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  • Writer's pictureGagan Kaur

Rich Dad,Poor Dad SUMMARY

Updated: May 25, 2021

2020 has been interseting, to say the least, and like many other folks, my yearly resolutions too got put on the back burner. 2021 I am changing that, one thing I want to do more of is LEARN. My first resolution is to read more, so I decided to create a book club series to summarize every book I read this year. Another resolution of mine is to be more financially literate so it only made sense to start off with a very well-known book called “Rich Dad, Poor Dad”.

Rich Dad, Poor Dad was written by Robert Kiyosaki and talks about the two different financial ideologies he was exposed to at a very young age. He shares the two widely different perspectives of his real father (poor dad) and the father of his best friend (rich dad) and how it shaped his thoughts about money. In today’s blog post, I will be giving the key takeaways in my opinion and a favorite quote from each chapter of the book.

Lesson 1: The Rich Don’t Work for Money

  • In this chapter, Kiyosaki talks about his childhood and how his real father (poor dad) had a college education and barely made ends meet and the father of his best friend (rich dad) was wealthy without a college education.

  • The rich work but the truth is that the majority of rich people do work very hard, as they go about it differently than most people do. “The poor and middle-class work for money. The rich have money work for them.”

Fav quote: "A job is only a short-term solution to a long-term problem."

Lesson 2: Why Teach Financial Literacy?

  • If you were to learn anything from this book I would say it’s to understand the difference between a liability and an asset. An asset is something that has value, that produces income or appreciates, and has a market where the asset can easily be bought and sold. Conversely, liabilities take money out of your pocket because of the costs associated with them.

  • According to Kiyosaki, real assets fall into the following categories:

  • Stocks

  • Bonds

  • Income-generating real estate

  • Notes (IOUs)

  • Royalties from intellectual property such as music, scripts, and patents

  • Anything else that has value, produces income or appreciates, and has a ready market

Fav quote: "Wealth is a person’s ability to survive so many numbers of days forward - or if I stopped working today, how long could I survive?"

Lesson 3: Mind Your Own Business

  • In Chapter 3, Kiyosaki notes that most people confuse their profession with their business. Most spend their entire lives working in somebody else’s business and making other people rich. Whereas you need to learn to mind your own business and create your own wealth.

  • He mentions you should prioritize paying off your debts and then start investing in income-producing assets.

Fav quote: "Buying a luxury on credit often causes a person to eventually resent that luxury because the debt becomes a financial burden."

Lesson 4: The History of Taxes

  • This book isn't meant to be a financial book but a motivational one. Kiyosaki gives a good overview of the history of taxes.

  • Chapter 4 covers the four main components of what Kiyosaki calls “Financial IQ”: Accounting, Investment Strategy, Market Law, and Law.

  • Accounting: Ability to read numbers

  • Investment Strategy: Strategy for your money to make money

  • Market Law: Understanding supply and demand

  • Law: Knowing the tax advantages and protection from lawsuits

  • As Rich Dad Poor Dad reminds us, understanding the laws and taxes contributes to building long-term wealth.

Fav quote: "Who are you working for? Who are you making rich?"

Lesson 5: The Rich Invent Money

  • Inventing money means finding opportunities that other people might not be able to and capitalizing on them.

  • To maximize money-making opportunities you need to maximize your financial intelligence. Financial intelligence is having more options, so if opportunities aren’t coming your way, what else can you do to invent money?

Fav quote: "Luck is created. So go create yours."

Lesson 6: Work to Learn - Don't Work for Money

  • The most important thing to understand is you don't work for money you are working to learn. Kiyosaki recommends to younger people to find work that they can learn from rather than what will make them the most money.

  • After graduating from college, Kiyosaki joined the Marines and gained insight into essential business skills of leading and managing people. What skill set are you wanting to acquire?

Fav quote: “I recommend to young people to seek work for what they will learn, more than what they will earn. Look down the road at what skills they want to acquire before choosing a specific profession and before getting trapped in the Rat Race.”

Lesson 7: Overcoming Obstacles

  • In Chapter 7 Kiyosaki states “the primary difference between a rich person and a poor person is how they manage fear.”

  • Fear is just one of the biggest obstacles people face to becoming successful. The five obstacles Kiyosaki states are:

  • Fear

  • Cynicism

  • Laziness

  • Bad habits

  • Arrogance

  • These obstacles are just some of the reasons why people have yet to be successful and reach wealth, if you overcome these roadblocks you are on your way to greatness.

Fav quote: "I’ve never met a golfer who has never lost a golf ball. I’ve never met people who have fallen in love who have never had their heartbroken. And I’ve never met someone rich who has never lost money."

Lesson 8: Getting Started

In the last chapter Kiyosaki highlights the key lessons of the book and creates a checklist of actions you can do:

  • Find a reason greater than reality: the power of the spirit

  • Make daily choices: the power of choices

  • Choose friends carefully: the power of association

  • Master a formula and then learn a new one: the power of learning quickly

  • Pay yourself first: the power of self-discipline

  • Pay your brokers well: the power of good advice

  • Be an Indian giver: the power of getting something for nothing

  • Use assets or buy luxuries: the power of focus

  • Chooser heroes: the power of myth

  • Teach and you shall receive: the power of giving

Rich Dad Poor Dad was a great motivational book, not so much an in-depth financial book. It’s a great book to inspire you to take action and outline your personal financial goals. For me personally, the key takeaway was the difference between an asset and a liability. Every time I am making a purchase big or small, I think to myself - is this going to help me gain money or lose it? The book itself was written 25 years ago and to this day is a staple in space. If you are starting off in your journey of financial enlightenment, I would recommend you start with Rich Dad, Poor Dad.

sincerely, gagan

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