What The Rich Teach Their Kids About Money That The Poor And Middle Class Do Not!
by Robert T. Kiyosaki
Learn financial literacy.
30-45 minutes per day, for 4 weeks
Table of Contents
Summaries
Introduction: Rich Dad Poor Dad (p.15)
Having two dads offered me the choice of contrasting points of view: one of a rich man and one of a poor man. Read
In this introduction, the author, Robert T. Kiyosaki introduces the two main influences in his life: his real father (Poor but educated Dad) and his best friend, Mike’s father (Rich Dad). Here, Kiyosaki relates how having had two dads with different education, opinions and wealth made him realize, early in his life, what made his first dad poor and his second dad rich. He also describes the different approaches they had to money and finance.
Having been taught two different opinions about how to live one’s life made the writer possess a broader view about the best education a parent could give his child. How big a difference is thinking in statement or questioning : not just state a problem or a hurdle but thinking about how to overcome it.
A Lesson from Robert Frost (p. 20)
Kiyosaki’s favorite poet poem: The Road Not Taken. It is about having to choose between two roads. Having chosen the road that was less traveled by, that has made all the difference. The most obvious path is not always the best one.
The Road Not Taken Read
Two roads diverged in a yellow wood, And sorry I could not travel both And be one traveler, long I stood And looked down one as far as I could To where it bent in the undergrowth; Then took the other, as just as fair, And having perhaps the better claim, Because it was grassy and wanted wear Though as for that the passing there Had worn them really about the same, And both that morning equally lay In leaves no step had trodden black. Oh, I kept the first for another day! Yet knowing how way leads onto way, I doubted if I should ever come back. I shall be telling this with a sigh Somewhere ages and ages hence; Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference.
Chapter One - Lesson 1: The Rich Don’t Work for Money (p. 23)
The poor and the middle class work for money. The rich have money work for them. Read
Kiyosaki explains how the Rich Dad taught him to think about money differently, emphasizing the importance of building assets and creating passive income streams that generate money even when you’re not actively working.
For a nine year old boy, it was shocking to him to discover that being poor has made him and his best friend excluded from their classmate excursion.
“Dad, can you tell me how to get rich?” A question very few kids ask at this age.
Their search for an answer made them look for Mike’s dad counseling.
Rich dad did not give them lessons like how school teachers do. He made them use their brain by working without being paid so they had to think of a way to get money.
Lesson #1: The Rich Don’t Work for Money. Avoiding One of Life’s Biggest Traps (p. 41)
“Most people have a price. And they have a price because of human emotions named fear and greed. First, the fear of being without money motivates us to work hard, and then once we get that paycheck, greed or desire starts us thinking about all the wonderful things money can buy. The pattern is then set. […] Offer them more money and they continue the cycle by increasing their spending. This is what I call the Rat Race.”
Seeing What Others Miss (p. 52)
Here, the nine years old Robert and Mike found a way to obtain comics without buying them on the condition that they don’t sell them. They abided by this rule but found a way to earn money by opening a library where kids could read all the comics they want for two hours by paying only the price of one comicbook.
So they learnt how to make money work for them.
Chapter Two - Lesson 2: Why Teach Financial Literacy? (p. 55)
It’s not how much money you make. It’s how much money you keep. Read
In this chapter, Kiyosaki argues that the education system doesn’t teach people the necessary financial skills to be successful in the real world, and explains why financial literacy is essential for achieving financial freedom.
The Richest Businessmen (p. 56)
This story is about how unwise it is to just obtain money and being rich without financial intelligence.
Rule #1: You must know the difference between an asset and a liability, and buy assets (p. 59)
“Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.”
cash-flow pattern of an asset (p. 61)
“assets put money in your pocket.”
cash-flow pattern of a liability (p. 62)
“A liability is something that takes money out of my pocket.”
cash-flow pattern of a poor person (p. 63)
A poor person earns to pay for his expenses, without striving to acquire assets. So no movement on the balance sheet.
cash-flow pattern of a person in the middle class (p. 64)
A middle class person uses his money to buy liabilities that increase his expenses column. No acquisition of assets.
cash-flow pattern of a rich person (p. 65)
The assets in the balance sheet of a rich person generates the incomes that will pay for his expenses.
Rich dad gave many examples to help them understand why more money doesn’t solve problems. Also why a buying a house is a liability, not an asset. A very controversial wisdom.
Instead of investing, buying an expensive house causes at least loss of time, loss of additional capital and loss of education (investment experience).