"Rich Dad Poor Dad" by Robert Kiyosaki: How to Make More Money and Reach Financial Freedom?

Not many books about personal finance have achieved the cult status of Rich Dad, Poor Dad. It introduced revolutionary ideas that had an impact on the finance world when it was first published in 1997. The majority of people's perspectives on money and getting rich have been impacted by it.

This article about Rich Dad Poor Dad will give you great ideas, inspiring quotations, important lessons about money and useful concepts even if you haven't read the book.

What is Rich Dad Poor Dad About?

One of the most influential books on personal finance, Rich Dad, Poor Dad by Robert T. Kiyosaki, provided a new perspective on wealth management. The author uses a comparison of his two dads' financial philosophies - the rich dad and the poor dad, to highlight fundamental concepts in financial management. His poor dad was a well-educated, well-paid man who valued hard work, stability in his career and a college degree. His rich dad was an entrepreneur who valued financial literacy over formal education. He wasn't the same as his poor dad when it came to handling money. He thought that operating a business and making investments in things that produce passive income streams was the only way to accumulate wealth. 

Kiyosaki's explanation of assets and liabilities was the book's best-known idea. As he put it, liabilities cost money, whereas assets generate revenue. For example, homes and cars are liabilities even though many people consider them to be assets. However, the real assets are income-producing rental and investment properties.

In short, the book Rich Dad, Poor Dad is about getting financial literacy and making wise financial decisions to build wealth and get out of the rat race.

Focus on Assets and Not Liabilities

The book's main goal was to teach financial independence and wealth-building skills to readers.

According to Kiyosaki, the majority of people are unaware of the difference between assets and liabilities. He describes them as:

• Assets are things that bring in money, such as real estate, stocks, and businesses
• Liabilities, on the other hand, drain money from your pocket. These include home or car loans, credit card debt and more

He uses the example of a house, which is a liability but is generally seen as an asset, to illustrate this. He explains that using a mortgage to purchase a home for yourself results in only expenses and no income, making the purchase a liability.

Get a Financial Education

One of the main lessons from Rich Dad, Poor Dad is the necessity of financial literacy for successful money management.

The author claims that financial literacy, including the fundamentals of wealth creation and financial management, must be effectively taught in schools since financial education falls short in this area. He illustrates the importance of financial education by using the contrasts in the financial philosophies of his two fathers, one wealthy and the other poor. His poor dad had a good education and supported the idea of getting paid. His rich dad was less educated, but he was more financially literate and thought that the best ways to accumulate wealth and achieve financial independence were through business ownership and investment.

Thus, while having a good education is important, having a good financial education is something else. Invest in financial education to gain a better understanding of risk assessment, money management and other essential topics.

Run Your Own Business

Another lesson to be learned from Rich Dad, Poor Dad is that owning a business will make you wealthy, not working a job and getting paid.

The wealthy, in Kiyosaki's opinion, accumulate assets and make their money work for them. The rich only work for themselves and don't work for anyone else. The secret to gradually accumulating wealth rather than depending solely on a paycheck is to generate passive income from assets or opening a business.

The Tax Code and Legal System

According to Kiyosaki, the wealthy are aware of the tax code and how to take advantage of it. He explains that taking out loans or receiving a salary requires paying high taxes. Income tax, social security tax and Medicare tax are a few types of taxes.

However, operating a corporation allows you to deduct business expenses and reduce your tax liability. Even more, a company's profit can be reinvested for further development and expansion. In addition, the profits can be distributed to the owners as dividends, which are subject to a lower tax burden than salaries.

Learn to Invent Money

One of Robert T. Kiyosaki's more controversial teachings is that earning money doesn't come from working hard, instead, it comes from making strategic decisions.

He rejects the idea that success comes from putting in a lot of effort and performing well at work. Rather than earning money, he contends that the wealthy create it. To get rich, they take risks, calculate chances and set up several sources of passive income.

The takeaway is don't work to make money. Buy assets that will yield returns and help you make more money. Several instances of these resources include: 

• Businesses that don’t require active supervision
• Rental properties that provide a passive income
• Financial investments that pay dividends over time

Work to Learn, Not for Money

You can never escape the never-ending cycle of working truly become wealthy if you work to earn a paycheck. But if you put in the effort to learn new skills, you will eventually become more skilled and create new career opportunities for yourself.

This change in perspective encourages people to pursue entrepreneurship instead of high-paying employment. Additionally, he highlights the significance of developing employable skills and provides McDonald's as an illustration.

"Who can make a better hamburger than McDonald's?" he asked the crowded room. Almost all of them put up their hands. Yet, McDonald's is a multibillion-dollar company. While anyone can cook a good hamburger, the ability to turn that food into a successful business is more valuable. Hence, work to upskill yourself rather than just to get paid and acquire marketable skills that help you earn money.

Take Financial Risks

To become wealthy, take risks. You will become a part of the crowd if you walk in everyone else's shoes. You have to take a different approach if you want to get out of the rat race. Rich people don't let opportunities pass them by but they use opportunities and try new things. You have to take significant risks if you want to make huge profits.

According to Kiyosaki, financial security and job security are not the same. A safe job gives one a false sense of security, which can encourage laziness. No matter how safe you believe your job is, external factors can always change that and you could lose it. You will, however, become financially secure if you invest in stocks, bonds, real estate and other assets that generate multiple income streams. Even if one source of income is down, you still have plenty more.

However, the author says that to succeed financially, you must be willing to take measured risks not just any risks. While you should carefully consider your options, don't let fear of risk or limiting beliefs prevent you from taking advantage of a good opportunity.

Popular Rich Dad Poor Dad Quotes

There are many great quotes about money management and personal finance in Rich Dad, Poor Dad. It gives smart guidance on how to create wealth, make money, and change how we think of money.

These are five of the book's most inspiring quotes. 

“In the real world, the smartest people are people who make mistakes and learn. In school, the smartest people don’t make mistakes.”

“The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant.”

“Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.”

“It’s not what you say out your mouth that determines your life. It’s what you whisper to yourself that has the most power.”

“Workers work hard enough to not be fired, and owners pay just enough so that workers won’t quit.”