Rich Dad Poor Dad is a 1997 book written by Robert Kiyosaki that advocates financial independence through investing, real estate, owning businesses, and the use of finance protection tactics. The book criticizes the traditional teachings of working hard, saving money, getting out of debt, and investing for the long term with the stock market. Instead, Kiyosaki recommends generating income streams, utilizing leverage, and focusing on assets that generate cash flow.
Rich Dad Poor Dad draws on Kiyosaki’s personal experiences growing up with two fathers — his poor natural father and his best friend’s rich father — to explain different mentalities around money that separates the wealthy from the poor and middle class. The book busts the myth that you need to earn a high income to become rich and explains how to create passive income streams.
About the Author
Robert Kiyosaki grew up in Hawaii in a middle-class family. His father was a government worker while his best friend’s father was an entrepreneur and investor. Kiyosaki credits much of his outlook on money to the contrasts he observed between his own father, the “poor dad,” and his friend’s father, the “rich dad.”
After graduating from college, Kiyosaki entered the Marine Corps and served in Vietnam as an officer and helicopter gunship pilot. When he returned in 1974, he joined Xerox as a sales associate until 1978 when he resigned to start a company that brought to market the first nylon and Velcro “surfer” wallets.
Kiyosaki went on to start or partner in a variety of other entrepreneurial ventures in industries like apparel, mining, consulting, retail, and real estate. He also began investing in real estate and small businesses.
Kiyosaki is the founder of Rich Global LLC and the Rich Dad Company, which provide business and financial education through books, games, online courses, live events, and other media. He is the author of more than 26 books, including the Rich Dad Poor Dad series, which has sold over 41 million copies worldwide.
Book Summary
Rich Dad Poor Dad is divided into nine chapters covering topics like lessons learned from Kiyosaki’s rich dad on making money, the importance of financial literacy, how to take advantage of opportunities, differences in investment philosophies, secrets and attitudes of the rich, and fears and limitations that keep people poor and middle class. Here is the book summary of rich dad poor dad
Chapter 1: Lessons Learned from the Rich
Kiyosaki introduces his two dads – his educated but poor father who held a secure government job with a modest salary and his best friend’s rich father who dropped out of school and created wealth through entrepreneurship and real estate investing.
He recalls life lessons from rich dad including:
- The poor and middle class work for money while the rich make money work for them through assets like real estate and businesses.
- Intelligence solves problems but money gives you the freedom to find the answers. Financial struggle causes stress that impairs thinking.
- Overcoming fear is key to financial success. Poor dad feared taking risks while rich dad routinely took risks.
Chapter 2: Why Teach Financial Literacy?
Kiyosaki argues traditional schooling does little to provide real-world financial education. Academic degrees lead to jobs but not financial literacy. Schools teach students to be good employees but not employers.
Rich dad encouraged entrepreneurship, teaching through experience and action like having Kiyosaki start a small business at age 9. Financial intelligence goes beyond accounting – it involves using money to make more money.
Chapter 3: Mind Your Own Business
To become financially secure, Kiyosaki recommends building businesses and acquiring assets rather than climbing the corporate ladder or cutting back expenses. Assets like businesses and real estate put money in your pocket. The middle class typically trades time for money while depending on monthly paychecks.
Rich dad preached financial independence comes from passive income streams and utilizing people’s services while focusing your energy on your strengths. The self-employed must manage systems and leverage people’s time to be successful.
Chapter 4: The History of Taxes and the Power of Corporations
This chapter explores how the tax system, corporations, and government policies affect the distribution of wealth. Kiyosaki argues taxes reduce your wealth as an individual while shielding corporate profits. Institutional investors and corporations have advantages like limited liability, perpetual life, and delayed or reduced taxes.
Rich dad embraced corporations for tax advantages and encouraged financial intelligence – mastering soft assets like knowledge, people skills, and freedom from needing a paycheck. Wealth accrues through focusing more on return on investment and less on wages.
Chapter 5: The Rich Invent Money
Kiyosaki differentiates between income earned from a job or self-employment and assets that generate income independent of direct work. Real estate and business systems that run without you are examples of automating income.
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Rich people make money through leveraged investments that provide passive income exceeding expenses. They exploit financial instruments like mortgages to fund investments. Less wealthy people collect their primary income from active work. High taxes on individuals compared to corporations incentivize the rich to earn money through entities like corporations, partnerships, and trusts.
Chapter 6: Work to Learn, Not to Earn
Recommending to view jobs as learning opportunities, Kiyosaki says choose positions for the experiences and skills you gain over immediate income. Work to master useful soft assets like accounting, investing, sales, and leadership skills. Look at challenges in terms of what they teach.
Poor dad saw job loyalty as key and education as the path to promotions. Rich dad focused on increasing assets, dismissed job security, and measured self-worth by profits. He constantly invested in expanding his financial knowledge. Kiyosaki says financial aptitude compounds over time so start early.
Chapter 7: Overcoming Obstacles
Fear, cynicism, laziness, arrogance, and bad habits are common obstacles to wealth. Kiyosaki admits he allowed arrogance and self-destructive habits to impair his success at times. Cynics criticize advice from those more successful. Realism can limit imagination and greed can lead to complacency.
Rich dad taught persistence, setting ambitious goals, ignoring skeptics, and focusing on opportunities over obstacles. Kiyosaki advocates working through failures, finding lessons, and continuing to take risks and innovate. Wealth grows from taking baby steps and gaining experience over time.
Chapter 8: Getting Started
With money lessons learned in childhood as your foundation, work early on active and portfolio income streams. Kiyosaki started businesses as a young adult like selling wallets and T-shirts. Look to invest in real estate and stocks with long-term growth potential.
Avoid get rich quick schemes and keep growing your financial intelligence. Low risk ventures first build skills and experience to take on greater risks and levels of commitment later like rental properties or starting companies. Getting rich is a process, not an event.
Chapter 9: Still Want More? Here are Some To Do’s
This final chapter advises on getting started with actions like identifying your fears, setting specific financial goals, educating yourself on money, taking risks, rejecting cynics, and surrounding yourself with the right mentors and knowledge resources.
Kiyosaki says choose your teachers wisely, maintain high ethics, and keep honing your financial skills. Wealth grows incrementally so get started now and keep your finances active. The road to wealth involves lifelong learning, perseverance, evolving, and using money to serve a higher purpose.
Key Takeaways
- Generate assets that provide passive income streams rather than simply earning a paycheck
- Running a business and acquiring income-producing real estate are critical to wealth
- Master financial intelligence and use money skills to increase your assets
- Change your attitudes and beliefs around money to expand possibilities
- Corporations and taxes favor the rich; individuals rely more on active income
- Fear and cynicism hold people back; conquer obstacles with persistence
- Pick your mentors carefully; be a continuous learner in finances and business
Rich Dad Poor Dad convincingly illustrates how mindsets, financial philosophies, and levels of financial education shape wealth. Developing entrepreneurial skills and leveraging money strategically are more important than simply optimizing active income from labor. The book provides an inspiring case for how rethinking your approach to money can pave the road to financial freedom.
