The Most Important Lessons of Robert Kiyosaki's 'Rich Dad, Poor Dad'

‘Rich Dad, Poor Dad’ is about Robert Kiyosaki two dads one his real father (poor dad) and another father of his best friend (rich dad). So the story main character is he himself. In this book we will understand why rich are getting richer, poor are getting poorer and middle class well middle class. This book is story of Robert Kiyosaki’s life because he talks about the two most influential figures in his life his poor dad who is biological father a highly intelligent educated man who has Phd and has a well-paying job but struggled financially throughout his life on the other hand was his rich dad who was his friend’s father and he had only eight grade education but he went one to become one the richest man in Hawaii.

The next plot talk about financial statements because most of people understand the different between income and expense its very straightforward but they do not understand different between assets and liabilities now assets are something that work for you and generate income for you even if you are not working for example cash flow positive real-estate investment that produces $1000 a month income is asset a business that produce income for you is an assets on the other hand labiality is always taking out money from your pocket even when it is staying idle when you are not using it so for example a large house apart from personal use for which you are paying a lot of mortgage everyday but it’s not really putting money in your pocket now that is liability a big luxury car you bought for your personal use again that is liability because it is losing value every day.

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The three key most important lessons we learnt from this book and the first lesson is: what kind of education to get? What we teach most kid when we start off and kind of education to get the poor dad always told Robert go ahead study hard and gets best possible education so in future he can get a best job and believed in conventional education. His poor dad is constantly educate himself but never really learned about money and finances. He was educated intelligent man he had phd but when it came to finances he was ignorant and he doesn’t know how money works on other hand his rich dad an eighth grade passed he always said go get the best possible education so that you can start your own business or buy a business and give other people job. A huge mindset different is that his poor dad was saying go get a education so you can get a job while the rich dad was saying go get best education and be a job provider. So the rich dad believe in a kind of education where he is constantly feeding his about business, finance and there are four key area of financial education that he always emphasize on which were accounting, investing, marketing and the laws that surround finance and money. So the important lesson to understand that instead of focusing our education on the conventional education we need to think about educating financially ourselves with accounting, investing , market law and everything else that goes around to building a financial portfolio to building the business.

The second most important lesson is that what kind of work to do? Let’s say you have gone to college and you graduate from college, what you do next? What kind of work you should do? And here is the key the rich don’t work for money. What does poor and middle class says 'go get degree and get a job'. Their mantra was go work for money rest of life. And that’s what poor and middle class people do. They learn how to works for money and work for others as a employee. They wonder by working this long why they’re not getting rich. The challenge for poor and middle class people is fear and greed. They are fearful of staring their own business they are afraid of taking risk so that’s where the rich differ from poor. The rich dad said the rich don’t work for money, money work for them. So rich dad mantra was the rich work to acquire and improve on their assets and these assets produce income. So rich dad was always acquiring and growing his assets like business, cash flow positive, real estate, and stock. Rich people do their own business, they leverage business structure and taxation to grow more.

The third key lesson the most important lesson is: how to invest/spend money? Let’s say you have your education and you are doing job or your own business how do you spend your money? And the key is to pay yourself. First now let me ask you question: you probably know of people who are making money, but still are broke in the sense of no real tangible assets. What happen? What is the key to these people going broke while some people, who are not, making as much money on them, but they are rich. Well and the key is when do people pay themselves, when are you paying yourself now here. What the poor people do they have income coming in and then as soon as income comes in it goes out into expenses they never put the income into an assets, they never pay themselves. They are ignorant about how money works so the income comes out and goes as expenses. They never get around to paying themselves at all on the on other hand middle class they start with certain amount of income they have spent up and that income on liabilities and the liabilities are just become expenses and money goes out of their expenses column. They have very limited assets or they may have little amount of retirement savings or bank balance. They might also have higher income and also have higher liabilities which in the end keep taking money out of their pockets. So, these people the middle class people are paying themselves lasts and first things to do.