Growing up, most of us had one father figure, but in Robert Kiyosaki’s case, the author of Rich Dad Poor Dad, he had two. The rich dad, the father of his best friend, Mike and his poor dad, his own father. The book talks about the different and contrasting viewpoints of the two dads regarding money and wealth creation.
The book conveys a parable-like story and gives us the contrasting views of the two dads in Kiyosaki’s life. The book is not perfect as it has its flaws, but it is a good starting book for beginners trying to educate themselves in financial literacy. Let’s delve in and discover why Rich Dad Poor Dad is so popular.
The book has 6 main lessons:
- The Rich Don’t Work for Money
- Why Teach Financial Literacy?
- Mind Your Own Business
- The History of Taxes and Power of Corporations
- The Rich Invent Money
- Work to Learn – Don’t Work for Money
The Rich Don’t Work for Money
The poor dad worked for the government and put emphasis on studying hard and getting good grades, while the rich dad owned businesses. The poor dad tells Robert to study hard and get good grades so he can find a good job in a big company. The rich dad tells Robert to study to get money and learn how the real-world works. While the rich works hard for money, they work to learn things. Those things can be done over and over again to earn money.
People also equate wealth with material things. They define rich people as having huge houses, expensive luxury cars, and luxury designer clothing. The rich dad does not put emphasis on having those, he drives a beat down car, and lives in a modest house. What the rich dad values is his money in the bank. He believes that wealth is not just for show, but what matters is how much he really has.
Poor dad, while highly educated and works for the government still struggles financially. He pays his bills last while the rich dad pays the bills first.
Why Teach Financial Literacy?
The term asset is something that you own that has value, such as your home. In the book, the rich dad teaches Robert that an asset puts money in your pocket, and a liability takes money out of your pocket. He is saying that your house is not an asset, but a liability. The rich dad redefines assets as something that generates passive income such as rental property or intellectual property.
The book also makes a point that while schools teach you to do well academically, schools do not teach you to be financially literate.
A person can be highly educated, professionally successful, and financially illiterate. Robert Kiyosaki
Mike’s dad, the rich dad, was not a college graduate, he did not even graduate from high school, he left school in the 8th grade.
Mike’s dad was not book smart, but he was financially educated and successful as a result. Robert Kiyosaki
The main point of this lesson is to minimize your liabilities and expenses while increasing your income generating assets.
Mind Your Own Business
The current educational system focuses on preparing today’s youth to get good jobs by developing scholastic skills. That is not the idea the book wants you to have. Most people confuse their profession with their business. The book is teaching you that if you want to be financially successful, you have your own business, and not be an employee for the rest of your life. The chapter is focused on educating the reader to spend their spare time to invest in income generating assets, instead of just spending their paychecks. Financially successful people pay off their debts and start investing to generate revenue.
The History of Taxes and the Power of Corporations
If you’ve heard the story of Robin Hood and his Merry Men, then you would know how he stole from the rich to give to the poor. This idea does not sit well with the rich dad as he does not see Robin Hood as a hero, but he sees him as a crook. The idea of Robin Hood is what the government used to implement taxes, take from the rich and help the poor. In time, the government got greedy and taxed even the lower-income individuals. Robert and Mike were taught by the rich dad about corporations. Corporations have a lower income-tax rate than an individual. Expenses could also be paid by a corporation with pre-tax dollars. The chapter also talks about tax delays on real estate.
Robert also elaborated on how he used the lessons from the rich dad during his working days for Xerox. He worked as a salesman and created his corporation which invested in real estate during the real estate boom in Hawaii.
Robert sees that financial IQ is made up of knowledge from four areas of expertise:
– Understanding markets
– The law
The Rich Invent Money
As young boys, Mike and I were constantly told by my rich dad that “money is not real.” Rich dad occasionally reminded us how close we came to the secret of money on that first day we got together and began “making money” out of plaster of paris. “The poor and middle-class work for money,” he would say. “The rich make money. The more real you think money is, the harder you will work for it. If you can grasp the idea that money is not real, you will grow richer faster.
That excerpt from the book embodies the idea that the author wants the readers to think. The single most powerful asset that people have is their mind. If the mind is trained well, it can create massive wealth instantaneously. An untrained mind can also create extreme poverty that can crush a family for generations. The author highly suggests investing in our financial intelligence to develop our most powerful asset, our brains.
Robert shared the story of how he made $40,000 in 5 hours, because he was able to use his knowledge about investing. Even though the story is hard to believe, the basic idea is to invest at the right time.
Work to Learn – Don’t work for Money
Kiyosaki wants us to keep learning. Work in different fields to gain experience in other areas of business such as accounting, sales and even the military. If we just work for money, for job security, we would not be financially successful as we are bound to fear, fear of losing job security.
The poor dad wanted Robert to specialize to be paid more, but Robert saw that being more specialized people become, the more they are trapped and dependent on that specialty.
The importance of sales and marketing was also emphasized in this chapter.
Robert ends the chapter with this quote:
In conclusion, I became both dads. One part of me is a hard-core capitalist who loves the game of money making money. The other part is a socially responsible teacher who is deeply concerned with this ever widening gap between the haves and have-nots. I personally hold the archaic educational system primarily responsible for this growing gap.
This section in the book discusses how to apply these lessons in your life and provides personal productivity tips. The chapter teaches the reader how to overcome obstacles such as fear, cynicism, laziness and arrogance. Another chapter is dedicated to getting started by giving personal productivity tips using the rule of attraction ideas. Another chapter with the emphasis on reading books and taking classes to educate one’s self.
The Book’s Popularity
The book achieved great success because it gave the readers an inside look to the mind of a financially successful individual. The different and contrasting ideas of the rich dad and poor dad gave the readers an idea on how to correct their way of thinking to achieve success financially.
Thanks for reading my post, Why Is Rich Dad Poor Dad So Popular? I hope you found it useful.
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