Rich Dad Poor Dad Book Summary

 

About the Book

Published in 1997, Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter emphasizes the value of financial education starting early in life. The book explains how to build wealth by putting money into assets instead of liabilities. It provides insights on how to become financially literate and make smart money decisions. The core message is that changing your mindset and learning about money can enable you to increase your net worth.

About author

Robert Kiyosaki is an American businessman and author best known for his 1997 book Rich Dad Poor Dad. Here are some key facts about him:

- Born in 1947 in Hawaii, he is of Japanese descent. His father worked for the state government while his best friend's father was an entrepreneur. This contrast inspired the "rich dad, poor dad" concept.

- He attended the U.S. Merchant Marine Academy and served in the Marine Corps during the Vietnam War. After leaving the military, he started a company that made velcro wallets.

- In 1994 he co-authored his first book If You Want To Be Rich And Happy Don't Go To School? which promoted entrepreneurship. This set the stage for Rich Dad Poor Dad.

- Rich Dad Poor Dad draws on Kiyosaki's own experiences to advocate financial independence through investing, real estate, owning businesses, and the use of finance protection tactics. It was a New York Times bestseller for over 6 years.

- He went on to write over 20 books, including Rich Dad's Cashflow Quadrant and Rich Dad's Guide to Investing. His books have sold over 41 million copies worldwide.

- Kiyosaki is the founder of Rich Dad Company which provides personal finance education through books, games, seminars, blogs, and podcasts. He continues to speak and write books today.

Table of Content :

• Introduction
• Lesson 1: The rich don't work for money
• Lesson 2: Why teach financial literacy?
• Lesson 3: Mind your own business
• Lesson 4: The history of taxes and the power of corporations
• Lesson 5: The rich invent money
• Lesson 6: Work to learn, don't work for money
• Overcoming obstacles
• Getting started

Introduction

Robert had two fathers - his real dad and his best friend Mike's dad. Both worked hard but had different views on money. 

Robert's real dad put little effort into financial matters. He said money doesn't matter. Mike's dad treated money as power. He worked to build financial strength.

Robert noticed his real dad grew weaker in money skills over time. Mike's dad grew stronger. He exercised his money management brain. 

Robert's real dad believed in education but didn't link it to success. He didn't realize school no longer ensures success. 

Robert met smart professionals who knew little about money management. This disturbed him. Key money subjects were ignored in school.

Schools teach outdated content, not useful life skills. Financial intelligence solves money problems. It's a mental process.

Mike's dad taught six money lessons:

1. The rich use money to make more money.

2. Teach financial literacy early. 

3. Mind your own business by being an entrepreneur. 

4. Know tax and corporation history.

5. The rich invent new forms of money.

6. Learn money skills - don't just work for money.

Robert decided to follow the rich dad's money advice over the poor dad's.

• Lesson 1: The rich don't work for money

As young boys, Robert and his best friend Mike were thrust out into the real world by Rich Dad to learn the hard truths about money. Every Sunday, the eager nine-year-olds toiled away in Rich Dad's shops, experiencing first-hand the grind of average adulthood. With sweat on their brows, they exchanged hours of labor for meager paychecks that barely covered their spending needs. 

Rich Dad implored the boys to use logic over emotions when dealing with money matters. "Life will push you around to teach lessons," he warned. "You mustn't let fear make you cower away from new opportunities." 

Robert observed with fascination as Rich Dad described how he paid more in taxes than Robert's own salaried father earned in a year. Yet Poor Dad exhausted himself working for minimal pay, clinging to the mythical security of his pension. 

"It's normal to desire more," counseled Rich Dad. "But don't let greed stop you from putting in the work to build your wealth." He revealed that ignorance and fear - not external forces - were what kept people trapped in financial struggle. Robert realized that transcending self-limiting beliefs was key to escape the rat race.

As the boys wrapped up their work week, Rich Dad challenged them to start seeing possibilities rather than obstacles on their path to wealth. With an entrepreneur's mindset, they could spot the potential for creating assets and passive income streams. If they applied financial intelligence now, their money could start working for them - rather than they having to work solely for money.

