“What the rich teach their kids about money that the poor and middle class do not…”
Its taken me quite some time to write a book review on what’s considered to be the holy grail of entrepreneurial advice. The reason being: I have a hard time summarizing a book that has completely challenged (for the better) my financial conditioning. To be honest, Rich Dad Poor Dad is what sparked my interest in reading and self-education all together. Throughout my life I wondered how people acquired a lot of money; I didn’t understand how wealthy people were wealthy because I didn’t truly understand business and how money worked…until reading this book (although the education process never stops and I have a lot more to learn.)
OK- SO Robert Kiyosaki’s father did not have split personalities, and he didn’t have two fathers. The title refers to two men (one being his real dad) and another being the father of his best friend, Mike. The two men taught Robert very different lessons and he learned these lessons starting at the age of 9. Both men were successful in their careers, both worked hard, and both earned substantial incomes. Both men were influential, and both believed in education- just not the same type. Disclaimer: Robert Kiyosaki stresses that this book was written to teach people about money. These statements aren’t to be confused with a lack of respect for how he was raised, or an absence of love for his real dad who is referred to as his “poor dad.” Before I go any farther, I have to differentiate between the two “dads” beliefs.
Robert’s real dad:
- Was highly educated, attended Stanford University, the University of Chicago, and Northwestern University and committed his life to education and government work.
- Believed money is the root of all evil and never wanted to discuss the topic.
- Had a habit of saying things like, “I can’t afford it, I’ll never be rich, I don’t care about money.”
- Believed the rich should pay more in taxes in order to take care of those in need.
- Often said to play it safe rather than take financial risks.
- Believed people should be taken care of financially by the government.
- Struggled to save
- Taught him how to write impressive resumes
Robert’s friend Mike’s dad:
- Never finished 8th grade but embarked on a journey of life-long learning.
- Encouraged the discussion of money
- Asked, “how can I afford it?”
- Believed in tax breaks for people who create jobs and own businesses
- Was an advocate for self-education to decrease risks through knowledge.
- Believed in total financial self-reliance
- Owned many income-producing assets
- Taught him how to read and write financial statements & business plans.
At a young age, Robert decided that he wanted to take the financial advice of his friend’s dad (we will call him rich dad). Rich dad taught 6 main money lessons. Money lesson number one is the rich don’t work for money. People gain true wealth when they find a way to have money work for them. This means having a system in place that allows a person to escape the “rat race” and get paid whether they’re sleeping, golfing, or vacationing in the Bahamas. A person has only so much talent, and only so much time in a day. When you’re able to leverage your efforts and have money work for you, you can be paid much more than a salary or hourly wage. It’s called having passive income. Money lessons number two and three are having financial literacy and using that to mind your own business. This means learning how to own something for yourself in order to get ahead. The fourth lesson talks about the history of taxes, which surpirsingly fascinated me when I thought I’d snooze through it. Reading this chapter made me realize how little people (including myself) understand about how our governement and tax system work. Lessons five and six are the rich invent money and work to learn before working to earn. There are no shortages of opportunities, and no shortages of money. In saying the rich-minded invent money means they create circumstances that will be profitable by thinking outside the box and taking calculated risks.
Rich Dad, Poor Dad is an excellent book that challeneges the typical societal beliefs about income and saving. The eye-raising fact is that children are not getting financial education in our country’s school system, but it’s not too late to educate them on great lessons this book has to offer. If you wonder how the rich are that way, or why the rich get richer, there’s no better book I’d recommend to you. Thanks for reading!
Feature photo credit: unsplash.com