Rich Dad Poor Dad in 5 minutes
5 min readFeb 4, 2021
Disclaimer: Everything in this article is taken from the Rich Dad Poor Dad book, either directly or paraphrased. All credits go to Robert Kiyosaki. Amazing read!
ONE
The rich don’t work for money, they have money work for them
- Let life push you around
- It’s easier to change yourself than change everyone else
- The poor and middle class pay more in taxes than the rich
- A job is a short-term solution to a long-term problem
- Human life is a struggle between ignorance and illumination
- Use your emotions to think, don’t think with your emotions
- By not getting paid, you use your imagination to find ways to make money
TWO
Why teach financial literacy?
- It’s like planting a tree. You water it for years and then one day it doesn’t need you anymore. The roots are planted deep enough and it provides shade for your enjoyment.
- Intelligence solves problems and produces money.
- Buy assets and not liabilities
- The Japanese are aware of 3 powers: the sword, the jewel, and the mirror
- Power of weapons, power of money, and power of self-knowledge
- An intelligent person hires people who are more intelligent than he is
- When it comes to money, high emotions tend to lower financial intelligence
- Owning a house — loss of time, capital, and education
- Wealth measures your financial survivability
THREE
Mind your own business
- There is a difference between your profession and your business
- Net worth is often less than what it seems due to taxes on gains
- Assets include businesses run by others, stocks, bonds, real estate, royalties, etc
- True luxury is a reward for investing and developing a real asset
FOUR
The history of taxes and the power of corporations
- The rich use corporations to limit the loss of investments
- A corporation is a legal document that creates a legal body without a soul
- Income tax rate is lower for corporations + certain expenses can be paid with pre-tax income
- Real estate — as long as you keep trading up in value, you will not be taxed for the gains until you liquidate
- If you work for money, you give all the power to your employer. If your money works for you, you keep the power and control it
- Accounting — ability to read numbers
- Investing — letting your money make money
- Markets — supply, and demand
- Understanding the law can give you tax advantages and protection from lawsuits under a corporation
FIVE
The rich invent money
- In the real world, your “balls” matter more than your college grades
- Often in the real world, it is not the smart who get ahead but the bold
- People who get out of the rat race the quickest are the ones who understand numbers and have creative financial minds
- Money is not real, the single most powerful asset that we have is our mind
- Being financially intelligent will allow you to see the opportunities when they appear
- The problem with secure investments is that they are often so sanitized that the gains are little
- Plant seeds in the asset column. Start small; some grow and some don’t
- It’s not gambling if you know what you are doing
- Great opportunities are not seen with your eyes, they are seen with your mind
- People who avoid failure, also avoid success
- Two types of investors — the ones who buy a package and those that assemble the package
- To be the second type of investor
- Find an opportunity that everyone else missed
- Raise money
- Organize smart people
- It is what you know that is your greatest wealth. It is what you do not know that is your greatest risk
SIX
Work to learn — don’t work for money
- Learn to sell — you have best-selling authors, not best-writing authors
- Know a little about a lot
- Seek work for what you will learn more than what you will earn
- Education is more valuable than money, in the long run
- If you do become highly specialized, seek union protection
- Management skills needed
- Management of cash flow
- Management of systems
- Management of people
- The skills of selling and marketing are one of the most important
- Most important law of money: Give, and you shall receive
SEVEN
Overcoming obstacles
- The primary difference between a rich and a poor person is how they manage the fear of losing
- “If you hate risk and worry, start early”
- For winners, losing inspire them. For losers, losing defeats them
- FOCUS: Follow One Course Until Successful
- Doubt is expensive
- There is a little chicken inside every one of us
- A great property manager is the key to success in real estate
- People should learn how a stop loss works — automatically sell your stocks if the price drops below a certain point to help you minimize your losses
- Fry your little chicken
- Say “How can I afford it”, instead of “I can’t afford it”
- How do you beat laziness? A little greed
- If I pay myself first, I get stronger, mentally and fiscally
- You will figure out how to pay the bill collectors because you have to
- When you are ignorant in a subject, start educating yourself
EIGHT
Getting Started
- Without a strong reason or purpose, anything in life is hard. Find a reason that keeps you going
- Choose wisely. Choose to feed your mind with good things and grow it, it is your most real asset. Make good choices daily
- Choose your friends wisely. Learn from them, both the financially intelligent and the unintelligent but don’t let their chicken little scare you. Learn from the rich about how to make money
- You become what you study. Study faster to find faster formulas to build wealth. Working hard for money is an old formula
- To get rich, you need self-discipline. Study the management of cash flow, people, and time to run a business.
- Don’t get into debt in the first place
- Pay yourself first, let your creditors and the IRS motivate you but don’t give in and liquidate your stocks or use your savings
- A good broker should provide you with information. Information is priceless
- A good broker should educate you and save you time, they are your eyes and ears in the market
- Hire professionals that mind their own business
- For every investment, there must be an upside (assets you get for free) and low risk
- Let your assets buy you luxuries
- Find heroes. They make it look easy and if they can do it, then so can you
- Give what you want first and it will come back to you in buckets. Teach and you shall receive
NINE
Some To-Dos
- Stop doing what is not working and look for something new
- Look for new ideas
- Look for someone who has done what you want to do
- Take classes, read and attend seminars
- Make lots of offers, someone might say yes
- Get around your area for 10 minutes a month — look for changes
- Shop for bargains
- Profit is made when buying not selling
- Look for people who want to buy. Then look for people that are selling
- Think big, act big
- Action always beats inaction
Final notes
- 3 types of income — earned, passive, and portfolio
- Earned income is money you work for
- Passive and portfolio income is money working for you