Rich Dad Poor Dad

By Robert Kiyosaki

Date: 14 October, 2019

Just the Highlights in : 10 Minutes

Buy the book Here

Summary and My Thoughts

This was a fairly controversial read, similar to Be Obsessed or Be Average by Grant Cardone, similarly both books were heavily recommended by people within the financial independence community (with Rich Dad, Poor Dad being the more widely read and recommended example). Both books are written by extremely controversial authors. Some of the more controversial points within the book is how he often frames the poor and middle-class, the educational system, and his opinion on taxation. Robert Kiyosaki has also been criticized for his extremely risky real estate investing strategies, and costly seminars, courses, and speaking appearances but I can’t speak toward those endeavors. However despite these criticisms, many successful real estate investors and other financial independence figureheads often draw upon this book as an inspiration for their beginnings; so I decided to give it a charitable read.

The book follows a somewhat parabolic story involving two individuals who may actually simply be archetypes in a fable woven by Kiyosaki to serve as vehicles for his contrasting perspectives. The rich dad is an entrepreneurial capitalist who teaches the importance of wisely investing money in income producing assets such as businesses and real estate whereas poor dad (who serves as the biological father of the author) is the extremely well-educated professional whose income is squandered on liabilities, resents the wealthy, and encourages dependence on the government and professional advancement rather than entrepreneur-ship. There are two main points that most people take away from this book when they revisit it in their head: the concept of buying assets and removing liabilities and instead of saying “I can’t afford it”, ask “How can I afford it?” The first concept is introduced early in the book when the author discussed the financial habits of members of each social class: lower, middle, upper. Where wealthy, upper-class, individuals focus on delayed gratification by paying themselves first and then investing that money in assets that earn income themselves; whereas middle-class individuals spend money on liabilities which add to their expenses, and lower-class individuals simply don’t produce enough income to purchase assets or liabilities and all of their income simply goes toward paying off their expenses. The rest of the book describes the idea of developing one’s financial intelligence to aid in making wise and fruitful investing decisions.

I can’t speak for the rest of Robert Kiyosaki’s catalog of works; however this was a short and interesting read and it’s appeal is understanding.


    This chapter introduces the archetypes revisited throughout the book. The “Poor Dad”, a well-educated but under compensated individual who viewed money as the root of all evil and often remarked that when encountering a potentially expensive endeavor that he “can’t afford it”. Contrasted with the “Poor Dad” is the “Rich Dad”, despite not as well-educated as the “Poor Dad”, the “Rich Dad” has a much better understanding of financial literacy and does not view money in such a negative fashion. When faced with a similar challenge as the “Poor Dad”, the “Rich Dad” instead asks “How can I afford it.” to spark the initial mental exercise of creatively solving the challenge. The “Poor Dad” believed in heavy taxation and the government’s responsibility to provide whereas the “Rich Dad” had a much more entrepreneurial spirit. According to the author, his biological dad is the “Poor Dad” whereas his friend’s dad is the “Rich Dad”. This chapter also stresses the importance and value of a financial education over simply accumulating more wealth.

Chapter One: Lesson 1: The Rich Don’t Work For Money

    The chapter begins with a short personal story of the author, who, deciding that he wants to make more money, partners up with a friend and literally starts making money by creating a small counterfeit operation without realizing it. Upon their dismay, they decide to go to his friend’s dad, the “Rich Dad”, and ask how to actually make more money. The “Rich Dad” who has multiple business interests, employ the two young boys at one of his stores for an incredibly low wage by promising to teach them a valuable lesson. After working the small job for a bit and learning nothing, the author confronts the “Rich Dad” about the incredible low pay and lack of promised lessons taught. It is at this point that the “Rich Dad” reveals that the low paying job was part of a lesson to teach the inadequacy of working for money. “Rich Dad” details that people’s lives are controlled by fear, such as the fear of having no money, and greed which is responsible for creating this grinding, rat race, work for money mentality. Instead of falling into this trap of greed and neediness, the “Rich” discover opportunities to create wealth generators such as businesses; the chapter concludes with the author recognizing a business opportunity by creating a “comic book” library from discarded comic books retrieved from his original low-paying job.

