The book, Rich Dad Poor Dad by Robert Kiyosaki and Sharon Letcher is about a man who had two fathers. The Poor dad was his biological father, a Ph.D. holder, with little knowledge in finances, while the Rich Dad was his friend’s (Mike’s) father. The rich dad was an 8th-grade school drop-out whom Kiyosaki portrays as having great business acumen, street smartness, and what it takes to make the right investment decisions. Although educated, the poor dad spent his entire life helplessly entangled in a cycle, or a perpetual rat race, trying to satisfy his financial needs due to the lack of financial literacy. The poor dad taught Kiyosaki that education was the key to success but the rich dad taught him how to succeed in life. Rich Dad Poor Dad narrows down to one fundamental concept in dealing with money: financial independence. This is illustrated in six key lessons.
Firstly, rich people don’t work for money. This is in contrast to the poor and the middle class who always work for the rich in return for a very little pay. The poor avoid taking risks in the name of job security while the rich look for any business opportunities that will lead to financial growth. Secondly, Kiyosaki stresses the need for financial literacy, a subject that is never taught in school! Both Mike and Kiyosaki become very successful financially in their later life by applying what the rich dad taught them. The author emphasizes on the difference between assets and liabilities. The rich acquire assets such as real estates, bonds and shares; the middle class acquires liabilities, while the poor have expenses. Assets always generate more assets making the rich richer. On the other hand, the poor and the middle class acquire liabilities such as houses, cars, expensive boats which make them even poorer.
Another lesson is that people need to mind their own business in order to be financially sufficient in life. Kiyosaki illustrate this clearly by citing McDonald’s as an example. Although McDonald’s day-to-day business is to sell hamburgers, his main interest is in real estate. Kiyosaki also explains the subject of taxes and corporates. Individuals pay taxes directly on what they earn and spend the rest. Corporates pay taxes on what is left after taxes. The lesson here is that the rich know how to manipulate the system because they understand the power of big corporates to enhance their wealth.
Kiyosaki outlines the fifth lesson which is how the rich use their financial literacy to invent money. Money is invented by customizing new investments an aspect that requires talent and courage. Fear and self-doubt is the main hindrance to developing talent. The rich pay educated intelligent people to work for them hence siphoning that knowledge to their own advantage. The last lesson illustrated requires one to avoid working mainly for payment but for the skills they learn from job.
Kiyosaki goes ahead to state that to achieve financial independence, individuals need to overcome five obstacles namely fear, bad habits, cynicism, arrogance, and laziness. Specifically, he points out that inasmuch as fear is normal, it is important to manage it wisely while making investment decisions. The author then gives tips on how to be motivated by a reason greater than mere reality, have the power of choice in mind, choose friends carefully (mainly those who discuss money), pay oneself first, paying brokers well (be generous), have heroes in life to set your standards higher. In the final chapter, Kiyosaki advocates for changing or taking up new actions in case old strategies have not been working.
The key in Rich Dad Poor Dad by Robert Kiyosaki is that it is very difficult to attain financial independence in life through working for other people. To achieve this, there is a need to lay a good foundation on which to build a business empire. This means acquiring financial intelligence which can be sought from the right people who have extensive experience in corporate world. Although the book seems to undermine schools and education system, in chapter 6, the author points clearly that informed mind is easier to train because there is already a base to build on. Rich people therefore hire intelligent people to work for them in areas where they require expertise.