Rich Dad Poor Dad Book Summary
Robert Kiyosaki and Sharon Lechter
1. Why do we keep falling for the rat race?
The rat race is an endless quest where you have to work hard to catch up with bills and taxes.
The rich don’t see things that way. This is no longer the recipe for a life free of financial struggles. Good education and high grades no longer guarantee success.
Financial education is powerful, while money is where this power manifests.
Societal disapproval prevents us from quitting the rat race and building wealth.
2. Fear and greed prompt us to make irrational decisions
Many individuals live in perpetual fear about their financial condition.
Instead of taking control, many people constantly worry about their financial condition, stressing about the possibility of starting over or failing their family and loved ones.
In order to realize that we are stuck in the rat race, we need to step aside for a moment and assess the situation from a third-person perspective.
Greed only dictates us to raise our living standards but it doesn’t teach us how to do it.
Fear and greed hinder people from becoming wealthy in the long run.
To get out of this rat race, you have to gain financial knowledge. You have to understand the difference between an asset and a liability and buy assets instead of liabilities.
3. Conventional education systems don’t teach financial knowledge; self-education is the key to financial success
If financial literacy was a school subject, not family wisdom, getting rich would not be an unattainable godsend but a very real pursuit.
Start by investing in your mind. Enroll in seminars and finance classes, read as many books as you can.
It’s crucial for you to get a mentor. Your mentor could be a person who has already achieved what you want. Then, ask them to guide you.
You don’t need a lot of free time to become financially literate. Instead, take advantage of your job and gather the essential skills there.
4. If you want to build wealth, you must be willing to take risks
Investing in stocks and bonds generates more income in a short amount of time.
The rich focus on their asset columns while everyone else focuses on their income statements.
The financial struggle often occurs when we work for someone else our entire life.
5. We don’t become rich overnight; learn how to fuel your motivation
One way to keep your motivation is to create a list of “wants” and “don’t wants” for reference. It can contain things like “I want to be free of my debts within three years.” And “I do not want to end up like my parents.” This list will keep you motivated in the face of adversities.
Spending money on yourself before settling your bills is also another way to stay motivated.
Working hard for a paycheck and spending the most of it out of greed is the wrong kind of motivation.
Stay motivated by reading about the life of wealthy individuals like Warren Buffett, Bill Gates, or Mark Zuckerberg.
Assets generate more money for you: as your assets cover your expenses, you take the money and reinvest it into new assets, thus generating a compound growth effect.
Sound knowledge of how to create lucrative assets and invest in them is what will make you rich and take you out of the rat race in the long run.
6. Your profession is not as significant in wealth creation as your business
It is close to impossible to build wealth just with your profession, as it only covers necessary expenses, in most cases. To create wealth, you must build a business while you work at your job.
To start your own business, you need cash flow, people, and personal time.
The rich have a deep understanding of taxes.
Getting a salary, an employee pays taxes, and then lives on what’s left until the cycle repeats. When a corporation makes money, it spends everything it can and pays taxes on what’s left.
7. Overcoming obstacles that can cause financial ruins despite your financial literacy
Fear of losing money is innate in all of us. However, the fear itself is not the problem. It is our attitude towards risks that makes the difference.
Winners are inspired by a failure, while losers are defeated by it.
Most people struggle financially because they play not to lose instead of playing to win.
Many never get rich because the fear of losing money outweighs the joy of getting it.
Start building habits that bring you closer to your goals. Acquire a positive habit of reading every day.
If you want to be successful, you have to make humility a priority.
The phrase “I can’t afford it,” turns off your brain, whereas the question “What do I need to do to afford it?” opens up possibilities, excitement, and dreams.
Practice Lessons from Rich Dad Poor Dad Book
- Keep expenses low, reduce liabilities, and diligently build a base of solid assets. True luxury is a reward for investing in and developing a real asset.
- The rich focus on their asset columns while everyone else focuses on their income statements. Start thinking like the rich and focus on building your asset columns.
- Keep in mind that real estate is a powerful investment tool for anyone seeking financial independence or freedom. If you get the opportunity to invest in real estate, take it!
- Connect with successful people in the business you are interested in and learn as much as you can from them.
- Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth.
Rich Dad Poor Dad
Be blessed by the Divine!
Krish Murali Eswar.