Rich Dad, Poor Dad Summary and Review

Here are the top things to retain from this great book from Robert Kiyosaki. The goal of this book is to teach us about how to manage money to become financially independant, or rich. I’ve compiled the most important aspects of it.

book-rich-dad-poor-dad

 

1.”The rich dont work for money. They make their money work for them.” The reason some people never get out of the middle class is that they spend all their money on liabilities instead of assets. You have to invest your money in assets that will give you cashflow, instead of buying a new boat. And what’s the purpose of being rich if you have to work 70 hours a week doing a job you hate? Its okay to work long hours, but it should level off after a while and after you delegate tasks to do more important and enjoyable things. In a way, the lazier you are, the better, because you will find the most efficient way to do things, and will do the most important things. (remember the 80/20 rule).

 

2.“It’s not how much money you make, its how much you keep.” It doesn’t matter if you make 100k a year or just 30k, what really matters is how much you keep. If someone makes 100k and spends all of it (or even goes in debt), he cant invest and make more money. On the other hand, if someone makes 30k a year and only spends 25k, he has 5k he can invest every year. In a couple of years, the one that invest a part of what he makes, will be the richest. Kiyosaki also explains that your house is not an asset, contrary to popular belief. An asset is something that makes you money, while a liability is something that costs you money. Your house is depreciating all the time, because youre living in it. The only time it could be considered an asset, is when the house market is on the rise, and you want to sell your house. Besides that, your house is always a liability. An asset would be something like an appartment complex, a company, land, precious metals, stocks, bonds, etc. A liability would be your house, your car, your boat, your cellphone bills, etc. Knowing the difference is crucial.

 

3. “PAY YOURSELF FIRST”. This was in caps, because it is the basis of all personal finance. This principle has been found in every personal finance book because it has proven itself to be a good principle over the years. You have to save at least 10% of all you earn to invest. It’s that simple.

 

4. Start your own buisiness. Why start a buisiness? First, it teaches you the entreprenerial spirit, and gives you problem solving skills. Having a buisiness will help you get financially free, because you cant have a sucessful buisiness if you cant manage money, so you will learn either by books, or by experience, but you will end up learning. Second, it’s easier to get rich by having a company. All the tax laws are in favor of companies. We live in a world wherre the rich have a big influence (this is probably an understatement) on the laws and on politics. You dont pay taxes on your revenue when you have a buisiness, you pay taxes after spending. Not everything is tax-deductible, but you can save alot of money by puting your car as the companies car, or your buisiness lunches, or your buisiness cellphone bill, etc. You also have a lower tax rate in many countries. If you get a good acountant, you can save alot of money.

 

5. Get creative, therre are many ways to make money. You wont get rich by waiting for it to happen, or by working hard. You have to work smart and take the road less traveled. Invest in knowledge first, and then therre’s no stopping you. Dont be afraid to experiment and to try things out that have never been done. But dont put all your eggs in one basket. Multiple small experiments are the best, because you dont put alot of capital in them to start them out, so if you loose, you arent paralysed financialy for years. You only need to strike gold once. So get creative, experiment, but keep it small at first. Get proactive!

 

6.” Get financial intelligence.” There are four areas that you need to master to become financially independant: Accounting (reading the numbers, cashflow), Investing (once you have money, wherre to put it), understanding the markets (understanding wherre there is demand, and how to get the supply), the law (its better to know the tax laws and to play by the rules).

 

7. “If you have to work, work to learn, dont work for money.” Get a job selling or a job managing, or learning a new usefull skill. If you work for money, you become trapped in the “rat race”.

 

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And if you would like me to write a summary of another book, tell it to me in the comments down below!

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