Rich Dad Poor Dad Book Summary: How To Get Financial Freedom
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How To Get Financial Freedom Forever
Robert Kiyosaki’s Rich Dad, Poor Dad is for the reader to understand the mindset and strategies of people who are financially successful. The focus of this strategy is to re-invest assets into other assets, such as real-estate, stocks, businesses, or other vehicles that can help make the reader financially independent.
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- The author compares his “rich dad” to his “poor dad.” The life philosophies of both dads’ are clearly stated. These philosophies provide a stark contrast in how the money being made at work is being handled
- You do not need to be a high-income earner to become wealthy if you invest your money in the right places and look for opportunities
- Understanding how to invest your hard-earned money into other assets instead of the best way to lose money, which is spending money on liabilities
- The author reiterates that the strategy to re-invest money in assets is how the rich make and keep their money
- How corporations and LLC’s lessen taxation on earned funds, and why this is such an advantage for the rich, compared to the normal worker
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Rich Dad Poor Dad
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Learn personal financial freedom from one of the most unique and credible minds in the space. The difference between assets and liabilities. As well as how to break free from society's ideas about how to manage your money.
READ NOWRich Dad Poor Dad Book Summary
Robert Kiyosaki’s book, Rich Dad Poor Dad provides a unique point of view on personal financial independence and avoiding what he calls the “Rat Race.” The Rat Race is the life of most middle-class Americans, which ends up becoming a process of living paycheck to paycheck.
Robert’s main point focuses on how the non-wealthy cannot accumulate wealth because they consistently spend their money on liabilities such as overpriced cars, “nice-to-haves” and big houses. Robert even goes on to say that your house is not an asset, it’s a liability. His point on the house is that you are not making any money off your house, therefore it cannot be considered an asset.
This point provides the reader an interesting view that not everyone understands. Financial independence starts with moving your money into assets, which can make you more money.
Robert begins the book by comparing his “poor dad”, who is his biological father to his “rich dad”, who is his friend’s dad. Poor dad is a well-educated professional who works a regular job but is not well-educated financially. Rich dad, on the other hand, is an entrepreneur who understands how to use his money to make money. If learning to make money sounds interesting read the book Ready Fire Aim or The Million Dollar One Person Business.
A comparison is shown how poor dad’s income constantly flows out. Poor dad, as well as most middle-class and poor Americans, work hard for their income. They spend this income on liabilities, most often too many, and then have regular expenses such as taxes, mortgages and other payments. The income category ends up matching the expense category and there is no opportunity to make and hold money.
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On the other hand, a rich dad has invested his money into other investments, such as his corporation which gives him an immediate advantage from a taxation perspective. Additionally, rich dad does not spend frivolously on items that are not assets. Because rich dad’s money is making money from other investments, and he has limited his liabilities, he is constantly making money. Another amazing book about entrepreneurs is Delivering Happiness.
This contrast is stated repeatedly throughout the book to highlight how the wealthy get to their status compared to the middle-class, or poor, who have trouble building wealth.
Robert then lists off 10 steps to help the reader on their journey to start investing like a wealthy person. These 10 steps take the reader through thoughts that need to constantly be in their mind.
1) Have a strong reason/desire to want to become wealthy. For more on this you can read the book Start With Why. You might also be interested in learning how effective committing to something can be. For that read the book INFLUENCE.
2) Make smart choices with your money daily. Every choice to avoid frivolous liabilities will help your bottom line. I’ve also heard it said to ‘live in the valley of your earnings.’
3) Associate yourself with people who are smart financially. These people can help you with ideas and investments. The 4 Hour Workweek going into this importance of this as well.
4) Learn a way to make money by investing in assets, then once mastered, learn another one. If you haven’t read How To Blog for Profit Without Selling Your Soul I recommend that book for more on this subject.
5) Pay yourself first. This is a phrase that is often referred to throughout the book. This means that your Income Statement should look like a rich dad’s instead of poor dad. There is an entire book dedicated to this topic called Profit First.
6) Align yourself with people who can help you, such as tax attorneys and investment brokers who have your best interest in mind.
7) Invest money in investments where “free money” can be gained, such as good deals.
8) Use assets gained through investments, not your salary, to buy luxuries. This means that you need the self-discipline to have made money on investments before buying luxuries. This lesson is a pillar for Ramit Sethi’s blog I Will Teach You To Be Rich.
9) Choose a hero. Whether it be Warren Buffett, Tom Brady or someone else. Everyone should strive to follow in the footsteps of their hero. Seth Godin talks a lot about the thousands of requests he gets to be someone’s mentor. He states that you don’t need a mentor. You need a hero. This can be found in books.
10) The power of giving. Giving your money to worthy causes is a great way to use your wealth in a positive manner.
Kiyosaki concludes the book by motivating the reader to take control of their financial standing and their financial education. He suggests that readers need to take stock of what is working and not working in their current financial situation. He also pushes the reader to constantly be on the lookout for new investment opportunities by shopping for bargains and looking in the right places for good deals. Lastly, he implores the reader to take immediate action and think big. Another great book on taking action is Poke The Box.
About The Author Robert Kiyosaki
Robert Kiyosaki, author of 19 books, mainly centered around investing philosophies, is a successful real-estate and business investor. Robert’s goal is to educate the reader on how to properly invest their hard-earned money. In addition to his numerous real estate holdings and books, Robert created a personal investing board game titled CASHFLOW.
Robert grew up in Hawaii and began his career in the merchant marines and then as a salesman for Xerox. Robert started his investing career selling “surfer wallets”, which ultimately became a losing proposition. He then later owned a t-shirt company which went out of business and left him penniless. Eventually, Robert regained his footing and became a millionaire by working as a motivational speaker and investing in real estate. Robert’s success allowed him to retire at age 47.
Robert wrote Rich Dad Poor dad in 1997 and has since written other books that have built off the philosophies mentioned in this book. Robert’s mixture of financially independent thinking and motivational tone have combined to make this book one of the most popular books in the world of personal finance. Additional books related to “Rich Dad Poor Dad” include Rich Dad’s Guide to Investing and Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom.
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