Active vs Passive Income

A financially literate person should be able to answer these questions:

• How much are they earning after tax and after saving for retirement? Is it fair considering their education level and job title?
• Are they earning above sector median rates, below, or on par?
• How much goes to their retirement accounts?
• How much goes into their investments?
• What are the rates of return on their investments when benchmarked against an index like the S&P 500?
• What are their financial plans?
• Can they read a company's financial statement?
• Do they understand their tax benefits?
• Do they understand their retirement requirements?
• Do they have a plan for retiring?

According to John T. Reed the famous book is filled with bad advice:

Dangerous advice

• "If you're gonna go broke, go broke big"
• Convinces people that college is for suckers

Law-breaking advice

• Advocates committing a felony: have rich friends for trading stock based on non-public inside information, he says "That's what friends are for."
• Recommends tax fraud by deducting vacations and health club dues
• Brags about using a partner weasel clause in which his cat is his partner

Many critics pointed out that Kiyosaki is selling a cult, not financial advice.

He is accused of tapping into the fantasies of the masses & being short on specifics, both attributes of religious cults.

The “Poor dad”, a stereotype for the regular salary man, believes that one should work for money as an employee at a stable job. This mentality can trap a person into working a job they don’t love, but is willing to stick with because they have to pay the bills.

The "Rich dad", an entrepreneur, thinks wealth comes from experience-based learning (learn on the job, by becoming an entrepreneur) and multiple income streams.

When the “poor dad” encourages working your way up the ladder, “rich dad” laughs and says, “Why not own the ladder?”

According to Kiyosaki in his book "Poor Dad, Rich Dad", rich people do certain things poor people don't:

1. The rich buy assets (things that generate revenue like bonds), not liabilities (things that cost money like rent).
2. The rich become financial literate through experience, not by studying hard at fancy schools.
3. The rich learn to sell early on.
4. The rich manage fear better. They take more risks and don't play it safe.

Get to working on improving your finances today, not tomorrow. Reading the steps and thinking you’re capable of doing it but postponing it is just an excuse, an unprofitable one.

Talking about your financial goals, and scheduling time once a month to go over your finances together can prevent money from affecting your relationship.

R. Kiyosaki's "Rich dad, Poor Dad" reads like a novel. The most shocking message of the book:

Don’t focus on your job or career. Think primarily about building personal wealth.

“With low interest rates, and an uncertain stock market, the old adages of saving and investing for the long term make no sense.”

It is what Kiyosaki recommends in his famous book, but saving and investing for the long term are exactly what most experts say you should do.