Rich Dad Poor Dad
Are you buying assets or liabilities?
The other dad is the dad of his childhood friend. That dad advises Robert to get a job so he can learn the skills required to be an entrepreneur. Wealth comes from experience-based learning and multiple income streams. When his dad encourages Robert to work his way up the ladder, the other dad laughs and says, "Why not own the ladder?"
In this summary, we will go over some of the main lessons that Robert covers in this classic book.
Lesson 1: The rich buy assets, not liabilities
An asset is something that puts money in your pocket.
A liability is something that takes money out of your pocket.
Let's look at how a rich person acts when making money compared to a poor person.
The rich gets their income and straightaway they buy assets.
They buy assets such as stocks, bonds and real estate.
It's important to note that real estate as an asset puts money into your pockets (from being rented
out to someone else).
In the long run, these assets will create even more cash for them in the future.
The middle class earns their money from a good job, but the moment they get their salary, they spend it on liabilities which they think are assets. Possessions such as TVs, cars and vacation homes.
You might look rich and your friends might admire you for it, but you will never actually be rich practicing this.
Lesson 2: Financial literacy can only be learned through experience
The well-educated "poor dad" says, "Studying hard and getting good grades is the only way to secure a good job at a big company with excellent benefits.
But the "rich dad" says that the most important goal is to learn how money works so you can make it work for you.
To be financially smart, Kiyosaki says you must master accounting, investing, markets and the law.
The more you broaden your skills, the more successful you'll be.
Lesson 3: Stop focus on your income – focus on your assets
Study hard, so you can get a good job at a great company.
No, study hard so you can find great companies to buy.
Robert Kiyosaki's poor Dad had a PhD, but was always a struggle with money.
His rich dad didn't even finish high school and yet, he had an abundance.
His super book smart dad studied so many years just to get a few hundred extra in salary every month.
On the other hand, his rich dad used those years to start acquiring assets.
The rich focus on their asset column, while everyone else focuses on their income statement.
Lesson 4: Fear and self-doubt are your greatest barriers to success
The primary difference between the rich and the poor is how they manage fear.
"Poor dad" keeps it safe and avoids risks. This perspective can be costly in the long-run.
"Often in the real world, it's not the smart who get ahead, but the bold," says "rich dad."
Lesson 5: Always think in terms of opportunities
The "rich dad" forbids his kids from saying, "I can't afford it."
Instead, he tells them to say, "How can I afford it?"
The first phrase shuts down a person's brain, and they no longer have to think.
The second one opens up "possibilities, excitement and dreams."
It forces the brain to search for answers. Kiyosaki learns that the "primary reason the majority of the poor and middle class are fiscally conservative—which means, 'I can't afford to take risks'—is that they have no financial foundation."
Our Thoughts from More Money Malaysia.
Rich Dad Poor Dad is a great book to start learning the difference between how money is made.
Most people (ourselves included) will make money from working for someone else.
There is absolutely nothing wrong with that. We have less stress. We can go home and stop thinking about work. We have our weekends to ourselves. And we can spend time with our loved ones without having to think about a business.
However, where most people go wrong is how they use the money once it's made.
As Robert mentions, the rich use their income right away to buy assets, while the poor use the money in other ways.
If you do not allow yourself to have assets make you money, you will be stuck making the same amount, and not be able to truly live that perfect life.
Although most people think about this book as a reason to start buying assets like real estate, the biggest asset you can buy is improving your ability to think and take action.
The more strategic you can be with your time, and the more you're willing to try something new, the more likely you are to succeed.
Whether that's finding a way to get a promotion that normally takes 3 years in 1, or to start your own business, or to buy real estate.
Now that you have a basic understanding of the book Rich Dad Poor Dad, here's what you need to do:
- Think about how you can get onto the path of being rich.
How are you currently spending your money?
How would you ideally like to spend your money?
How much of your money can you put into buying you assets that will make you more money in the future?
- Explore the different types of assets and find the one you'd like to start with.
Although this book primarily talks about real estate, there are many other types of assets that require far less money to start.
In fact, we have found 25 different assets that you can invest in.
So take a read through those assets and decide which one you'd like to start putting your money into.