Rich Dad Poor Dad by Robert Kiyosaki is one of the top-selling books in the world. Written in 1997, the book focuses on the importance of financial independence and emphasizes the importance of building wealth through investments by comparing two fathers.
This article includes a summary of the book Rich Dad Poor Dad and identifies important lessons for everyone.
The book also highlights the importance of increasing your financial IQ for establishing a successful business. The book states practical steps that teach you financial freedom at a very early age.
With over 32 million copies sold worldwide, Rich Dad Poor Dad is translated in more than 50 languages across 100 countries and many bloggers have written the book’s summary in different languages on their websites.
Many people work very hard in their life, few work more than ten hours a day but can not save money nor do they get rich. Rich Dad Poor Dad book identifies smart ways to escape this “rat race” of working for unlimited hours yet struggling to make ends meet.
We have summarized the book into 20 lessons for your quick and better understanding. Let’s take a look at what lessons we can draw from this amazing book.
- For most people, their profession is their income and they live through their work to survive. For rich people, assets and investments are their income.
- If you want to buy something, you must first generate enough cash flow from your assets to cover the expenses. The emphasis is to buy luxuries last, not first.
- Excess cash flow generated by your assets should be invested again to acquire more assets.
- Do not simply aim for more income, aim for more valuable assets, keep repeating the circle.
- Reduce your expenses low and cut your liabilities. Expenses and liabilities beyond means are not good.
- 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 everything. Learn something about accounting, investing, markets, law, sales, marketing, leadership, writing, speaking, and communication. Know little about anything you can. Bill Gates has also talked about the same point in his interviews.
- Work to learn, don’t work to earn. Find a job where you can learn skills. Alibaba’s Jack Ma often emphasizes the importance of learning skills in his interviews.
- 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, 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 your failures.
- Be in control of your emotions. Do not let fear or opinion of anyone 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 a lot by surrounding yourself in their company.
- Saying “I can’t afford it” shuts down your brain. Asking “How can I afford it?” opens up your brain. Change your questions to change your life.
- 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 to generate more cash.
- 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?”
- Develop a skill to listen. Listening is more important than talking. Do not constantly argue, instead listen and observe. Ask questions and try to gather 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.
Rich Dad Poor Dad Summary: A greater insight into Financial Woes.
Robert Kiyosaki deals with a concept of how people struggle with financial woes. His whole literary expertise is based upon spend years in school and learn nothing about money or investments. People are bound to money instead of money being bound to them.
The book correlation a simple concept that most people will work for money but rich people make money work for them. Some consider to be a myth, Not possible but in these isolated times this is as true as the 14 commandments. The first step towards generating wealth is generating a basic income. IF you have no assets and no skill you can sell it for money. A job is considered to be the easiest way to produce cash. Rich people don`t stay in the job phase very long. Being rich and being wealthy are two separate concepts when someone thinks about it. Being rich correlates to a short term plan. Whereas Being Wealthy correlates for a long term plan.
Making money and many new ventures to generate a steady income at some times is easy as well as complicated. But creating sustainability is hard. Day in Day out takes a toll on many people.
The second key takeaway is that it doesn’t matter how much money you make but how much you can keep. People who save money are better examples of being rich than those who spend. Remember Spending more than generating will cause you the file a chapter 6 bankruptcy sooner than later so the question is raised How do I keep generating a new venture to keep the cash flow going? That where expertise comes.
Rich people will find new ways to increase their wealth whereas a common man will only work the time.
What you can not live without and what you cant?
I can live without Netflix, I can live without television but I can’t live without the internet as its a necessity to do various things. I can live without a high priced car or a high price motorbike but I can’t live without fuel. Fuel gives me the incentive to travel and do a lot of things. A full tank of gas is always important and in this epidemic highly critical. Normal days I can live with a half a tank of gas. We need to decide what is necessary and what is wanted? .We can have all of these things once we have financial stability but until that happens we need to invest in surviving the long run.
As of this moment, 35 million people have lost their jobs, and finding new ones is going to be a hassle. They are pummeling through their saving to pay monthly bills some are worse to wear as they are not financially sound. The global unemployment has jumped ten-fold.
Another key takeaway that the book keeps reminding us is born rich and made rich. People who are born rich meaning they have big factories are less financially sound than people who are made rich. Made rich people are those individuals who that understand if there income or turnover is down they need to find new ventures to generate cash flow whereas born rich have to find whole new ways. Made rich invest in assets that generate income whereas born rich invest in asses of value. Born rich will invest in houses cars and luxury items whereas Made rich will invest in an ad agency or investment portfolios to keep on generating income.
Made rich will generate enough income to live comfortably whereas the Born rich will have to look for other options.
Jeff Bezos is the richest man, he invested in the Washington Post to generate a steady income. Instead of buying a huge yacht
And lastly, the book defines the key component Financial struggle.
Financial Struggle happens to those who keep working the same job for countless years. Remember Time is critical and is money and People who spend 9-5 hours daily are bound to have financial struggle down the road. By having that they are more likely to follow illegal practices like corruption and bribes to increase their cash flows.
Always keep in mind that at a basic level you will always earn less than what you work for.
However, there is an easy way to get out of Financial Struggle. Be self-employed and create your own asset. Define your own direction. This might seem challenging but it beats the alternatives. Through this, you will generate enough capital to generate even more income streams
Being Self-employed generates challenges and rewards. You set your time as well as your goals.
Freelancing is the key here. Many people have stopped working their daily jobs knowing how much the embarrassment it has become to be laid off or furloughed. They have started investing in themselves.
The problem is when a person graduates and gets a job he/she stops investing in themselves. We should not stop but keep on building skills. These views aren’t meant to make you hopeless or miserable but to give an insight. The book was written 20 years ago and to this day it keeps ringing that you still have a choice to make a difference. Still have a choice to make something worthwhile. 40 years ago having 9-5 jobs was worthwhile as the population cap was low. Fewer people meant more benefits. But as the population increased the rewards dwindled.
If you want to improve your financial situation you need to re-evaluate. The rich have already figured it out and are doing it. You can check the news on how they are laying off or investing somewhere else knowing the consequences this epidemic brings.
Financial Intelligence is important. It gives you more options than you can handle.
We hope you have enjoyed the Summary of the book Rich Dad Poor Dad and learned from the lessons it offers.