Summarize Key Points From The Well-known Book “Rich Dad, Poor Dad”
In this post, I’m going to summarize key points from the well-known book “Rich Dad, Poor Dad” by Robert Kiyosaki. So, even if you haven’t read the book, today I’m going to teach you the most important lessons that I believe is contained in this book.
Almost everyone in business has read it or at least knows about this book, it’s authored by Robert Kiyosaki, and is one of the best books in my opinion on personal and financial education. The principles and lessons taught in the book are simple and easily understood by just about anyone.
If you’ve read his books, you know that Robert is a successful entrepreneur and real estate investor, but he didn’t start off this way. His story resembles just about every other entrepreneur’s story. He wasn’t born into a rich family, he wasn’t the smartest, nor was he the most successful either.
Actually, he started multiple businesses and some of them failed. One, in particular, he mentioned in the book is a nylon Velcro wallet company he started in the 1970s. Although his company was initially successful, it fell apart leaving him bankrupt, mostly due to overseas competition, putting him out of business.
Amidst several failures he would experience in his business journey, he found success in the business of financial education and personal growth. He started giving seminars all over the world until he created and published the book, Rich Dad Poor Dad, and that’s when his success really took off. So in today’s post, we are going to look into some of the key takeaways from this book.
Lesson Number 1: Don’t Work For Money
The rich don’t work for money according to Kiyosaki. They have money work for them. While the average working person is paid hourly, it doesn’t matter how hard they work, they will always be paid the same amount or just a little extra.
The rich, however, although they work hard, they do it with one main intention, and that is to raise money, which ultimately has one goal: and that is to generate more money. According to Kiyosaki, the rich use the principle of making money work hard for you, not you working hard for money.
One way to make money work for you is by investing. Imagine investing in the stock market. If you pick the right stock, the right industry, and invest in the right time, (ideally when markets are down) you are most likely going
to make a good return in your investment.
So, let me give you this quick example; let’s say you invest $1000 into a stock you think has a lot of potential, with the intention of holding it for 5 years. After 5 years, if you invested the money in a good company, your stock should have grown in value and now you can sell it for a good profit. This is in essence stock investing.
See how this works? Well, all you had to do is pick the right investment, and then do nothing but hold and watch your money grow. After a while, if you held it for long enough. You’ll have a return on your investment without really working at all.
Ok, but let’s suppose that you don’t have the knowledge and the money necessary to invest, what should you do? Well, first of all, you should start saving. So, instead of working for money, you should work to educate yourself on money. So that one day when you do have money, you’ll know how to invest the money and have it working for you.
When you are making money without having to work for it, this is called passive income. It’s a type of income that you receive without lifting a finger, the equivalent of “making money in your sleep”. If you can learn how to leverage money, and have it working for you, instead of you working for money, you can start doing this and it will change the way you think about money forever.
Instead of working and getting paid at the end of the month, from your 9-5, you can learn how to leverage your salary and have it working for you. So the question is, why aren’t more people investing? And why don’t they take the necessary action towards success and a better life?
In the book, Kiyosaki said, “Anger is a big part of the formula, for passion is both anger and love combined.” Fear is what controls and holds a lot of people back. You see, for a lot of people, instead of taking the risk of trying to invest money, they fear they’ll lose money.
The poor and the middle class perceive investments as a risk, but in reality, it is all risky. It doesn’t matter what you do, if you don’t try to step up your money game, one day life will hand you the bill for not trying. Fear and emotions are what stops most people from trying, but here’s the thing: you should never let your feelings get in the way of your success.
You have to look at all situations and be able to think objectively. I have a little advice for you on this one. Whenever you have to make a decision and pick between one or more options, here’s what I want you to do. List all the pros and cons of every option, and then, no matter how hard it is, pick the one that is logically the best.
You have to think objectively and make that decision despite it being out of your comfort zoon, even though it looks crazy or risky. But, back to having money work for you, you have to learn how to make money work for you, and here’s the part that most people hate because they’re probably too lazy: you have to develop and learn the skill of investing money and having money work for you. And nobody will pay you to do that! Not even school will teach you this!
Here’s a quote from Kiyosaki’s Rich Dad in the book, when he made Robert work for him for free in order to teach him about money: “keep using your brain, work for free, soon your mind will show you ways of making money
far beyond what I could ever pay you. You will see things that other people never see.
