Rich dad poor dad book summary-cover

Rich Dad Poor Dad summary : [2020]

SHOULD YOU READ THIS RICH DAD POOR DAD SUMMARY?

Rich dad poor dad is one of the finest book revolving in the financial industry written by Robert T. Kiyosaki, which emphasizes on financial education. This book has been sold over 40 million copies worldwide and has remained as New York Times bestseller.

This book gives you a clear picture of the famous question – Why the rich become richer and the poor become poorer? It also shifts your mindset to a completely new financial perspective. 

 You will be able to absorb how money works in real. It also tells -How you can take better money-making decisions and grow your net-worth with time, enjoying the lifestyles you dream of. 

In short Rich dad, poor dad book is the first book any financial intellects can read. And for you, I have given Rich dad poor dad summary in the best form i.e in the blog here so that you don’t have to read the book again.

Chapter- 1.  The rich don’t work for Money

While both the author and Mike with the intention of becoming rich go to Mike’s father to seek his advice on how to make money. His father tells them 3 important points.

   a). Poor and middle-class people always work for money because of fear and greed, the fear of not paying their bills makes them work for 8 hours a day, once they get their paycheck they tend to spend more which makes them work again and the pattern is set.

b).   On the contrary rich people always think of making more money from their earned money, they try to automate their business so that even if they are not present money is credited to them.

c).     A Job is a short term solution to a long term problem – You can’t become rich by doing jobs, you can only maintain your family.

Never forget that fear and desires can get you to live’s biggest trap. Don’t think about the bills at the end of the month instead if you are doing a job find an opportunity which can pay you some more money for your skills.

Chapter- 2.     Why Teach Financial Literacy

            In this chapter, the author tells the reason for the rich becoming more rich and poor remaining poorer. He tells unless you have good financial education, you tend to make bad decisions about your wealth.

You must know about assets and liabilities, in order to become rich. Liabilities is anything that takes money from your pocket (like a credit card, car-loan, home-loan) whereas assets put money in your pocket (Like stocks, bonds, rental property).

These two things mainly differentiate rich and poor. The riches keep increasing their assets by keeping liabilities to a minimum, whereas middle-class people increase their liabilities thinking these are their assets and the poor only have their expenses.

So your main takeaway from this Rich dad poor dad summary should be, you must increase your savings to invest in assets and reduce your expenses on liabilities.

Chapter- 3.     Mind Your Own Business

            The main problem with the majority of the middle class and poor people is that they want to look rich as soon as they start earning some money. They buy new cars, houses, and luxuries on their credit card or salary, whereas the rich prefer to buy luxuries at last.

Rich people buy luxuries on their return on assets that they have bought, they don’t have to spend their own money on any cars or luxuries. They work on growing their assets columns at first and return cash-flow after few years gives them everything that they want.

Financial struggle is often the result of people working all their lives for someone else.

Start minding your own business. keep your daytime job in case you don’t have other options but start buying real states, not liabilities that have no real value once you get them home.

Keep your expenses low, reduce liabilities, and diligently build a base of solid assets

Chapter- 4.    The History of Taxes and the Power of Corporation

            In this chapter, Kiyosaki explains how the poor let the tax system exploit them with their complex structure. Because they lack Financial IQ, they don’t have other options but to pay multiple taxes on everything from their personal account.

However, The rich have money working for them, they spend the money on creating corporate businesses to protect and enhance their assets. They have the advantage of letting their business earn money, spending on things it wants and then taxed on the remaining amount.

 Rich capitalists use their financial knowledge and power to escape the complex legal taxation structure.

Therefore, it is necessary to gain knowledge in Accounting, Investing, Law, understanding how the market works, Tax Advantages, etc., which will prevent you from being exploited by Government and Taxes.

In Summary

Business owners with corporations Employees who work for corporations
1.     Earn     1.  Earn
2.     Spend     2.  Pay Taxes
3.     Pay Taxes      3.   Spend

Chapter- 5.   The Rich Invent Money

            The author says, in the real world, it is not smart who gets ahead but the bold. You must be a risk-taker sometimes to gain astronomical rewards.

