Rich Dad, Poor Dad Summary

Understand the difference between an asset and a liability; and grow your income-generating assets' column.

“If you find you have dug yourself into a hole... stop digging.”

Wealth measures how much money your money is making and, therefore, your financial survivability.

10 Lessons From RICH DAD, POOR DAD.

PAY YOURSELF FIRST

LEARN TO LISTEN

Fear and greed can drive financially ignorant people to make irrational decisions.

If you have money, you are likely to focus on all the new things it can buy (greed). If you don't have it, you worry you might never have enough (fear).

People who are ignorant about how to manage their finances are especially prone to letting these emotions drive their decision-making.

By building up your financial knowledge about things like investments, risk and debt, you can counter these emotions, and place you in a better position to make rational decisions.

Despite being vital for both personal and societal prosperity, we receive no training in financial intelligence.

Being rich is not about being talented or capable. The world is full of such people, and most of them are poor. What they lack, is financial intelligence, an aptitude for financial subjects like investing, accounting etc.

Sadly, we aren't raised with this intelligence. Our schooling doesn't cover financial intelligence amongst the myriad of concepts we learn.

Since society has left us poorly equipped in terms of financial knowledge, it is up to the individual to educate himself.

Financial self-education and a realistic appraisal of finances are the building blocks of growing wealthy.

Earlier you start at building your personal wealth, the better. If you begin at 20, you're far more likely to become rich, than at 30.

Set financial goals based on a realistic appraisal of finances. A good look at the income, and expenses helps you plan your future accordingly. Coupled with financial education, there's a good change you'll become wealthy one day.

1. Theory One

Money is the cause of all sufferings

2. Theory Two

Lack of money is the cause of all sufferings.

Assets

The things which increase your money.

Liabilities

The things which reduce your money.

Poor

People whose income gets spend on basic expenditure.

Middle class

People whose income gets spend on luxury things and unnecessary shopping.

Real rich

People whose income does not get spend, but they invest a good part of their income on money generating assets.

Understand that assets put money in your pocket, while liabilities take money out. Invest in assets like stocks, real estate, or businesses that generate income, rather than liabilities like cars or consumer goods that depreciate in value.

Look for investments that provide ongoing cash flow, such as rental properties, dividend-paying stocks, or royalties from intellectual property. This way, your money can work for you even when you’re not actively working.

Poor Dad values traditional education, job security, and working for a steady paycheck. In contrast, Rich Dad focuses on financial education, entrepreneurship, and building wealth through assets, rather than relying on earned income.

Financial literacy is crucial for building wealth. It’s not about how much money you make but how well you manage it. Understanding how money works, how to invest, and how to build and protect wealth is essential.

1. The Rich Don’t Work For Money
2. Why Teach Financial Literacy
3. Mind Your Own Business
4. Taxes And Cooperation
5. The Rich Invent Money
6. Work To Learn , Not For Money

The Art of Habits (Its Free)

If you wanna know the key points from the book, the following ideas are for you

The fear is the main cause of working for money. Rich people make money work for them. Job is a short term solution to a long term problem. Emotions should not control your thinking. Money is illusion. Money is not real.

It’s how much money you keep not how much you make. You need to be a financially literate. Master financial literature. Accounting is very important even though it’s boring. Account analysis is an important skill. Understanding the difference between asset and liability is crucial. Do know the difference! Keep it super simple. Buy an asset not a liability. You have to understand the numbers. Rich acquire assets. Asset is what puts money to your pocket. In financial reporting the story is important. Cash flow tells the story how the money is spending.

(Continued in next idea..)

"Rich Dad, Poor Dad" is a concept that highlights the differences in mindset and financial philosophy between two father figures. The term refers to a situation where an individual has two father figures with different approaches to money and wealth-building. The "rich dad" is typically someone who has achieved financial freedom and has a mindset focused on asset-building, investing, and entrepreneurship. The "poor dad," on the other hand, may be someone who has a more traditional view of money and focuses on job security and the pursuit of higher education.

It is often used to illustrate the importance of financial education and the need to develop a mindset that focuses on building assets and generating passive income. It emphasizes that traditional education does not necessarily lead to financial intelligence/success and encourages individuals to seek knowledge & practical experience.

It also highlights the importance of taking control of one's finances and not relying on others. It encourages individuals to think like entrepreneurs & view money not just as a means of survival but as a tool for creating wealth and positively impacting the world.

The Lessons are a series of teachings related to personal finance and wealth-building that emphasize the importance of developing a strong financial mindset and taking control of one's financial future. The Lessons are designed to challenge traditional beliefs and assumptions about money and to provide practical advice and strategies for building wealth.

Kiyosaki shares the contrasting financial philosophies of his two father figures: his own dad (Poor Dad), who followed traditional advice of getting a stable job and saving money, and his friend's dad (Rich Dad), a self-made millionaire who emphasized financial education and investment.

Unlike the traditional education system, which often neglects financial literacy, Rich Dad emphasizes the importance of acquiring knowledge about money, investing, and entrepreneurship.

Kiyosaki introduces the concept of assets and liabilities, emphasizing the significance of building assets (such as real estate, stocks, and businesses) that generate income, rather than accumulating liabilities (such as consumer debt and luxury items).