Rich Dad, Poor Dad: Robert T. Kiyosaki

This book has been listed as the #1 best-selling book in the category of personal finance and it has been on my TBR for so long. And even though I am always skeptical about famous books, this book lives to the fame. This book has changed the way I look at money and personal finance and it really encouraged me to focus on becoming wealthy.

The book has pointed out clearly how the poor or the middle-class people teach their kids that money is evil and one should learn to be happy with whatever we have. And as a middle-class kid, I was also taught the same. This book challenged my thinking and now I am looking forward to reading more books/topics on business and finance to develop my financial knowledge.

Key Idea from the book:

Lesson 1: The rich don’t work for money

• The poor and middle class work for money. The rich have money work for them
• Life pushes all of us around. Some people give up and others fight. A few learn the lesson and move on. They welcome life pushing them around
• Stop blaming others for your problem. If you think others are the problem, then you try to change them. If you think you are the problem, you change yourself, learn something and grow wiser
• Most people play safe in terms of money. It’s not passion but fear directs them
• A job is a short-term solution to a long-term problem. Most people keep doing their job due to either fear or greed

Lesson 2: Why teach financial literacy?

• Money without financial intelligence is money soon gone
• Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets
• Your house or your car is not an asset

Lesson 3: Mind your own business

• Financial struggle is often directly a result of people working all their lives for someone else.
• Keep expenses low, reduce liabilities, and diligently build a base of solid assets
• Once a dollar goes in, never let it come out.
• What can be classified as assets
  • A business that does not require your presence
  • Stocks
  • Bonds
  • Income-generating real estate
  • IOUs
  • Royalties

Lesson 4: The history of taxes and the power of corportions

• Corporations are the biggest secret of the rich
• In reality, the rich is not taxed. It’s the middle class who pays for the poor
• Employee earn and get taxed, and they try to live on what is left. A corporation earns, spends everything it can, and is taxed on anything that is left

Lesson 5: The rich invent money

• Often in the real world, it’s not the smart who get ahead, but the bold. People are not rich because they are terrified of losing. Failure is a part of the process to success
• 2 types of investors:
  1. Buy a packaged investment
  2. Who creates investment
• The second type is more of a professional investor. To become one, you need to develop 3 skills:
  • Find an opportunity that everyone missed
  • Raise money
  • Organize smart people

Lesson 6: Work to Learn – Don’t work for money

• Instead of simply working for money and security, take a second job to learn a second skill
• The more specialized you become, the more trapped and dependent you are on the specialty
• 3 main management skills needed for success:
  1. Management of cash flow
  2. Management of systems
  3. Management of people
• Learn sales and marketing

Lesson 7: Overcoming obstacle

The reason many financially literate people don’t make enough money:

1. Fear:
   • Everyone has a fear of losing money. It’s how you handle it.
   • Win big and lose big. Don’t bury your losses, be inspired by them
2. Cynicism:
   • It’s often our self-doubt or the doubt of the people in our life that keeps us from acting and miss big opportunities
   • Cynics criticize and winners analyze.
3. Laziness:
   • To busy to take care of your health, wealth, and your relationship
   • Cure? A little greed
4. Bad habits:
   • Rich always pay themselves first
5. Arrogance:
   • Use it to hide their ignorance
   • Take help from experts

Lesson 8: Getting started

• Find the reason why you want to get rich
• Make choice to be rich. Invest first in education
• Associate yourself with people with similar mindset
• Master a formula and then learn a new one
• Pay yourself first
• Hire people smarter than you
• Get your initial investment back and quickly
• Use assets to buy luxuries
• Follow successful people
• Give more to receive more