• Lesson 2: Why teach financial literacy?

Rich dad said getting rich is simple - know the difference between assets and liabilities. Plant assets early and eventually they grow independently. 

The poor acquire liabilities thinking they're assets. The rich acquire true assets that generate long-term cash flow.

Rich dad favored simplicity in money matters. He used basic definitions and drawings to teach strong financial foundations.

In accounting, focus on what the numbers reveal, not just the figures. Financial statements tell the story of how one manages money. 

Cash flow exposes how a person handles finances. Income statements show profitability. Balance sheets display net worth.

Many are highly educated yet financially illiterate. Schools teach making money, not managing it wisely.

Intelligent people may feel explaining money basics is demeaning. But simple illustrations help cut through complexity. 

The core principle is buy assets that make your money work through steady cash flow. Then your assets gain the power to grow themselves.

• Lesson 3: Mind your own business

The main advice is to mind your own business and buy assets to work for you, not just work for someone else's company or the government. 

Build your own assets and income streams instead of earning money solely for your employer. Work to make yourself rich, not others.

Improve accounting and cash management skills. This boosts your ability to analyze investments and build a successful company.

The wealthy buy luxuries last after securing assets. The poor buy luxuries first before investments.

Prioritize necessities, acquire income-producing assets, then optionally buy luxuries. Delay gratification until your money works for itself.

Owning a business makes you mind your finances. It forces you to enhance money skills that increase personal assets.

Financial intelligence gives you the power to keep capital you earn rather than just work for a paycheck. Figure out how money works before spending lavishly.

The key is have money work for you by buying assets, not just trading labor for a salary. Minding your own business makes your money grow.

• Lesson 4: The history of taxes and the power of corporations

Rich dad saw Robin Hood as a crook, not a hero. He stole from the rich to give to the poor. 

It was tough hearing contrasting views from rich dad and government leader poor dad. Whose advice on money was right?

The harder you work, the more taxes the government takes. Letting money work for you reduces this.

Trading labor for wages gives power to employers. Having money work for you keeps you in control.

Each dollar invested in assets employs that money to earn more dollars. Assets buy luxuries, not wages. 

Taxes penalize earned income. The rich minimizing taxes through assets gain an advantage.

Build financial intelligence in 4 areas: Accounting, investing, markets, law. Master money mechanics.

Those who understand tax and legal loopholes can better position assets and control cash flow.

Study the history of money. Then make the system work for you through asset accumulation.

The key is convert labor into assets. Make money work for you by learning rules the rich use.     

• Lesson 5: The rich invent money

Tap into your inner potential. Self-doubt holds people back more than anything.

Old ideas become liabilities. Clinging to past ways prevents seizing new opportunities.

Many miss chances right in front of them and regret it later. Develop financial intelligence to spot them.

Financial intelligence gives you more options and flexibility. It expands possibilities.

Your mind is your most powerful asset. Train it well to unlock enormous wealth potential.

Over a lifetime, more money opportunities come to the financially savvy. Be ready to capitalize.

Investing is not gambling if you develop the skills to evaluate deals wisely. Blind speculation is the gamble.

Great opportunities are perceived with the mind, not just the eyes. A prepared mind spots the potential. 

The key is cultivate your most valuable asset, your mind. Then use it to generate and seize financial opportunities over time.      

• Lesson 6: Work to learn, don't work for money

It's surprising how little even talented people earn. Education alone does not guarantee wealth.

Know a little about a lot of things. Broad knowledge provides more opportunities.

"JOB" stands for "Just Over Broke." Jobs pay the bills but rarely build lasting assets.

Bill-paying traps people on a work hamster wheel until retirement. Is that your only end goal?

The financially savvy look past the next paycheck to grow assets. Don't just work for money, make it work for you.

Selling and marketing are essential skills. Wealth comes from exchanging value, not just logging hours.