If you don’t work on increasing your financial intelligence unknowingly, you will end up paying more and more taxes.

He also points out that the single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth seemingly instantaneously.

An untrained mind can also create extreme poverty that can crush a family for generations.

The reason rich people becoming richer is that they train themselves to invest and make more money from earned money itself. And the main reason for the majority of the people remaining poor or middle class is:

·        They are terrified of losing and do not take risks.

·        They do not train themselves about finances or learn the required skills.

·        Do not have proper financial planning or control over their expenses.

Winners are not afraid of losing. But losers are. Failure processes in achieving success. People who avoid failure avoid success. 

Chapter- 6.   Work to Learn – Don’t Work for Money

            Under this rich dad poor dad summary, this chapter talks about the skills individuals should have in order to achieve financial success. You must recall that Financial intelligence is a cocktail of Accounting + Investing + Marketing + Law.

 The author talks about the skills of Marketing and selling which is important in any profession. Also learn how to manage cash flow, people and the system in order to get rich.

Along with these skills, you must possess better communication skills, learn to share your knowledge as a teacher as it gives you a sense of social satisfaction.

People must try to learn various operations in businesses and not try to specialize in any one department as it prevents you from learn something new and gather knowledge about overall business functionalities.

Chapter- 7. Overcoming Obstacles

            The primary reason between a rich person and a poor person is how they manage fear

The author talks about five main reasons which stop an individual to gain huge wealth and make them financially free. The 5 reasons include:

1.     Fear

2.     Cynicism (self-doubt)

3.     Laziness

4.     Bad Habits

5.     Arrogance

Almost the majority of the people have these 5 traits in common and famous reasons which is stopping you from becoming rich.

Winning means being unafraid to lose. So for most people, the reason they don’t win financially is the pain of losing money is far greater than the joy of becoming rich. If you hate risks and worry, start early. If you start young it is easier to be rich.

You need to eliminate these 5 reasons: fear by taking risks, cynicism by motivating yourself to make better decisions even if many are following opposite, Laziness by having greed of little extra, Bad habits by focusing and replacing it with good ones and Arrogance by gaining knowledge.

Chapter- 8.     Getting Started

            This chapter insight you with the guide to building personal wealth. The author gives five suggestions to follow in the process of becoming rich.

1.     You need to have a stronger reason or purpose for money and choose your investments carefully.

2.     Make good friends who can help you with finance and investments. Although making friends on financial status is not said, but do not take advice from your poor friends.

3.     You must learn to pay yourself first, keep your expenses low and build your assets first and then buy luxuries from return if you want.

4.     You must pay stock-brokers well if you want some good advice. Take their suggestions and also keep learning and reading about heroes in your field of expertise.

5.     Whenever you feel short of something, give what you want first and it will come back in buckets. If you want to learn about money teach it to someone else.    

Chapter- 9.   Still, Want More? Here are some to Do’s

            The author adds that you must stop doing things that seem not viable. Start learning different books, keep exploring new ideas, learn and implement.

 He encourages learning by taking classes, attending seminars or online materials which is free and inexpensive. Or read about the successful person in your industry for it is rightly said, the more you learn the more you earn. 

CONCLUSION

Now that you have read this rich dad poor dad summary, you must have sound knowledge about managing your finance and expenses. You might be already thinking of building your assets and reducing your liabilities and expenses.

No learning is beneficial unless you start taking any actions no matter how small steps you take towards saving or investing. If you can start It, you can build it.

Becoming rich is not rocket science rather it is taking better decisions and following good investment habits.

You must build 3 different types of income: ordinary, Portfolio and Passive. Ordinary income is what you earn from your work hours. Passive income is what you earn from your side hustles or real estate investments. Portfolio income is income from paper assets like bonds and stocks.

Portfolio income is what makes Bill Gates, the richest person in the world. The key to becoming wealthy is the ability to convert ordinary income into passive and portfolio income as quickly as possible.

Taxes are highest on ordinary income. The least taxed income is passive income.

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