Chapter Two: Lesson 2: Why Teach Financial Literacy

    It’s not strictly about how much money you make, it’s about how much money you keep. How much money you keep is the result of financial intelligence and financial intelligence is the result of teaching financial literacy. This chapter introduces one of the most often repeated concepts attributed this book, “Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.” The first and only rule described in this chapter is “You must know the difference between an asset and a liability, and buy assets.”.  An asset puts money in your pocket whereas a liability takes money out of your pocket. Using two entities, an income statement that describes “income” and “expenses” and a balance sheet which describes “assets” and “liabilities”, the author introduces various cash flow patterns. The cash flow pattern of a “poor person” is where cash flow from their job simply goes through their expenses. The cash flow pattern of a middle class person is where their income goes to purchase liabilities which add to their expenses. The cash flow pattern of a rich person goes to purchase assets which produce more income to handle expenses. The author argues that the “Rich Dad” treated his primary home as a liability whereas the “Poor Dad” viewed his primary home as an asset. The key is to reduce expenses and at the same time, increase your assets. Any excess cash flow should go to purchase more assets. The middle class individual often increases their expenses with their salary as they become more captivated by the rat race of chasing a larger salary and then they use whatever excess cash flow they may have to purchase liabilities (such as their primary house) and treat it as if it’s actually an asset.

Chapter Three: Lesson 3: Mind Your Own Business

This chapter introduces the idea that one’s financial struggle is often the result of spending your entire life working for someone else. There is a distinction between one’s profession and their business, most people focus on defining themselves by their profession rather than minding their own business. Minding your business is the concept of focusing on your “assets” column rather than simply your income statement. Getting a promotion, a raise, or a second job focuses on the income column, you should focus on the assets column instead. You should focus on income-producing assets rather than simple personal effects that inflate your net worth. Keep your expenses low, reduce your liabilities, and diligently build a base of income producing assets. Real assets include business (that can be ran without physical presence), securities, income-generating real estate, notes, royalties from intellectual property, or anything that has value, produces income, appreciates, and has a ready market. Once a dollar goes into your asset column, it should never come out; it becomes your employee. Once your cash flow grows, you can indulge in the luxuries that you can rightfully afford. Rich people buy luxuries last while the poor and middle-class purchase luxuries first. A true luxury is a reward for investing in and developing a real asset.

Chapter Four: Lesson 4: The History of Taxes and the Power of Corporations

The Robin Hood fantasy of taking from the rich and giving to the poor has caused the most pain for the poor and middle class. The Robin Hood ideal has resulted in heavy taxes for the middle class (especially the educated upper-middle class). Rich people use corporations and other strategies to avoid taxes. If you work for money, you give the power to your employer. If money works for you, you keep the power and control it. This chapter introduces the concept of Financial IQ which is made of four broad categories:

  • Accounting
  • Investing
  • Understanding Markets
  • The Law (Tax Advantages, Protections from Lawsuits)

Chapter Five: Lesson 5: The Rich Invent Money

Self-doubt affects everyone to some degree because of a lack of self-confidence. Financial success requires both technical knowledge as well as courage. You should dispense with your fear of change and self-doubt and embrace the changing landscape of business. To do so, you need to focus on developing your financial IQ rather than simply focusing on your grades and college degree acquisition in academia. Financial intelligence allows you to develop many different financial solutions when different opportunities present themselves to you. Most people simply focus on working hard, saving, and borrowing. Poor and middle-class people focus on working for their money, however rich people focus on using their financial intelligence to discover ways to actually make money. The most powerful asset that we all have is our mind, so you should train it well.

Chapter Six: Lesson 6: Work to Learn —Don’t Work For Money

There are many incredibly talented people out there who are making very little money; and vice versa there are many little talented people out there who are making a fortune. This boils down to the ability to sell. The example that he uses in this chapter is a young talented writer for a newspaper who would be better served increasing her skillset in the arena of financial intelligence such as sales and marketing to produce the success that she desires. In today’s workforce, the popular opinion to make more money is simply to specialize and get promoted. You should work a variety of different tasks simply to learn more about those areas, as a generalist, rather than working and specializing to increase your income. You can then use the knowledge that you gain from your work experience to aid in the success of your own businesses. The ability to sale and market are the most important skills to specialize in.