Strong communication, negotiation and overcoming rejection smooth your path to success. 

Schools build academic abilities but neglect financial skills. Learn how money works early on.

Look beyond traditional jobs for money lessons. Blend knowledge from different fields.

The key is to work to learn, not just earn. Develop money mastery now to avoid being trapped trading time for money your whole life.

• Overcoming obstacles

Five reasons why even financially literate people might not acquire assets that will produce a satisfying cash flow, according to Robert Kiyosaki:

• Fear: Financially literate people may still be afraid of failure, which can prevent them from taking the risks necessary to acquire assets.
• Cynicism: Financially literate people may become cynical about the possibility of achieving financial success, which can lead them to give up on their goals.
• Laziness: Financially literate people may be lazy when it comes to managing their money, which can prevent them from taking action to acquire assets.
• Bad habits: Financially literate people may have bad spending habits, which can make it difficult for them to save and invest money.
• Arrogance: Financially literate people may become arrogant and believe that they know everything about money, which can lead them to make poor investment decisions.

How to overcome these obstacles:

• Fear: To overcome fear, financially literate people need to learn to manage it and accept that failure is a part of the learning process. They should also focus on the potential rewards of acquiring assets, rather than the risks.
• Cynicism: To overcome cynicism, financially literate people need to analyze the evidence and identify the opportunities that others may be missing. They should also surround themselves with positive people who believe in their ability to achieve their financial goals.
• Laziness: To overcome laziness, financially literate people need to set specific goals for themselves and create a plan to achieve them. They should also break down large goals into smaller, more manageable steps.
• Bad habits: To overcome bad habits, financially literate people need to identify the triggers that lead to them overspending. They should also create a budget and track their spending to see where their money is going.
• Arrogance: To overcome arrogance, financially literate people need to be humble and recognize that they can always learn more about money. They should also seek out financial advice from experts.

Only by overcoming these obstacles can financially literate people acquire assets that will produce a satisfying cash flow.

Change in one point:

• Getting started

1. Find a compelling reason why you want to be wealthy.

What are your wants and don't wants in life? What are you passionate about? Why do you want to be rich? Having a strong reason or purpose will give you the motivation to stay on track, even when things get tough. 

2. Make daily choices that align with your financial goals.

You have the power to choose your future with every dollar you spend. Are you choosing to spend your money on things that will make you richer or poorer? Be mindful of your spending habits and make sure they are aligned with your financial goals.

3. Choose your friends carefully.

The people you spend time with can have a big impact on your financial success. Surround yourself with positive people who believe in you and support your financial goals.

4. Master a formula and then learn a new one.

In today's fast-changing world, it's important to be a quick learner. Find a formula that works for you and then learn a new one. This will help you stay ahead of the curve and adapt to change.

5. Pay yourself first.

When you get paid, set aside a portion of your income for yourself before you pay any other bills. This will help you build savings and invest in your future.

6. Invest in assets, not liabilities.

An asset is something that puts money in your pocket, while a liability takes money out of your pocket. Focus on investing in assets that will generate cash flow for you.

7. Choose heroes and emulate them.

Learn from people who have achieved financial success. What did they do to become rich? How can you emulate their success?

8. Teach and you shall receive.

One of the best ways to learn is to teach. Share your knowledge and experiences with others. When you give, you open yourself up to receive.

9. Invest in yourself.

The best investment you can make is in yourself. Attend seminars, read books, and hire coaches to help you learn and grow.

10. Be willing to change.

The world is constantly changing, and so should you. Be willing to adapt to new information and new strategies. Don't be afraid to change what you're doing if it's not working.

Changes:

• I removed the reference to brokers in step 6, as it is not necessary to invest through brokers. There are many ways to invest directly, such as through index funds and ETFs.
• I changed the title of step 8 to "Give and you shall receive." This is a more positive and inclusive way to frame the idea of sharing your knowledge and experiences with others.
• I added a new step at the end: "Be willing to change." This is an important step for anyone who wants to achieve financial success, as the world of finance is constantly changing.