Many people work very hard in their life, few work 10+ hours a day but eventually do not save much and never get rich. Robert Kiyosaki, author of the book explains smart ways to escape this “rat race”. We have summarized the book for your quick, better understanding.
Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That the Poor and Middle Class Do Not!
Important Lessons from the Book (Summary):
- For most people, their profession is their income and they live through their work to survive. For rich people, assets they maintain, invest is their income.
- If I want to buy something, I must first generate enough cash flow from my assets to cover these expenses. Buy luxuries last, not first.
- Excess cash flow generated by my assets should be invested again into other assets.
- Do not simply aim for more income, aim for more valuable assets, repeat the circle.
- Reduce your expenses low and reduce your liabilities.
- Create a corporation to protect your assets and reduce tax expenses. An employee earns, gets taxed, and then spends what is left.
- Know a little about a lot. Learn something about accounting, investing, markets, the law, sales, marketing, leadership, writing, speaking, and communication. Now little about everything you can. Also See Bill Gates talking about the same point.
- Work to learn, don’t work to earn. Find a job where you can learn one or more of the above mentioned skills. Alibaba’s Jack Ma also empahsized on this particular point here.
- Do not simply buy investments. first learn how to invest as no one else can do it better than you.
- You become what you study, so choose your study materials carefully and do read a lot.
- Every rich person has lost money at some point, but many poor people have never lost a dime. Playing not to lose money means you will never make money. “Winning means being unafraid to lose.“
- Failure inspires winners and defeats losers. Do not be afraid of losing and be bold enough to admit and learn from the failure. No one is born perfect.
- Be in control over your emotions. Do not let fear or opinions of the general public dictate your actions.
- Most sellers ask too much. It is rare that the asking price is lower than something is worth.
- Surround yourself with winners. Sit with people who are smarter than you and you can learn from them,
- Saying “I can’t afford it” shuts down your brain. Asking “How can I afford it?” opens up your brain.
- Pay yourself first. Each month, first invest a certain amount of money into income generating assets before you pay your bills. Short of money, use this pressure to keep yourself on your toes.
- Dream big, have a clear game plan in your mind. Always seek answers to important questions such as Why do you want to earn more passive income? For me, because I do not want to work all my life. I want to have control over how I decide to spend my time. Also, I want to support my parents financially because they helped me all my life.
- Develop a skill to listen. Listening is more important than talking. Do not constantly argue and think with your mouth. Ask questions, grab as much knowledge as you can from others.
- On the market: do not follow the crowd, and do not try to time the market. Profits are made when you buy, not when you sell.
Buy the book from Amazon at Rich Dad Poor Dad