Rich Dad Poor Dad – Robert T. Kiyosaki

read 01.13.2020

Although I had heard of this book at a very young age due to its popular Korean translation, never did I imagine picking it up at the age of 23. Prior to this reading I was regretting my inability to extend my financial knowledge beyond an economics major. Graphs and theories can only take you so far in appreciating how money moves around us. Rich Dad Poor Dad has convinced me that there is much more we can do to learn how to manage and grow our wealth.  

Of course, there is some personal bias involved in assessing my potential for financial success, and by no means do I mean that after reading this book I am certain in becoming a stock trading genius. I am, however, motivated in reading more about my renewed interest. I have this book to thank for that.

Below, I go over the lessons offered in the books as well as my personal takeaways from each of them.

LESSON 1: THE RICH DON’T WORK FOR MONEY

Here, Kiyosaki recommends holding assets that create money for you, viewing each dollar invested as workers or employees that produce profit. The main point is that poor people’s expenses are derived from their income, whereas rich people’s expenses can be covered by money created by their assets, allowing them to save and invest in more assets in a positive feedback loop.  

I agree with Kiyosaki’s recommendations, although I do realize the realistic barriers that may obstruct potential risk-taking behavior. Throughout the book, Kiyosaki makes claims that are rationale if given that such risky investments do produce returns. While reading, I expect many readers disagree with Kiyosaki’s perspective with respect to their current financial circumstances.  

LESSON 2: WHY TEACH FINANCIAL LITERACY?

“Most people fail to realize in life, it’s not how much money you make. It’s how much money you keep.” (77)

“An asset is something that puts money in my pocket whether I work or not. A liability is something that takes money out of my pocket.” (85)

Kiyosaki mentions that poor people view their house as assets. Under his own definition, a house would be considered a liability as there are costs in maintaining a house (unless it is rented out and the income produced outweighs the costs). Problem is, how many people could afford purchasing a house to begin with? To counter, Kiyosaki present the example putting a down payment on a house purchase and buying time to find another buyer who would purchase it at a higher price, netting a quick-and-easy profit. Possible, yes. Probable? I don’t have the experience to say.

LESSON 3: MIND YOUR OWN BUSINESS

“A problem with school is that you often become what you study. So if you study cooking, you become a chef. If you study the law, you become an attorney, and a study of auto mechanics makes you a mechanic. The mistake in becoming what you study is that too many people forget to mind their own business. They spend their lives minding someone else’s business and making that person rich.” (131)

Kiyosaki tends to antagonize jobs and employers, painting them as impediments to financial independence. This is done to emphasize the importance of being able to lead your own life, so that you are not lost and hopeless if you end up being terminated or facing similar financial troubles. By having your own “business” distinct from your job, you would be able to remain afloat.  

I agree that it would be nice to lead your life in your own hands. Even as a researcher, I think about how great it would be if I could continue doing research without thinking about the constraints of money. Or if PhD graduates could even fund their own research— how amazing would that be?

LESSON 4: THE HISTORY OF TAXES AND THE POWER OF CORPORATIONS

“The first lesson of having money work for you, as opposed to you working for money, is all about power. If you work for money, you give the power to your employer. If money works for you, you keep the power and control it.” (157)

The sentiment here is similar to that seen in Lesson 1 and 3.

LESSON 5: THE RICH INVENT MONEY

“Financial intelligence is simply having more options.” (183)

“So why develop your financial genius? Only you can answer that. I can tell you why I have been developing this area of my intelligence. I do it because I want to make money fast. No because I need to, but because I want to. It is a fascinating learning process. I develop my financial IQ because I want to participate in the fastest game and biggest game in the world. And in my own small way, I would like to be part of this unprecedented evolution of humanity, the era where humans work purely with their minds and not with their bodies. Besides, it is where the action is. It is what is happening. It’s hip. It’s scary. And it’s fun.” (185)

“In school we learn that mistakes are bad, and we are punished for making them. Yet if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk.” (201)

I particularly liked the idea of treating the world of finance as a game, because in the end, it really is a game in which you either win or lose. What makes this game fun would be trying to figure out the rules as well as the strategies of how to win. There are so many factors to consider, so many variables to account for. In one part of my mind, I can’t wait to be hooked. In another part, how risk-taking am I really? I guess I need to enter the game first to find out.

LESSON 6: WORK TO LEARN— DON’T WORK FOR MONEY

“The world is filled with talented poor people. All too often, they’re poor or struggle financially or earn less than they are capable of, not because of what they know, but because of what they do not know. They focus on perfecting their skills at building a better hamburger rather than the skills of selling and delivering the hamburger. Maybe McDonald’s does not make the best hamburger, but they are the best at selling and delivering a basic average burger.” (231-232)

Yes, the brain diet is as important as the physical diet. Perhaps what we need is to think in terms of business rather than in terms of technical skill. But at what cost and is such a cost affordable?

Overall, Kiyosaki paints a pretty picture of financial freedom, offering his rationale behind why acquiring income-generating assets is important and why most people fail to do so. It is a desirable and eye-opening image. However, he doesn’t offer much after that. I guess the next steps can be found in one of his next twenty something books in the Rich Dad Poor Dad series.

Regardless, I’d like to thank him for re-igniting my interests in investing. I probably won’t end up flipping houses as he recommends, but perhaps I’ll find my own way to make money work for me.

As always, a few of my other favorite snippets are below:

“The primary difference between a rich person and a poor person is how they manage fear.” (247)

“For most people, the reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich.” (250)

“Wise investors must look at more than ROI. They look at the assets they get for free once they get their money back. That is financial intelligence.” (300)

“That’s how the game works. The game of buying and selling is fun. Keep that in mind. It’s fun and only a game. Make offers. Someone might say yes.” (325)

“I always make offers with escape clauses. In reach estate, I make an offer with language that details “subject-to” contingencies, such as the approval of a business partner. Never specify who the business partner is. Most people don’t know that my partner is my cat. If they accept the offer, and I don’t want to deal, I call home and speak to my cat. I make this ridiculous statement to illustrate how absurdly easy and simple the game is. So many people make things too difficult and take it too seriously.” (326)

“Profits are made in the buying, not in the selling.” (327)