, people who aren’t taking risk are the risk takers.”
The Good and the Bad of Rich Dad Poor Dad
The Good: On a fundamental level, most of the concepts in this book are sound. The main point of this book is that you should work to save money and accumulate assets that will eventually replace the income you make from your nine to five job, and that’s something everyone can agree with. It’s very inspirational and it paints a way of life that fulfills the type of dreams that many people have of being independent and free.
The Bad: The book tends to fall apart once you try to rely on it for concrete examples. If you try to follow some of the strategies the author used in his success stories, you’ll find that opportunities to use these strategies and the type of farfetched situations are hard to come by. Basically, the specific paths the author talks about are not so easy to follow.
For some, the book can be insulting in many ways. The author insults people who don’t share his point of view, referring to them as hamsters. This is a poor salesmanship technique and it doesn’t benefit anyone and only comes off as a way to make the author appear strong and the working class to appear weak and unmotivated.
So, there’s some good and bad in this book. We still recommend this book, especially for the entrepreneurs who are just starting out. You should take some of the author’s advice with a grain of salt. It should be read, not just for motivation but to also get you thinking differently than a salaried employee. Many readers love this book because it teaches them how they’re supposed to look at money, but the author doesn’t provide many actionable suggestions. This book has an excellent way of challenging a person’s way of thinking about money and work. But you’ll benefit more if you combine this book with others that offer tactical recommendations on financial issues. The comparisons used in this book seem worthy, opening up a new way of thinking by comparing the very different aspects each father figure had regarding their work ethic and how they made their money. Ultimately, you can benefit from reading this wildly popular book, but you’ll need to continue to educate yourself in terms of financial strategies. While the author gets you motivated to make more money, he fails to tell you exactly how to do it.