This is a comprehensive summary of the book Rich Dad Poor Dad (What the Rich Teach Their Kids About Money – That the Poor and Middle Class Do Not!) by Robert Kiyosaki. Covering the key ideas and proposing practical ways for achieving what’s mentioned in the text. Written by book fanatic and online librarian Ivaylo Durmonski. Supporting Members get full access.
Learning how to handle your finances is essential for a quality living. You can’t be truly happy and satisfied with your life if you don’t have enough money to cover your basic needs. Rich Dad Poor Dad by Robert Kiyosaki tells a great story about how we should manage our income.
The Core Idea:
To understand what’s the main difference between rich and poor people. The former invest in themselves and make money work for them while the main mission of the latter is to find a stable job. The concepts in the book will help you level up your financial skills and give you a different perspective on making money.
- Good grades in school won’t necessarily get you the life you want;
- A 9 to 5 job won’t make you financially independent. You need to build your own thing if you want to secure your future;
- Money is a resource and it shouldn’t be your end goal. Make money work for you by learning how to invest;
5 Key Lessons from Rich Dad Poor Dad:
Lesson #1: The “Study Hard At School” Myth is a Myth
Our parents teach us to listen in school, to be obedient, and to have good grades. They think that our future success is determined by the grades we have in school and in college. Unfortunately, that’s not how things work. At least not in today’s times.
Instead of figuring out what type of work we enjoy, we literally fight for good grades to please our parents. And as you can imagine, this doesn’t lead to anything productive. During our school years, we don’t master any type of work and we only get used to obeying others. Our knowledge is broad and our skills are vague.
Of course, the above is good for the government and for society in general. For our precious state, we’re just a little cog in a big wheel. A resource that can be mold to serve the greater good – a good taxpayer. The less we want for ourselves, the better. After all, we need people to work in the millions of factories around the world.
That shouldn’t be the case with you, though. Most of the people are lazy and will happily work a 9 to 5 job as long as they can afford Netflix and something to smoke. But if you’re a person who wants more out of his life, you should do things differently and focus your time on becoming good at one specific thing. This immediately excludes being good at school. Most of the people who graduate school with good grades end up working an average job and having an average life.
Lesson #2: Most People Think Everyone Else Should Change, But Not Themselves
When you are not satisfied with your job, your salary, your life as a whole, you’re constantly thinking about what needs to change in order for you to be and feel happy.
But instead of focusing on what you, yourself, can do better, you’re thinking that your boss doesn’t pay you enough; That you deserve more attention and respect from your colleagues; That your spouse is responsible for your boring life. Although it’s your life, you think that others are the main reason for your unhappiness. I felt the same way and I know the feeling. Of course, if you didn’t yet realize it, this way of thinking is completely wrong.
When something is not right, doesn’t feel right, whatever it is: your salary, job, house, kids, salary, performance. Thinking that everyone else should change is absolutely wrong. If you don’t like something about your life, it’s your sole responsibility to inspire change.
If you don’t earn enough money, think about the why’s. Is the cause of your unhappiness the job itself or you? Is there something you can do in your behavior to get a promotion? If there isn’t, it’s time to move on to the next position. If there is, you need to improve. In both cases, it’s up to you.
Thinking that other people should change because their thoughts and actions don’t match yours is completely absurd. In 99% of the time, people are obsessed with their own thoughts and ambitions. They don’t care about you, as long as their ass is secured.
In short, if you’re not satisfied with your life, it’s up to you to make a move to make it better.
Lesson #3: How Much Money You Save Is Important
It is not important how much money you earn but how much money you keep and later invest.
We constantly read stories about lottery winners who’ve earned millions but only after a few years bankrupt. We hear the same story about famous athletes. They earn millions of dollars while they’re playing but after they retire most of them end up being broke.
The main reason the above things happen is lack of financial education. A lot of people don’t do their math and spent more money than they earn. That’s why credit card companies are thriving. To be honest, I really don’t get it. You don’t have to be a math guru to know that if you earn $3000 a month, it will probably be a bad idea to spend all of the $3000, month after month.
Living below your means is the perfect way to educate yourself that things won’t make you happier. Only experiences, people and ambition towards something greater will.
Lesson #4: You Need To Decide What You Want and Don’t Want
It’s up to us to decide whether we’re going to be rich, poor, or represent the middle-class.
A lot of people think that rich people are rich only because they have rich parents. Even though there are people born with a silver spoon in their mouth, that doesn’t mean all of the wealthy people are like that. Actually, the richest men in history are self-made. Consider John D. Rockefeller, for example.
In the book, Robert Kiyosaki shares a really interesting exercise to help you decide what you want out of life and what you don’t want. Here are few of his personal want’s and don’t want’s:
- I don’t want my parents to tell me what I should want.
- I don’t want to work my whole life.
- I want to be free and travel around the world.
- I want this to happen while I’m still young.
- I want to be in control of my own time.
- I want to make money work for me.
Of course, deciding what you want is the first step and obviously, after that, there is a lot of work involved. At least though, you’re aware of where you should direct your life and actions.
Lesson #5: Make Money Work For You
At school, we learn how to work to earn money, but no one teaches us how to make money work for us.
The sole purpose of money, according to the majority of people, is to allow us to purchase things: a house, a car, phone, clothes, books, groceries, bike, perfume, a hat, etc. That’s why we borrow money with a high-interest rate, to purchase even more stuff, thus feel happy. We think that earning more bucks, so we can spend them, is the ultimate goal in life. But it’s a bit different if you want to escape consumerism and finally feel content with yourself.
Money, like your car, for example, it’s just a means to an end. You earn money, not for the sake of earning money, you earn money to invest. You earn money to fund your project which will potentially become your main income stream. At least that’s what you’re supposed to do.
In school, we don’t have classes about how to handle our finances. If our parents aren’t educated enough on the subject to share with us their knowledge, we will never understand the real potential of investing, thus be poor.
Understand that money is only a resource, it shouldn’t be the end goal. Instead of spending them for new things, learn how to invest your money so you can gain a bigger profit over time.
- Mind your own business: Financial difficulties often come to those who work for others for their whole lives. Unfortunately, in the end, they don’t have anything left. Use your free time to build your own business.
- Expert education: Don’t focus so much on your school education. Invest in becoming an expert in a specific niche. Being an “A” student will surely make you popular amongst your teachers but it won’t put food on your table in the long run.
- Be bold: You need something more than good grades if you want to succeed in real life. Different people use different words for this: courage, boldness, determination, stubbornness, intelligence. The actual word is not important. The important thing is to believe in yourself and in your abilities.
Commentary And My Personal Takeaway
In general, the book tells a story about a boy raised by two fathers. His original dad, the poor one, is the one teaching the boy to study hard so he can later find a stable job in a large corporation where he can earn a living. The wealthy farther, on the other hand, is the one who tells the boy to invest. He inspires him to pursue his dreams, to work towards a project of his interest. He’s the one who constantly pushes him to invest in himself and in some kind of businesses. But not only that
It’s definitely a book everyone should read. Even if you’re good at managing your personal finances.
We all have tremendous potential, and we all are blessed with gifts. Yet, the one thing that holds all of us back is some degree of self-doubt. It is not so much the lack of technical information that holds us back, but more the lack of self-confidence.” Robert Kiyosaki
If you realize that you’re the problem, then you can change yourself, learn something and grow wiser. Don’t blame other people for your problems.” Robert Kiyosaki
In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk.” Robert Kiyosaki