Rich Dad Poor Dad by Robert Kiyosaki – A Must Read For Entrepreneurs

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Tired of reading, then listen.

So about three years ago I stumbled on this awesome book Rich Dad Poor Dad by Robert Kiyosaki that shaped my thought. The book has been a bestseller for over 18 years now, it would be life changing for you if you get a copy for yourself.

This book should come with a warning that ‘this book will make you hate your job!’

Rich Dad Poor Dad is a book that exposes how the rich find ways to make their money work for them, instead of them working for money. Kiyosaki also discusses how ‘financial literacy’ and gaining an understanding of money does not take place in the formal education system; it takes place in the home.

On making money work for you

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The Rich Dad Poor Dad explains that the conventional route for most people is to study hard at school, with the aim of securing a ‘good job’, and then spend a lifetime working hard in order to attain pay-rises. We become dependent on our employers as we build our lives and spend most of our income on consumption and debt (mortgages etc.). The poor and the middle class trade their time for money in this way, they get stuck in the ‘rat race’ because as their incomes rise, so does their consumption (nicer cars, clothes and holidays) and they become more indebted (bigger house, bigger mortgage).

Isn’t that what we all do I hear you ask? No. The rich send their money out into the world and expect it to bring back more money! Obviously there is a knack to this. Kiyosaki states that fundamentally it’s all about understanding a liability and an asset. The difference being defined as an asset is something that generates cash for you. Take property for example. If you invest in a rental property, and the monthly rent is more than the monthly costs, you are ticking over a nice profit. You aren’t trading your time to achieve this monthly income, so this is an income-generating asset. There are plenty of other ways to invest in income generating assets e.g. business investments, stocks… the aim is to build up assets, whilst minimizing liabilities (a liability includes, you might be surprised to hear, your mortgage on the house you live in)

On financial literacy

He argues we must educate ourselves (and in turn educate our children) on financial literacy – he refers to this as ‘mind our own business’. This doesn’t mean that we all start studying accountancy qualifications or quitting our jobs and becoming self-employed. It’s about learning the options and opportunities for managing our money. We need not to be impatient in our journey to riches, but we must learn to build foundations and those foundations will ultimately enable us to have multiple streams of income, without a dependency on our pay cheque. We must invest in ourselves, whether it’s reading books, attending seminars, training courses, memberships to training or professional communities… if it’s true that we ‘are what we learn’ then we need to think about that!

Conclusion

On the whole, the book made me think a lot!!! It made me think about work, money and decisions made in life. It made me realize that I should think more about the long term when it comes to money and investments.

Reading Rich Dad Poor Dad I realized that employment not the only way to generate income.

Perhaps one downside to the book is that there is a heavy focus on real estate investment. These are not necessarily investments that are easy for beginners. Also, whilst there is a lot of general negativity towards traditional employment, we all need to earn our money somewhere in order to make investments in the first place!

Rich Dad Poor Dad isn’t a get rich quick recipe – it’s an excellent book to get you thinking about financial literacy, and a way to challenge your thinking about work and money.

2 COMMENTS

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    Book Review: Rich Dad, Poor Dad (this books irks me)
    RAMIT SETHI

    I decided to start reviewing some books that I read. I’ll do books on personal finance, entrepreneurship, and whatever else I think is cool. (If you have books you like, let me know.) First off…

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    Rich Dad, Poor Dad: What The Rich Teach Their Kids About Money–That The Poor and Middle Class Do Not!

    This book is like the kid you hated in high school, but he let you cheat off his test a couple of times so you kind of like him. I have grudging respect for this book, but every time someone raves about it, I usually just want to punch them in the face.

    Rich Dad, Poor Dad is an absolute juggernaut of a book–it’s been on the bestseller lists for as long as I remember. I re-read this book yesterday. Man, there are some really great points, like how rich people make money work for them and how everyone else works for money. The first chapter is pure magic–read it. One of my favorite quotes is from his Rich Dad:

    Most people never study the subject [money]. They go to work, get their paycheck, balance their checkbooks, and that’s it. On top of that, they wonder why they have money problems. Few realize that it’s their lack of financial education that is the problem.

    He takes a dim view of people who blindly make decisions without stopping to ask themselves why:

    A friend of mine in Hawaii is a great artist. He makes a sizable amount of money. One day his mother’s attorney called to tell him that she had left him $35,000. This is what was left of her estate after the attorney and the government took their shares. Immediately, he saw an opportunity to increase his business by using some of this money to advertise. Two months later, his first four-color, full-page ad appeared in an expensive magazine that targeted the very rich. The ad ran for three months. He received no replies from the ad, and all of his inheritance is now gone. He now wants to sue the magazine for misrepresentation.

    This is a common case of someone who can build a beautiful hamburger, but knows little about business. When I asked him what he learned, his only reply was that “advertising salespeople are crooks.” I then asked if he would be willing to take a course in sales and a course in direct marketing. His reply, “I don’t have the time, and I don’t want to waste my money.”

    The book does a fantastic job teaching how to think about work and money. Its early parts are some of the best I’ve read. But I don’t agree with the book’s focus on real estate, which is far too complicated for beginning investors, and the high-level advice with few actionable recommendations. Many people love this book for teaching them how they they’re supposed to think about money–but if you ask them what they’ve done to get there, in my experience, the people who rave about this book haven’t done much. Unfortunately, Rich Dad, Poor Dad doesn’t have many actionable suggestions. I’d recommend this book as an excellent way to challenge your thinking about work and money, but only if you combine it with other books that make tactical recommendations of financial issues. I’ll cover more books I love and hate later.

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  2. The book does a fantastic job teaching how to think about work and money. Its early parts are some of the best I’ve read. But I don’t agree with the book’s focus on real estate, which is far too complicated for beginning investors, and the high-level advice with few actionable recommendations. Many people love this book for teaching them how they they’re supposed to think about money–but if you ask them what they’ve done to get there, in my experience, the people who rave about this book haven’t done much. Unfortunately, Rich Dad, Poor Dad doesn’t have many actionable suggestions. I’d recommend this book as an excellent way to challenge your thinking about work and money, but only if you combine it with other books that make tactical recommendations of financial issues. I’ll cover more books I love and hate later.

    08058777816

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