This post is a comprehensive summary of all eight of the lessons from Rich Dad Poor Dad, the #1 finance book in the world.
Rich Dad Poor Dad by Robert Kiyosaki is one of the most famous financial books ever published. This book has the capability of changing a person's life.
First off, if you don't have a copy, I highly recommend you get it today. This post is not sponsored. I just genuinely think the book offers a simplistic viewpoint of exactly how rich people become rich so it's extremely interesting and will get your mind thinking in a completely different way.
This post sums up all the lessons from Rich Dad Poor Dad. It's essentially a cliff notes version.
However, given that the points from the book could change the course of your life, I'd highly recommend purchasing the book for yourself to highlight and reference for years to come!! It should become your bible, in a sense! =)
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Intro to Rich Dad Poor Dad
This famous financial book is about a boy who grows up with an educated, but poor father. His best friend's dad, however, is a very wealthy man, with less education.
The book is about the differences in how they see the world.
For example, the poor dad might say “I can't afford that” while the rich dad might say “how can I afford that?”
Think about which person you relate to more and maybe even which person you are now.
The book will get you to think about things on a daily basis and you'll see the world differently.
It dives into a series of lessons, which I've summarized below.
Lesson #1: The Rich Don't Work for Money
The author, Robert Kiyosaki, talks about the fact that money is not taught in school or at home. He insinuates that the way you think about things will determine how successful you are in life.
Mindset is everything.
Changing your mindset to reflect what you actually want to achieve will pay dividends down the line.
The author recommends learning and reading books every single day to exercise your mind, just as one would with physical exercise. In fact, the more you exercise your brain, the stronger it will get.
He discusses how buying assets that deliver cash flow will bring more wealth and success down the road. This makes your money work for you.
If people get smarter about how they spend their money, their assets will do the work for them and they can avoid working for money.
He says “people remain poor because of their lack of financial education”. This is so true.
How many people do you know with luxury vehicles that can't pay their rent on time? I know too many to count.
Let your education be the beginning of your journey. We got this!
Lesson #2: Financial Literacy
This chapter was a long one, but it has so many important points.
The author discusses that it's not about how much money you have, it's about how much money you keep. Money management is the reason people don't get out of the 9-5 rat race.
Open your minds to think about new opportunities and find new ways to make money.
The books mentions that the earlier you learn financial education, the better off you will be.
“Money without financial intelligence is money soon gone.” – Robert Kiyosaki
The book dives into the fact that if you want to be rich, you need to be financially literate. You need to grow your mind by learning. I challenge myself to listen to a podcast each morning and read 10 pages of a self help book per day.
Podcasts I Recommend:
- Her Money
- TED Talks
- Tony Robbins
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Robert says that when the majority of people make more money, they increase their expenses. This results in a never ending rat race.
On the contrary, the book states that rich people acquire assets, while poor people acquire liabilities they think are assets. It's important to learn the difference between the two.
In fact, there's a huge difference in the way money is managed between wealthy people and non wealthy people. The cash flow of a rich person goes from income into assets. The cash flow of the majority of people goes from income into expenses.
To be successful, we need to learn how to manage money and how to make our money work for us.
Lesson #3: Mind Your Own Business
This was one of my favorite lessons from Rich Dad Poor Dad.
This lesson is about how the rich focus on their asset columns while everyone else focuses on their income.
The author talks about owning your own business and how that is the secret of the rich.
He focuses on the fact that you want to buy assets, not liabilities. In fact, you should think of each of your dollars as employees working hard for you.
He discusses a conversation with the founder of McDonalds and how even the founder says he's in the real estate business, not the hamburger business.
Find assets that will make passive income for you so that your money can work for you.
He makes a point of holding off on luxury items until your assets can fully pay for those purchases.
Lesson #4: Corporations and Taxes
This chapter is about how taxes and corporations work.
Most people work January through May just to pay the government. If you think about your tax bracket, that's exactly correct and it's crazy to think about it that way.
He says corporations are the biggest secret of the rich. They understand how taxes work.
He then goes on to say that the rich spend money differently.
Most people work, pay taxes, and then spend.
Business owners, on the other hand, earn, spend and then pay taxes.
My question for you: Are you going to work your way up the corporate ladder or ask “how can I own the ladder?”.
The choice is yours.
Lesson #5: The Rich Invent Money
This chapter is about how the rich invent money with their mind.
The author says it's not the smart that get ahead, it's the bold.
In fact, Robert says that the single most powerful asset we have is our mind and if it's trained well, it can produce enormous wealth.
So do you want to learn financial intelligence or keep working in a 9-5?
Financial Intelligence is made up of:
- accounting
- investing
- understanding markets
- the law.
