Robert Kiyosaki has become very wealthy, thanks in part to what his book, Rich Dad Poor Dad, has brought him in opportunities over the years. (If you didn’t know, this is a big reason I wrote my book, and so far, the opportunities are good, but I’m nowhere near Mr. Kiyosaki! Anyhow, this book provides many lessons on strategic investing, and it’s a must read.
Scroll down to watch the video, or just read the text below for a full summary of Rich Dad Poor Dad.
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What’s Rich Dad Poor Dad All About?
Speaker: Do you want to know how to get rich? Rich Dad Poor Dad is the story of Robert Kiyosaki. He had two dads, one had a Ph.D. while the other had only finished eighth grade. Although both dads earned a significant amount of money, Poor Dad always struggled while Rich Dad was on his way to becoming one of the richest men in Hawaii. If you weren’t born with rich parents, you can learn from Kiyosaki. To become wealthy you can use the principles from this book.
The first principle is the rich don’t work for money. Let’s look at John over here. He spends every hour of every day working for money. He’s really mad at life and can’t understand why he can never seem to get ahead. Over here we have Ben, he makes the same amount of money as John, but Ben spends most of his time looking for assets to add to his collection. Both of these guys make the same amount of money but John trades his time for money while Ben gets his money from assets.
The lesson here is that the rich don’t trade their time for money. Instead, they acquire assets to make money for them. One of my favorite quotes goes a little something like this, “Most of the time, life does not talk to you, it pushes you around and each push is life saying, wake up.” If you want to become wealthy, you must know that people’s lives are controlled by two emotions, fear and greed. I’ve had a lot of people tell me that they are not interested in money but yet, they’ll work a job for eight hours a day trying to get more of it. When not controlled properly, fear and desire can lead you into life’s biggest trap.
The second principle from the book is called financial literacy. If you want to get rich, it’s not about how much money you make. It’s about how much money you keep. Intelligent solves problems and produces money but money without intelligence is money soon gone. Did you know that rich people acquire assets while the poor and the middle class acquire liabilities that they think are assets? To become wealthy, you must understand the difference between a liability and an asset. All you have to remember is that assets put money into your pocket and liabilities take money out of it. This is one of the only rules you’ll ever need to know if you want to become rich. A lack of financial knowledge is a number one reason why the rich get richer and the poor get poorer.
The third principle from the book is mind your own business. To sum this principle up, the book is telling you that the rich focus on their assets while everyone else focuses on their income statements. To follow this principle, you need to build and maintain a strong group of assets. An asset might be a piece of real estate, a website or anything that produces positive cash flow for you every single month.
The fourth principle from the book is the power of corporations. If you’re watching this video, you probably don’t know that corporations are one of the biggest secrets of the rich, and they serve as a smarter way to play the game of life. The rich use cooperations to take advantage of legal tax loopholes and protect their money. If you own a business and make a decent amount of money, you need to consider setting up a corporation. To get rich, the book says that you need to train your financial IQ, which is comprised of your knowledge across several broad subjects.
To increase your financial IQ, you must increase your knowledge in the areas of accounting, investing, understanding markets, and the law. Accounting is for reading and understanding numbers. Investing is for using your money to make more money. Understanding markets is the science of supply and demand and the law is understanding tax loss and how to keep more of your own money. Once again, a corporation is one of the biggest legal tax loopholes used by the rich to make and keep more of their money. Your financial IQ is a synergy of all of these skills and talents combined.
The fifth principle from the book is the rich invent money. This principle can be summed up as the rich seize opportunities to invent money. Remember that great opportunities are not seen with your eyes, they’re seen with your mind. The single most powerful asset you have is your mind. If trained well, it can create enormous wealth for you. Another important point from the book is in the real world, it is not the smart who get ahead, but the bold. This means that the bold or risk-takers tend to make the most financial progress even if they’re not as smart as others.
The sixth principle from the book says to work to learn, don’t work for money. This means that rich people work to learn and not for job security. If you want to get rich, you should show, know a little bit about a lot of subjects. One of my favorite quotes is “J-O-B is an acronym for just over broke. It means that focusing only on a job will prevent you from becoming truly wealthy. The seventh principle from the book is overcoming obstacles. The primary difference between a rich person and a poor person is how they manage fear.
Even if you have an excellent financial IQ, there are a few major obstacles that will hold you back from becoming rich. These obstacles are fear, cynicism, laziness, bad habits, and arrogance. Some people are so afraid of losing that they lose. Cynicism is another word for self-doubt. For many, it’s a major obstacle. Laziness is another obstacle that we all struggle with. I remember after I first started getting results in the gym, and once I’d achieved what I consider to be a decent accomplishment, I started to get lazy, and I didn’t want to go to the gym as much.
The same laziness that prevented me from going to the gym can hold you back from becoming rich. Bad habits can have the same effect. Stop watching so much television and going out to drink on the weekends. The final obstacle that everyone must face is arrogance. Robert Kiyosaki said, “Every time I’ve been arrogant, I’ve lost money because I believed that what I didn’t know wasn’t important.” Don’t let arrogance steal your money.
Let’s look at the 10 steps to awaken your financial genius. Step number one, find a reason greater than reality. The power of spirit, have a strong reason to pursue financial independence. Step number two, make daily choices. Choose your daily activities wisely to invest in your mind and goals. Step number three, choose your friends carefully. Be careful who you choose to associate with. Step number four, master a formula, then quickly move on to the next. Financial success is closely linked to how quickly you can learn new formulas for making money.
Step number five, always pay yourself first to enhance your self-discipline. If you can’t control yourself, don’t try to get rich. Step number six, pay your brokers well. It’s hard to measure the power of good advice. Step number seven, be Indian giver. With the right deal, it is possible to get something for nothing. Try to make investments that offer you something for free, such as a piece of land. Step number eight, use assets to buy luxuries. You should always buy luxuries with income from assets and not loans.
Step number nine, choose heroes. By having heroes, it becomes much easier to tap into your raw genius. Finally, step number 10 teach and you shall receive. When you need something, give what you want first, and it will come back to you in buckets. These are the main principles from Rich Dad Poor Dad by Robert Kiyosaki.