Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!

Who should read this: This book lines out the very basics of passive income, tax savings, and setting up your own business, in particular for those who want to break free from the 9-5. It’s a classic among the finance/investment crowd and a must read especially for both those who have money they are trying to and for those who are starting out to create their own long investment and retirement plan. It’s not a step by step book, but it’ll change your mindset.

Kiyosaki starts the book off telling two parallel stories; the rich dad and the poor dad. The poor dad works every day, equates time with money, and thinks money is dirty. He pays his bills first and has a mortgage and is deep in credit card debt. He works for money. The rich dad, on the other hand, gets his paycheck and reinvests it in real estate and other businesses. He pays himself first. He diversifies in stocks. He is a savvy investor, and money works for him. 

This is how money flows for typical poor or middle class person:

As an employee who is also a homeowner, your working efforts are generally as follows: 1. You work for the company. Employees make their business owner or the shareholders rich, not themselves. Your efforts and success will help provide for the owner’s success and retirement. 2. You work for the government. The government takes its share from your paycheck before you even see it. By working harder, you simply increase the amount of taxes taken by the government. Most people work from January to May just for the government. 3. You work for the bank. After taxes, your next largest expense is usually your mortgage and credit-card debt. The problem with simply working harder is that each of these three levels takes a greater share of your increased efforts. You need to learn how to have your increased efforts benefit you and your family directly.

All of this comes down to understanding the difference between assets and liabilities. That is, the rich have more assets then they do liabilities, which means they have net positive cash flow every month. Simple as that.

This is the cash flow pattern of a poor person or middle class. They make a salary and then buy stuff and have expenses like cars and mortgages.

This is the cash flow pattern of a rich person, or someone who earns money from their assets (like rental income and royalties).


This is the cashflow quadrant as a simplified breakdown of the different ways to earn money.

They key is learning the difference.

P.S: Robert can be a little bit over the top sometimes, and the book has that Trumpish air of “capitalism is supreme,” really pushing you to make as much money as you possibly can for…what reason I’m not sure, and I’m not sure if Kiyosaki is sure either. But in any case, you’re reading the book, so hey, obviously you want to make money. Keep your eye on the ball.

Memorable quotes from the book:

What is financial intelligence?

Financial intelligence is made up of these four main technical skills: 1. Accounting Accounting is financial literacy, or the ability to read numbers. This is a vital skill if you want to build businesses or investments. 2. Investing Investing is the science of money making money. 3. Understanding markets Understanding markets is the science of supply and demand Alexander Graham Bell gave the market what it wanted. So did Bill Gates. A $75,000 house offered for $60,000 that cost $20,000 was also the result of seizing an opportunity created by the market. Somebody was buying, and someone was selling. 4. The law The law is the awareness of accounting corporate, state and federal regulations. I recommend playing by the rules.

Worthy investments

Invest first in education. In reality, the only real asset you have is your mind, the most powerful tool we have dominion over. Each of us has the choice of what we put in our brain once we’re old enough. You can watch TV, read golf magazines, or go to ceramics class or a class on financial planning. You choose. Most people simply buy investments rather than first investing in learning about investing.

Ignore the negativity

WARNING: Don’t listen to poor or frightened people. I have such friends, and while I love them dearly, they are the Chicken Littles of life. To them, when it comes to money, especially investments, it’s always, “The sky is falling! The sky is falling!” They can always tell you why something won’t work. The problem is that people listen to them. But people who blindly accept doom-and-gloom information are also Chicken Littles. As that old saying goes, “Birds of a feather flock together.”

Real estate investments

Look in the right places. A neighbor bought a condominium for $100,000. I bought the identical condo next door for $50,000. He told me he’s waiting for the price to go up. I told him that profit is made when you buy, not when you sell. He shopped with a real estate broker who owns no property of her own. I shopped at the foreclosure auction. I paid $500 for a class on how to do this.

Money is an idea

Money is only an idea. If you want more money, simply change your thinking. Every self-made person started small with an idea, and then turned it into something big.

Rich Dad Poor Dad_ What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do No-Notebook

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