He says to plant seeds in the asset column to unleash your potential.
Kiyosaki says courage is the difference between leading a normal life or a successful life.
He says money isn't real, but our mind is. If we train our mind well, we will be successful.
My question to you is: Are you training your mind?
Lesson #6: Work to Learn
In this chapter, the author talks about working to learn.
Even if it means working for free, the author states that working for knowledge is more important than working for money.
In fact, the more you learn, the easier things will get in life and the more potential to be successful. If you see opportunities as opportunities, you will succeed.
The same opportunities are handed to everyone, but it's only those that see them as opportunities that achieve success.
The world is filled with “talented poor people” meaning that we need to harness those talents to be successful in life.
Therefore, I challenge you to learn something new every day.
Read 10 pages of a book, listen to a podcast, talk to someone with wisdom or watch a self help youtube video.
Keep growing your mind…and then rinse and repeat tomorrow.
What talents do you have that you want to harness?
Lesson #7: Overcoming Obstacles
This chapter is about overcoming obstacles. This is one of the best lessons from Rich Dad Poor Dad.
He states that the biggest difference between a rich person and a poor person is fear.
I find this to be so true.
Buying properties and starting businesses is risky and can invoke fear in many. It can be very intimidating to even learn.
I know many people that rent their entire lives because it was never a good time to buy a house, the market was too high, etc.
Those are excuses.
If you take the time to research and identify a good investment from a bad investment, it's easy to make financial decisions.
When I bought my first house in my 20s, I knew the market better than my realtor. I researched every single day and I knew exactly what the homes were worth and what they would be worth in the future. I knew the area, the school district, the community, the potential rent in the future, etc.
When I bought the house, I didn't need her. She just processed the paperwork for me. I knew what I was going to offer and in the back of my head, I knew what it was worth at that time. She wanted me to write an offer for $20k more than I did and she was even embarrassed of my offer.
You see, I knew the house was worth $60k more than my offer, but I wanted the best deal, and I knew how to sell it to the seller to get the price I wanted. I put together a business case as to why it only warranted the amount I was offering.
The seller took the deal and we were in escrow within an hour of it being on the market. (I knew I had to jump on it fast.) If I had listened to the realtor, I would have paid $20k more.
That's where financial and real estate education paid off. I knew the market very well. The decision was easy for me because I had the financial education (real estate education) behind it to make a good decision.
That's just a small example.
However, wealthy people take risks. They are financial educated and know when they see a good investment.
The author mentions that failure inspires winners while failure defeats losers. This is so true.
When you fail, do you get back up and try something else or do you never try again?
Take that as motivation. Your mistakes are opportunities to learn.
Lesson #8: How to Harness Your Power
The final lesson of the book wraps up all the things you need to do to harness your power.
Opportunities are endless and money making potential is everywhere.
It is only those that harness their power to achieve greatness that actually do so!
The author says that we need to train our minds to see investments and opportunities.
He says that there are 10 steps to harnessing your power:
- Find a greater spirit- Mine is God. He is everything to me and my family. I honestly don't know what we'd do without God in our life.
- Make daily choices- I choose to learn, grow, and strive for success every day.
- Choose friends carefully- I truly believe you become who you hang around. A few years ago, I had to make this decision and eliminate toxic friendships from my life that weren't helping me grow. It was such a great decision and opened my life up to new friendships that help me grow!
- Master something- Find something you're great at and become even greater at it!
- Pay yourself first- Put money into your bank account or your investments before you pay your bills. I know this sounds crazy, but the author's reasoning makes sense. If you don't have enough, you'll either bring down your expenses or you'll find a way to make more money.
- Pay your accountants well- I liked this one. As someone who is frugal, I tend to look for opportunities to save money. However, this advice was great. Paying a lot for a good lawyer or accountant will pay dividends down the line as you'll learn from them and they'll help you become rich.
- Be an indian giver
- Use assets to buy luxuries- This is what the entire book is about and definitely is a true eye opener.
- Choose Heros- He talks about heros like Warren Buffett, Bill Gates, etc. These should be your heros. I have many. I love Warren Buffett, Gary Vee, Tony Robbins, and many real estate experts.
- Give- I whole heartedly believe you get back what you give. I tithe to my church every month and fundraise every year for St Jude and the Leukemia and Lymphoma Society. However, I don't do it to get anything back. Instead, I do it because I can and because I believe in giving. The blessings have been unbelievable.
Summary of Lessons from Rich Dad Poor Dad
That wraps up our book lessons! What did you think of the book?
I love this book. It's like my bible. I think it can relate to so many aspects of life and it truly helps your mind think differently.
Did you enjoy our women's book club? Any thoughts on books you want to do next?
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