Rich Dad Poor Dad is about Robert's two fathers: Own father(Poor) and his best friend's father(Rich) and how they were financially different where the money used to work for his rich dad and his poor dad had to work for money.
This book contains a story of Robert's two dads’ thought processes and lessons he learned from them in the financial part. It mainly gives examples of two characters: One rich father and one poor father.
1). Rich Father: This man was Robert's best friend's father. Although he was not academically rich, he believed in gaining financial education. He learned how money works and understood how to make money work for common people.
2). Poor Father: This man was Robert’s biological father. He was quite intelligent and very well educated. He studied hard and got good grades. So, he wanted his son to study hard as well and enroll in a well-paying job.
Assets: An item or property owned by a person or company whose net worth increases eventually with time. Example: Real Estate
Liabilities: An item for which someone pays certain money at a time. Example: A car
1). The rich don't work for money but the poor work to serve the rich.
2). One must learn financial management.
3). The rich invest money.
4). Develop the necessary skills to create something valuable.
5). Understanding cash flow is important to overcome the financial struggle.
6). The rich buy assets but the poor buy liabilities (or increase expenses). Thus, most middle classes are stuck with liabilities.
7). Great opportunities are seen with our minds.
8). Education and skills are way more valuable than money.
9). Management of people is a necessary skill needed in business.
10). Being rich is not about taking only, but equally about giving too.
11). Fear and greed are the key points to differentiate between poor and rich.
12). One who stops is the one who works for others.
13). Failure inspires winners but defeats losers.
14). A real estate investment can teach wonders for people seeking financial independence.
1). The emphasis should be given to buy the luxuries at last. First comes the assets undoubtedly.
2). Expenses should be kept low and liabilities should be cut out.
3). Every rich person has lost money in their lives, the one who lost nothing always remains scared to lose anything and becomes a poor lifetime.
4). One should be able to control their emotions in the game of financial success. If one fails to do so, their fears will be their biggest enemy.
5). A team of smart people and like minds should sit together and work. One who is doubtful and scared will never make it to the top.
6). Most people feel that they don't earn enough money from their salaries throughout their lifetime.
7). Risks and putting our whole life at stake is very important in this process.
8). Minding one's own business is very essential to be independent and to remain focused on the end goal.
9). True wealth is measured by how long one can survive in the future without needing to work.
10). Having a corporation includes tax benefits.
Rich Dad, Poor Dad is a book that teaches us the power of being aware of money and how to use that awareness to make money work for us rather than working for money all our lives. Starting from school, we are prepared for jobs. We are told to have a high paying job and live our life on the income generated from that job. However, it is seldom that we find people who teach us the power of money. The book addresses this shallowness and highlights that we should be working to first pay ourselves and not the bills.
When the book mentions making the money work for us, the key idea given behind is to invest the money in assets so that it remains added/multiplied. Most people fail to see the difference between assets and liabilities and therefore buy liabilities (eg. a luxury car) thinking that they are assets. As a result, no matter how much money they make, they end up keeping/saving/investing very little. The liabilities they buy take away all the money from their pocket.
The major takeaway from the book is to not buy luxuries using loans. Such luxuries are liabilities and drain more and more money once bought. It is a financially logical decision to invest available money on assets (eg. real estate). It is very important to be literate about such financial secrets and a wise mentor (like a rich dad) teaches us to be self-disciplined about money and make the right investments.