Book Summary of Rich Dad Poor Dad
Genre: Personal Finance, Self - Help Book
Author: Robert Kiyosaki and Sharon Lechter
Rich Dad Poor Dad was published in 1997 and is widely acknowledged for imparting Financial Literacy and Wealth Creation. The book seems to be from the real-life of Robert Kiyosaki as he brings out the narrative of what he learnt from his fathers, one who was rich and one who was not. It is one of the best books to read if your goal is to go strong financially.
Although a self-help book, it is written in a narrative format with stories and sharing and is one of the best books of all time in the category of Personal Finance Books. In this book, Kiyosaki talks about his father, who worked hard all the time and strived for financial security but remained ‘poor’. The ‘rich dad’ as it says in the title, is his friend’s father who took the road to entrepreneurship and knew how to invest and grow his money, ergo his financial wealth.
The most powerful ideas from the book:
The most powerful wealth we have is our mind and it is in our minds first that we need to open ourselves first for wealth creation. We are often taught that wealth is a result of greed and the rich are not essentially good people. This mindset can be a barrier to wealth creation.
It is not about how much we make. It is about how much we keep ( save, invest and build assets). The book talks about the real asset and liability patterns of the rich and poor.
Education that prompts us to get a job is driven by fear and not passion. The fear binds us to the trap or rat race, which is the vicious circle of having a job to pay bills, buy a car and a house and to make more money so that we can create more liabilities for ourselves.
There is a difference between being poor and being broke. Being broke is temporary but being poor is eternal. This is because people don’t invest in education that teaches them how to make money rather choose to be poor like sceptics and live in that mindset
People often say that they don’t want to make money but work 8 hours a day for money.
In the book, Kiyosaki categorises these as real assets:
- Stocks
- Bonds
- Real estate that generates income
- Notes (IOUs)
- Royalty from Intellectual Property like patents, scripts or music
- Anything with a value that either appreciates or generates income and has a ready market
Robert Kiyosaki majorly talks about generating income from real-estate and shares his wisdom from decades of building assets through real-estate. He also talks about how one must develop financial IQ, which is generally never part of our formal education, which is why people never know how to make money, even after years of education.
Financial IQ can be summed up as:
- Accounting
- Investing
- Understanding of the markets
- The Law
With the Financial IQ, one also requires the courage and acumen to take risks and understand what is at stake for those risks. Like it says in the book, “It is not gambling if you know what you’re doing. It is gambling if you’re just throwing money into a deal and praying.”
He also mentions the managerial skills that are required for success:
- Management of cash flow
- Management of systems
- Management of people
The 5 aspects of a financially literate person are fear, cynicism, laziness, bad habits and arrogance, which doesn’t let them get rich in spite of the literacy.
According to the rich dad, people often say “I can’t afford it”, and thereby shut their brain off from any possibility to bring a dream closer. Rather one should ask, “How can I afford it”, and find ways to get closer to possibilities.
Overall, it is a highly effective book with actionable items to take back and practice. It can change the way we perceive wealth creation and wealth management. It is not how about how much we make. One could win a lottery and go bankrupt right after that if they don’t have the discipline to manage the finance.
Book Reviewer - Arpitha Giri
Arpitha Giri is a writer and an avid reader. She's the City President, PAB Mysore, Regional Mentor, PAB India and Brand Guardian, PAB
