books for entrepreneur

Book Review : Rich Dad Poor Dad

One of the best books I’ve come across on financial education has been Rich Dad, Poor Dad by Robert Kiyosaki.

I’ve since become a huge fan of Robert Kiyosaki and have read many of his other books and watched a lot of videos of him. In this book review, I want to share some of the most important lessons that I’ve learned from Rich Dad, Poor Dad.

Now, I’m going to walk through this book as I read it for a third time

Character Summaries

Poor dad – educated but lacking the street smarts
Rich dad – very little education (eighth grade), tons of street smarts
The Son (Robert T. Kiyosaki) – the spectator who learns lessons from both but internalizes only ’s traits

Four Lessons

Lesson 1: The Rich Don’t Work For Money

This lesson has an ambiguous title that gives two separate meanings based on how you read it – actually, based on where you put the emphasis. If you read the title as the rich don’t work for money, that’s the wrong one. The rich in fact do work, and they work quite hard. The way the title should be read is that the rich don’t work for money.

The author develops the ideas that the poor and the middle class work for money, fear and greed cause ignorance and poverty, and the importance of using one’s emotions versus thinking with emotions.

They work to learn things, and the things they learn can easily be applied to make money over and over again. I agree with this sentiment entirely – good ideas are always more valuable than good labor, because you can keep mining good ideas, while good labor is spent the second you do the work.

Another part of this lesson I liked is that the “Rich Dad” is actually quite frugal. Although he has a lot of money in the bank, he drives a cheap car and doesn’t live in a mansion. Too many people equate rich with material things, so I enjoy it when it is shown that being rich often has very little connection to material possessions.

Being rich means never having to worry about paying your bills – it doesn’t mean driving a Ferrari (well, at least not until you can pay cash for it and not break a sweat).

Lesson 2: Why Teach Financial Literacy?

This is the section of the book that causes a lot of controversy when discussed. In a nutshell, this chapter redefines the term asset. For most, an asset is something that has value. For example, your home is an asset because it is something you own that has value.

Well, this section of the book redefines the word. To Robert Kiyosaki, an asset is something that generates income, while a liability is anything that has costs.

In other words, by this definition, your primary residence is not an asset but a liability.

It may have cash value, but it doesn’t generate income. Instead, assets are forms of passive income that you control, like a rental property or intellectual property.

So what’s the overall lesson here? Basically, you become rich by accumulating assets. Wealth comes from having enough assets that generate enough income so that all of your expenses are covered and there is enough left over to invest in more assets.

Lesson 3: Mind Your Own Business

The point of this chapter is that a financially healthy individual should be spending their spare time not spending their paychecks, but investing as much of it as possible in assets (as defined by this book).

This is another lesson I strongly agree with: pay off your debts and start investing as soon as you can into things that can generate revenue. This lesson was short and sweet.

Lesson 4: Own a Corporation

Another great thing Robert talks about is the tax advantages of owning a business. He mentions how a corporation can do so many things that an individual cannot. Like pay for expenses before it pays taxes.

Employees earn and get taxed and they try to live on what is left. A corporation earns, spends everything it can, and is taxed on anything that is left. It’s one of the biggest legal tax loopholes that the rich use.

A fantastic summary he has for it is:

The Rich with Corporations

1. Earn
2. Spend
3. Pay Taxes

People Who Work for Corporations

1. Earn
2. Pay Taxes
3. Spend

In this book, there are tons of other nuggets of gold like the ones I mentioned above.

Everything I covered here is just the tip of the iceberg. I hope you enjoyed this Rich Dad, Poor Dad review and take the next step to further your financial education.

To find out more about Rich Dad, Poor Dad by Robert Kiyosaki, click here.

Still Want More?

At last, some tangible things: read books and take classes to educate yourself!
Ask questions!
Do something!
These are all great tips, but I felt really uncomfortable realizing that the first direct, clear applicable tip found in the book came near the end – and it was to read more books.

To find out more about Rich Dad, Poor Dad by Robert Kiyosaki, click here.

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