RICH DAD, POOR DAD (By Robert Kiyosaki)

Rich Dad, Poor Dad is a story about how Kiyosaki grew up learning life’s lessons from his real dad (the poor dad), and his friend, Michael’s dad (the rich dad). Poor dad was a PHD holder and the Head of the Educational Department in a teaching institution drawing a good pay, but retired with little money as he did not know how to make his money grow. Rich dad on the other hand dropped out in the 8th grade but managed to amass a fortune through buying businesses and investing.

The book is not a step-by-step guide to acquiring wealth. If you are hoping to become rich by applying these ideas, forget it. Read another. There are plenty to choose from in the market. It is more of a motivational book, one that sets out to change your mindset and your attitude. For example one of the lessons of the story is how ‘assets’ and ‘liabilities’ are viewed. An asset is something that puts money in your pocket, a liability is something that takes money out of your pocket. Unlike what most people think, Kiyosaki asserts that buying a house is a liability because it is not earning money for you. On the other hand, buying a business is an asset because it can make money for you. A dollar invested is a dollar earned. If it sets you thinking about how you have managed your money or how you are going to manage your money, then it has done a good job.

These are some of the lessons that can be gleaned from the book :

1. The poor (P) and middle class (M) work for money, the rich have money working for them.

2. The rich buy assets, the (P) and (M) acquire liabilities. What the (P) and the (M) think of as assets are liabilities: buying a house, buying a new car, new furnishing for the house, etc.

3. The rich get richer as they make their money grow and work for them while the P and the M continue to work for more money to pay off their liabilities.

4. Rich people explore opportunities and take calculated risks, the P and the M hide behind the security of their pay checks that blunt their desire ability to strike out on their own..

5. People who want to succeed surround themselves with successful people.

6. Wealth is measured by net worth, not by income. As Kiyosaki says, if you stop working today, how long can you survive? Your assets will continue to support you, your liabilities will kill you.

7. You can never have too much money.

8. Always make sure that your asset is more than your liabilities.

9. A house is not an asset, it is a liability. It does not generate wealth. Instead it eats into your income. Don’t be “house rich cash poor”.

10. Generating wealth is like planting a tree. Once its roots are firmly dug in, it grows by itself and provides you with shade.

11. A true luxury is one that you buy from the earnings of your assets, not from your credit card.

12. It is not how much you make that is important, but what you save and invest.

13. He who has the financial muscles makes the rules.

14. If you know how money works, you make money work for you, but if you don’t know how money works, you spend the rest of your lives working for money. If you fail, don’t blame others for your failures.