Most people never see these opportunities because they’re looking for money and security, so that’s all they get.” After this lesson, Kiyosaki and his best-friend Mike started their first business. Renting comic books to his friends and neighbours, in their house.
Lesson Number 2: Your Own Business
Rich Dad Said: “If you don’t love it, you won’t take care of it”, and that’s true. That’s exactly why most rich people advise everyone to do something they love if you have to work extremely hard to achieve something, you have to love what you’re doing., You have to be excited to get up in the morning and start doing that thing.
While everyone focuses on how much money they have, owning a home, and buying cool stuff, rich people focus on acquiring assets. There’s a very important disparity between assets and liabilities. Assets are, basically, what puts money in your pocket, while liabilities are the opposite, they are things that take money away from your pocket.
Some examples of assets are: Businesses, Stocks, bonds, Income-generating real estate, Royalties from intellectual property such as music, scripts, and patents. And anything that puts money in your pockets. Some examples of liabilities are; Your house, Car, Phone, Credit card, etc.
In the book, Kiyosaki described any business as an asset, as long as it’s not your job. Meaning that the business can continue to run without you being there, so if you can go on vacation and still be making money from your business, only then does it qualify to be called an asset.
So, let’s say that right now you have a regular job, but you want to go into business, what should you do?
Well, according to Robert Kiyosaki, first of all, you shouldn’t quit your job. Because that’s a huge risk you shouldn’t take. You should first of all invest in yourself in order to create the foundation necessary to acquire wealth.
I’m talking about financial education and literacy. Then you can start or buy a business. You can save or get a loan. In the case of you starting a business and taking it public Robert Kiyosaki’s goal is to sell the entire stock of a company within a year of going public since 90% of companies fail.
Lesson Number 3: The Rich Invent Money
It’s never been a better time to acquire assets and build wealth. Never has it been so easy to generate wealth and to go from 0 to millions. Imagine starting from nothing and then trying to build wealth and a better life for yourself 500 years ago.
What an interesting task! 500 years ago, the wealthiest people were the people who owned the most land and livestock. Sure, there were merchants and other small businesses, but the real asset in those days was land. Then in the 18th century came the industrial revolution, and those who were able to create the most wealth were those that owned factories and production facilities.
Right now in the 21st century, it’s not just about who has the most properties, factories, or production facilities, although it certainly helps. Today it is all about who has the best information. Robert Kiyosaki said: “The players who get out of the Rat Race the quickest are the people who understand numbers and have creative financial minds.”
Who has the best information on the market? Who knows how to invest better? Who is more skilled in picking the right investment? And that’s the main reason why many can’t get ahead in life. They work just to spend, and they spend as much as they make, instead of investing part of their income to generate more money.
Most people think that getting rich is a matter of luck, like playing the lottery or winning the jackpot, but it isn’t. Instead of complaining and working for people that you hate, doing things that you dislike, and making money that doesn’t satisfy you, you should be acquiring timely information that you need in order to grow.
The best deals aren’t usually offered to newcomers. They’re often reserved for the rich. But the more sophisticated you get at the game, the more opportunities you’ll be presented with. So in conclusion, those were the 3 most important lessons that I think were some of the best lessons from the book “Rich Dad Poor Dad”. If you want to learn more, you should probably read the whole book, but those were the main points that you should really apply today.
Growth is achieved with work and dedication, and if you don’t use your time wisely, you’ll run out of it. Invest your time in things that matter to you and that will improve your life today. The best growth strategy is to actually devote yourself to following the right path and steps, that is…
1. Gaining financial education, investing in your own knowledge, since timely information is the best asset that you can generate;
2. Having money work for you instead of working for money.
3. Create or buy businesses, then sell them in the period of a year after going public.
Remember that everything in life is risky, but this doesn’t mean that you should gamble your money and invest in assets you do not understand with people that you barely trust, like random brokers and bankers. You should take risks, but calculated risk. This means that you have to consider the odds of success, the pros and cons, the losses if everything does not go well, and a lot more.
Robert Kiyosaki said: “It’s not gambling if you know what you’re doing. It’s gambling if you’re just throwing money into a deal and praying.” And that’s it for today’s post. Have you already read the book, and if so, did you like it?
Credit: Practical Wisdom