Rich Dad Poor Dad by Robert Kiyosaki – Book Summary

Rich Dad Poor Dad Book Summary

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

Lesson 1: The Rich don’t work for money. Money works for them.

  • Three years ago I worked at a book shop in the city. That job was fantastic. I loved it. I got paid 10000 per month for having a chance to read unlimited books, suggest people the books they can read and understand how different people’s perspectives affect their journey.
  • Even if I work for many years, I would not be able to become rich by doing so. Because there will always be a cap on time I can spend working. 
  • But my boss was making money because he discovered the secret of making money work for him. While I was doing the hard work as an employee, my boss would kick back, relax and travel. 

 

Lesson 2: The rich acquire assets.

  • Think about it, my boss paid me but the money he was profiting from my work exceeded that. My boss had built the store on the real estate he got from his father. He bought a printer that would add additional income by selling printouts to the customers.
  • He would easily earn more money than the one he had invested. The money earned will again go into bringing in more services for the customers and hence more money. He just has to pay for the salaries of employees. 
  • I was the one who would put in my man-hours every day and maintain the store. These are the perfect example of how rich people acquire assets and reduce liabilities. 
  • Assets put money in your pocket and liabilities take money out of your pocket. Assets make money work for you. The different types of assets you can acquire are abundant. Rental homes, ebooks, businesses, stocks, monetize YouTube videos, etc. 
  • So if you truly want to get rich, consider spending less money on pleasures like trading cards, parties or alcohol. Invest your money into assets.
  • Invest the money your assets make into more assets and you’ll become richer than you’ve ever imagined. 

 

Lesson 3: The power of corporations

  • Employees earn and get taxed and try to live on what’s leftover. For example, if Bob the Builder earns 50,000 a month, 25% of that or 1,2500 will be taken by the taxman before Bob can use the remaining 37500 to pay his living expenses. 
  • But corporations can pay expenses before being taxed. A corporation spends everything it can and is taxed on anything that is left. So why is this an advantage? 
  • Imagine Bob formed his own limited liability company and earn the same 50000 as a company rather than an individual. Because of the legal loopholes, he would be able to reinvest extra 1,2500 back into his business before the taxman could get his hands on it. 
  • Maybe he could hire an extra employee or buy a Xerox machine. He could also take a vacation and treat it as a business trip expense. I know someone who runs his own business and gets tax deductions on the food expenses.
  • Robert tells us it’s not hard to set up a company. Many people think of giant skyscrapers with hundreds of workers. But you can set up a private company in less than 10 days.

 

Lesson 4: Increase your financial intelligence

  • It is made up of four skills:
    1. Accounting: The ability to read numbers
    2. Investing: The science of making money
    3. Understanding markets: The science of supply and demand
    4. The law: The awareness of accounting corporate, state and federal regulations.
  • Robert’s online game cashflow is an excellent way to start increasing your financial intelligence right now. It’s frustrating at first but you’ll get the hang of it soon enough.

 

Lesson 5: Don’t work for money, work to learn

  • Robert interviewed a female writer. Robert said you have a great style. What holds you back from achieving your dream. She said, my work does not seem to go anywhere. Do you have any suggestions?
  • Robert said brightly, I have a friend here in Singapore that trains people to sell. 
  • She said, are you saying I should learn to sell? 
  • Robert nodded. She blew up. She went off saying that I have a master’s degree in English literature, why would I go to school to learn to be a salesperson. I hate salespeople. 
  • Soon then Robert pointed to his best-selling book on the table. 
  • She was shocked. It says the best-selling author not the best writing author. 
  • Robert said you are a great writer. Now you need to become the best selling author. 
  • She got angrier and stormed out. But Robert was giving her a million-dollar lesson.
  • Robert is constantly shocked by how little talented people earn. He’s met highly educated people that earn less than 50000. Often people are one skill away from wealth, just like the lady explained earlier.
  • It doesn’t matter how hard you work if you’re not willing to work to learn and use skills. Even if you have to work for free then your income potential will remain low.

 

Lesson 6: Five obstacles holding you back 

  1. Fear: People are loss averse. We’re more afraid of losing something than gaining something. This is why you see blog posts titled five reasons you’re not making money instead of five ways to make money. Imagine I flip a coin if it’s heads, I’ll give you 200, if its tails, you give me 100. Most people don’t take this deal even though it makes economic sense to do so. Rich people understand loss aversion and take control risks
  2. Cynicism: We all have doubts. What if I can’t pay the money back. What if things don’t go as planned. What if the stock market crashes after I invest. Rich people understand that it happens. They identify profitable opportunities that cynics miss.
  3. Laziness: To overcome this obstacle you need to be a little greedy. Mummy always told us that greedy people are bad people. Yet we all have a deep desire to have new or exciting things. Ask yourself, what would I do if I had all the money I ever needed. Without that little greed, progress will not be made.
  4. Bad habits: Our lives are a reflection of our habits, more than education. Robert has a habit of paying himself first before paying the bills. What if he doesn’t have enough money to pay the bills, he still pays himself first. He uses pressure as motivation to seek other forms of income.
  5. Arrogance: There are countless people in the world of money, finance and investments who have absolutely no idea what they’re talking about. When you know you’re ignorant, start educating yourself. Robert says what I know makes money, what I don’t know loses me money. Rich people play to win, poor people play not to lose.

 

Lesson 7: Nine final tips for wealth

  1. The biggest asset you have is your mind, invest in it.  
  2. Failure inspires winners and defeats losers
  3. Surround yourself with people who are smarter than you
  4. Listening is more important than talking
  5. Profits are made when you buy not sell
  6. It’s rare that the asking price is lower than something is worth
  7. When aiming to become rich, find a higher reason than just doing it for the money
  8. There is gold everywhere, most people are not trained to see it
  9. Saying I can’t afford it shuts down your brain. Asking how can I afford it opens up your mind and triggers your creativity to find a way.

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

Subscribe To Our Newsletter

Get updates and learn from the best

Do You Want To Know more About Us?