Chapter Seven: Overcoming Obstacles

There are five reasons why financially literate people may still not develop abundant asset columns: (1) fear, (2) cynicism, (3) laziness, (4) bad habits, (5) arrogance. For most people, the reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich. Failure inspires winners and failure defeats losers. You shouldn’t fear failure, you should overcome this fear by understanding that oftentimes failure presents new opportunities. Robert remarks that he has never met a rich person who hadn’t lost money, however he has met many poor people who have never lost a dime. You can overcome fear by managing risk and understanding the relationship between risk and reward (the bigger, the greater) and not allowing failure to define you. Instead of being balanced, you should focus: put your eggs in a few baskets and focus. Avoid the cynical chicken-littles of the world, don’t buy into alarmist hype over markets, real estate, and other investments. Contrary to common thought, busy people are often the most lazy. They are lazy because they choose to over-indulge in one area to avoid addressing problems in other areas of their life and thus both areas eventually suffer. A little greed is the solution to laziness. Instead of stating, “I can’t afford it.”, ask “How can I afford it?“. “I can’t afford it.” creates helplessness, despondency, depression, and laziness. Focus on figuring out how to afford it instead. The same concept goes for all other types of problems as well. Many people use arrogance to hide ignorance, arrogance can cost you a lot of money. So instead of being arrogant about your ignorance, start educating yourself by finding an expert in the field or a book on the subject.

Chapter Eight: Getting Started

Everyone has a financial genius inside them that is inactive due to the continuous dogma that teaches that the love of money is the root of all evil, simply learn a profession to work for money, and not worry about the future because the government will take of you. The message is to work hard, earn money, spend it, and when you’re short, borrow more. This chapter introduces 10 steps to awaken your financial genius to help you get started. Step 1 - Find a reason greater than reality: the power of spirit, develop a purpose from a series of “wants” and “don’t wants”, this purpose or reason will serve to inspire you in the hurdles that you will face on your journey. Step 2 - Make daily choices: the power of choice - your daily choices should serve your purpose or reason. Step 3 - Choose friends carefully: the power of association - associate with people who shares the same goals and journey that you have. Step 4 - Master a formula and then learn a new one: the power of learning quickly. You become what your study so be careful what your learn. You should learn a broad range of techniques to support your purpose, master it, and move on to learn even more. It’s all about how fast you can learn. Step 5 - Pay yourself first: the power of self-discipline - this is one of the most important steps and references the advice given in The Richest Man in Babylon. Step 6 - Pay your brokers well: the power of good advice. The more money your professionals (brokers, attorneys, real estate brokers, accountants) make, the more money you make. Step 7 - Be an Indian giver: the power of getting something for nothing - How fast do I get my money back? Step 8 - Use assets to buy luxuries: the power of focus - learn how to use your money to make more money (assets) rather than simply leveraging debt to purchase luxuries. Step 9 - Choose heroes: the power of myth. - Choose your heroes and emulate them to the best of your ability. Step 10 - Teach and you shall receive: the power of giving - the value of charitable giving in the form of both money and knowledge.

Chapter Nine: Still Want More? Here Are Some To Do’s

Stop doing what you’re doing by taking a break and reassessing what’s working and what is not working. Look for new investing ideas. Find someone who has done what you want to do and take them to lunch to ask for tips and tricks to do the same. Take classes, read books, and attend seminars. Make lots of offers. Jog, walk, or drive a certain area once a month for 10 minutes to look for investment opportunities. Shop for bargains. Look in the right places. Look for people who want to buy first. Then look for someone who wants to sell. Think big. Learn from history. Action beats inaction.


Blake Adams is a writer, software developer, technical consultant, and financial independence enthusiast living in Oxford, MS.

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