1 Aug 2020

Rich Dad Poor Dad summary

Rich Dad Poor Dad summary

Rich Dad Poor Dad summary

Rich Dad Poor Dad summary : Rich Dad Poor Dad is a book about finance, investing and state of mind. The book Rich Dad Poor Dad is written by Robert T. Kiyosaki. Here in this post we'll discuss on the summary of Rich Dad Poor Dad.

Why the rich are rich, the poor are poor and the middle class well middle class as explained by Robert T Kiyosaki in his book Rich Dad Poor Dad.


Summary of Rich Dad Poor Dad

The book "Rich Dad Poor Dad" is the story of Robert Kiyosaki's life in some ways, because he talks about the two most influential figures in his life. His poor dad, who is his biological father a highly intelligent educated man who has a PhD and has a well-paying job. But he struggled financially throughout his life.




On the other hand was his rich dad who was his friend's father and he had only eighth grade education but he went on to become one of the richest men in Hawaii.

let's try to understand how did these two dads. How did these two guys do, what they did ? And here in this post we'll discuss the three most important lessons learned from the book "Rich Dad Poor Dad".

Before we get into that let's talk a little bit about financial statements. because most people don't understand the difference between income and expense.

It's very straightforward, but they do not understand the difference between assets and liabilities.

What are assets ? 

Assets are something that works for you and generate income for you even when you are not working.

for example a cash flow positive real estate investment. If you buy a piece of land later that produces income. Or you buy a house and to-let it, it produces income. A business that produces income for you is an asset.

Rich Dad Poor Dad summary
Assets

What is liability ? 

In simple word liability is always taking money out of your pocket even when it is sitting idle when you're not using it.

for example a large house apart for personal use for which you're paying a lot of mortgage every day but it's not really putting any money in your pocket now that is a liability, a big luxury car you bought for your personal use again that's liability. it's losing value every day.

So now that we understand what assets and liabilities are.


Rich Dad Poor Dad important lessons

Let's understand the three most important lessons that we get learn from this book Rich Dad Poor Dad. 

The first lesson is what we teach most kids when we start off what kind of education to get. And the poor dad always told Robert well go ahead and get the best possible education so that you can get a great job.


He believed in conventional education his Poor Dad was constantly educating himself, teacher himself but he never really learned about money and finances he was an educated intelligent man. He had a PhD but he was ignorant when it came to finances and how money worked.

On the other hand his rich dad who had an eighth grade education, he always said go and get the best possible education. So that you can start your own business or buy a business and give other people jobs.

A huge difference in mindset, his Poor Dad was saying go get a job, go get an education so you can get a job. But rich dad was saying go get the best education, so you can start a business or buy a business and give other people jobs.

So his rich dad believed in the kind of education where he was constantly feeding his mind about business about finances.

And there were four key areas of financial education that he always emphasized on which were accounting investing markets and the laws that surround financing and money.

So really important lesson to understand that instead of focusing our education, on the conventional education we need to think about educating ourselves financially educating ourselves with accounting investing markets law and everything else that goes around to building a financial portfolio to building a business.

The second lesson and one of the most important lessons is once let's say you've gone to college and you graduate from college, what do you do next what kind of work should you do ?

here's the key the rich don't work for money, what do poor and middle-class people do. This is what his poor dad said go get a degree and get a job. His mantra was go work for money for the rest of your life. That's what poor and middle-class people do.

They learn how to work for money, they work for others. All their lights the first person they work for is their employer then they work for the government because the government takes taxes.

As soon as they receive an income and then they work for the bank because they buy a big house, they buy a big car. So they're paying mortgage they're paying interest / EMIs to the bank. Only after they have paid, they have worked for the employer and the government and the bank.

Rich Dad Poor Dad summary
Liabilities

Do they really start to work for themselves and then they wonder why they're not rich.

The for poor and middle-class people it's fear and greed that run their lives. Because they have this fear of not having enough money, so they keep on working hard on their job and keep on trying to make more and more money.

And then they have this greed on the other hand of the next paycheck of a higher paycheck so they're constantly stuck between fear and greed that's what runs their lives they're fearful of starting their own business their own venture.



That's where the rich differ from poor, Rich Dad said the rich don't work for money, money works for us. His rich dad's mantra was the rich worked to acquire and improve on their assets. And these assets produce income so rich dad was always acquiring and growing his assets like businesses and cashflow, positive real estate and stock and all that stuff and that's what rich people do.

Rich people own their businesses and then they leverage business structures corporation structures and taxation to their advantage.

The third lesson, really important lesson is once let's say you have your education and you are doing something you have a job or a business, how do you invest or spend your money ?

And the really important key is to pay yourself first. Rich people pay themselves first. Instead of spend their money on liabilities or luxuries, they opt to invest on assest and that generates income for them.

But what the poor people do, they have income coming in and then as soon as income comes in it goes out into expenses they never put the income into an asset they never pay themselves.

They're ignorant about how money works, so the income comes in and goes out as an expense. They never get around to paying themselves at all.

On the other hand the middle class they start with a certain amount of income. They spend up that income on liabilities. and the liabilities are just become expenses. The money goes out of their expense column and they have very limited assets.

They maybe have retirement savings or banks savings or some sort of housing but that's about it. They might have higher-income but then they also have higher liabilities. Which in the end keep taking money out of their pockets so these people the middle-class people are paying themselves last.

The first thing to do is pay their liabilities and expenses and then they pay themselves then they acquire limited assets. They almost get no income from these assets because these assets are very limited or they are in retirement savings or stuff like that.

Rich Dad Poor Dad summary
Pocket empty

However the rich pay themselves first, what that means is that as soon as any income comes in the first invest a portion of it into their assets. Their money is employed right way the remainder of their income is then used for expenses and liabilities.

While the poor and the middle class prioritize expenses and liabilities the rich prioritize assets. The rich ensure that their expenses are much lower than their income and that their liabilities are much lower than their assets and paying themselves first by investing in assets is a big step in that direction.


Rich Dad Poor Dad key lessons


  • Learn to Listen 
  • Read more 
  • Work smart 
  • Pay yourself first 
  • Reduce expanses 
  • Avoid Liabilities 
  • Control your emotions 
  • Generate valuable assets 
  • Invest your income 
  • Expand your knowledge 
  • Expand your source of income 
  • Learn from your failure 
  • Don not work only for money 
  • Befriend smarter people


Rich Dad Poor Dad review [ My opinion on Rich Dad Poor Dad ]

This book is really very interesting and there are a lot of tips that you can find in this book. If you read this book, then you can use these tips to help your personal finances both in you know how to buy assets that are going to develop long - term income for you and structuring the way you do your business setting up. My opinion Rich Dad Poor Dad is worth to read, I would suggest you to buy and read it.

Thankyou very much for reading, 



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