So I've finally finished Robert Kiyasoki's timeless financial book, Rich Dad, Poor Dad, and it was an amazing read.
The book's main idea is that rich people do certain things and poor and middle-class people do other things. And these things lead poor and middle-class people to be stuck in something called "the rat race." The rat race, according to this book, is unhappily living from paycheck to paycheck and never putting any or enough money away towards savings or retirement. The book makes references to becoming rich and wealthy but Kiyosaki says that being rich and wealthy is simply being able to live comfortably no matter how much you make.
Kiyosaki really hammers home that the only way out of the rat race is to learn more about how to manage your finances. He refers to this principle as financial literacy or financial intelligence. The book in essence a summary of the advice that Robert received from his best friend's business-owning father, the titular Rich Dad, and it juxtaposes that wisdom with the advice he received from his own father, the titular Poor Dad.
Main Ideas
So there are some recurring themes and key concepts that Robert espouses throughout the book. The biggest one is the importance of financial education. The book heavily touts the importance of learning to understand accounting, how to read your income and expenses, knowing how to sell yourself, and figuring out how and when to spend your money. In fact, Robert goes so far as to say the one skill that's keeping a lot of very talented people from escaping the rat race is financial intelligence.
Another key concept is the difference between an asset and a liability. Robert distills the definition of these two things down to assets being things that put money into your pocket and liabilities being things that take money out of your pocket.
Rich has a very different definition in this book. Rich means generating enough passive income (or income from your assets) to cover all of your expenses. The way to being "rich" is to gather passive income and to keep reinvesting that income into assets that generate it until you can live off it. In fact, Kiyosaki provides some visual aids to illustrate how poor people middle-class people and rich people manage their money.
Robert also talks about the cash flow of the different kinds of earners. These earners are the employee, the self-employed, the business owner, and the investor. In this book, Robert says the only way to get rich is to be a business owner or an investor since people who are self-employed or employees are reliant upon getting their income from actions that others take.
Key Takeaways
There are some things to be taken away from this book. The biggest one for me is to embrace financial education and dedicate yourself to learning about managing money. This entails learning all that you can about how to balance your bank account and coming to understand what you do with your money after you get it. This a book that espouses that knowledge is the greatest form of power and that more you learn the more you can understand. There's a point in the book where Robert says that rich dad told him that what he doesn't know loses him money, and what he does know gains him money. So if he doesn't know something then it shouldn't have any impact on his money.
As mentioned a little bit earlier, Robert really emphasized that the way to becoming wealthy is through acquiring assets that generate passive income. His strategy is to use income from your job to build up the number of assets you have and then to take the surplus money from these assets and then reinvest them into more assets and so on until you can live off your passive income.
We don't have to discuss the realism of the viability of such a financial strategy, but it is indeed simplistic and logically sound.
Robert's Anecdotes
Of course, these lessons don't get imparted just through long bullet-pointed lists and diatribes. There are a number of anecdotes and tales throughout the book that serve to hammer the main concepts home.
Firstly, Robert tells the tale of how he and his friend Mike begged Mike's father to teach them how to be rich like him. And Mike's father's response was to make them work for him at his business for free. This went on for weeks until they both finally got fed up and demanded an explanation. He claimed he wanted to teach them the lesson that if they never spoke up and demanded more out of life, then they'd never get rich.
Robert also talks about the richest men in the world in the 1920s (Charles Schwab, Albert Fall, Samuel Insull, Howard Hopson, Ivar Kreuger, Leon Fraser, Richard Whitney, Arthur Cotton Moore, and Jesse Livermore ) and how they had meetings in the mid-twenties. In just a decade, each of them would either go to prison, commit suicide, go insane, or lose all of their money due to the Great Depression. He talks about this to teach the emphasis on being adaptable under different circumstances, environments, and economies. If the richest men in the world were left broken, insane, and penniless by a sudden uprooting of the economy, then it would serve everyone to be able to prepare for and adapt to all kinds of circumstances in this rapidly changing world.
Another standout tale was the time Robert interviewed Zig Ziglar (who curiously became a notorious financial guru" and motivational speaker) back when he worked for a newspaper. Ziglar wanted to know how he could be a successful author like him. Robert told him that he was a "best-selling" author and not a "best-writing" author and that he needed to learn how to market himself. Ziglar felt like he was belittling him and stormed out of the interview.
However, SOMETHING tells me the book isn't exactly giving all the full details of that story...
Another standout tale is how Robert titled his first book "If You Want to Be Rich and Happy, Then Don't Go To School" because he knew he would get media coverage off the controversial title. His family and friends begged him not to name the book this, but Robert claimed that the inflammatory title would help it sell. And it did.
Robert Kiyosaki: Clickbaiting before it was cool...
In Rich Dad, Poor Dad, Robert Kiyosaki outlines his strategy for becoming rich and wealthy using the timeless ideas and information that he got from his childhood mentor. He emphasizes the importance of learning all that you can, investing in financial education, never succumbing to fear, and building up your asset column with passive income.
But this post is called "My Thoughts on Rich Dad, Poor Dad." This was some of the best financial advise I've ever been given. It eerily coincides with damn near all of the advice that I've been given by my own father. And I know for certain that he hasn't read this book.
I love that the book emphasizes to always give before anything else and to distinguish between emotional and logical thinking.
