“Rich Dad, Poor Dad is one hell of an amazing finance book of all time. The book, written by Robert T. Kiyosaki and Sharon L. Lechter, has reportedly sold more than 32 million copies in 40 languages across 40 countries since it was published in 2002.
This book is the ultimate guide for people who wants to be rich but did not know how to start. It will help you to set your mind about how the money actually works. This book will show you the difference in the mindset of a poor and rich and how exactly rich people think.7 golden rules to become rich
Rich Dad, Poor Dad is all about Robert Kiyosaki and his two dads. The “Poor Dad” is his biological dad who is highly educated and a government employee. The “Rich Dad” is his friend’s dad who is not much educated but he owns many businesses. Both dads teach him about money but their advice is conflicting.
The Rich Don’t Work for Money
The most important lesson from this book is “The Rich don’t work for money”. This poor or average people work for money but for rich their money works for them. Let me explain to you how this works.
Life doesn’t teach you with words, but by pushing you around. Average people let life push them around; others get angry and push back against their boss or their loved ones. But some people learn a lesson from it, and in fact, welcome life pushing them around because it means they need to learn something, these people have the potential of being rich. The money wouldn’t solve people’s problems. Many people who have high paying jobs still struggle with money problems because they didn’t know how to make money work for them. Lives of most people are controlled by fear and greed. Fear of being without money makes them work hard, and earn a paycheck, but once they have that money, greed gets them thinking about all the things they could buy. Which makes them need more money, which makes them spend more. It is called the Rat Race.
The main thing that creates the difference between poor and rich is “Financial Literacy”’. By Financial Literacy we mean the knowledge about how the money works and how to balance your account statement. If you want to be rich, you need to be financially literate.
It’s not how much money you make but how much you keep and how many generations you keep it. Accounting as a subject is boring, confusing- and absolutely crucial to financial success.
The first thing about financial literacy is you must know the difference between an asset and a liability and only buy assets. That’s all you need to know. But despite it being so simple, it’s something that many people don’t understand. The true definitions of “asset” and “liability” lie now in words, but in numbers.
“Asset adds to your income. They put money in your pocket”.
“A liability takes money out of your pocket”.
If you want to gain and maintain wealth, you must build your understanding.
Mind Your Own Business
Rich people mind their own business while poor people mind everyone business except their own. So many people work for everyone else; their employer(company), the government(taxes), and the bank(mortgage). But rich never spend their whole life working for someone else.
Too many people spend their lives minding someone else’s business and making them rich. In reality, you have to mind your own business, your business revolves around your asset column, not your income column.
Start minding your business. Keep your daytime job, but start working on something else(real estate, part-time job), but not invest on liabilities or personal effects that have no real value once you get them home.
The problem is, the harder you work in a job, the more you pay the government. Taxes end up punishing the very people who voted them in. But, attempt to punish rich rarely work, because the rich find ways to minimize their tax burden.
Rich hire smart tax consultants and attorneys are worth their cost, as it’s still cheaper than paying the government. It’s expensive to not know the law.
A Corporation can pay expenses before paying taxes, whereas an employee gets taxed first and must try to pay expenses on what is left. The wealthy person actually owns nothing. They control everything but own nothing.
The Rich Invent Money
We all have tremendous potential, and we all have self-doubt. Financial genius requires technical knowledge as well as courage. Take risks, be bold, let your genius convert that fear into power and brilliance. Those who have creative financial minds escape the Rat Race the fastest. Some people have lots of money but don’t know what to do with it.
Some people complain that they are not getting the right opportunities, some complain that they have the opportunity but don’t have enough money to grab it, others have the money have to opportunity but didn’t grab it at right time. Financial intelligence is simply having more options, figuring out ways to create opportunities or altering situations to work in your favor. Luck needs to be created, So go create yours. Millions can be made from nothing more than ideas and agreements. Save some money each month is a sound idea, but it can blind you to what is really going on and cause you to miss opportunities for much more significant growth.
“Would you rather work hard, pay taxes, and save from what’s left or take the time to develop your financial intelligence.”
Work to Learn, Don’t Work for Money
There are talented people all around us who struggle financially. They are one skill away from greatness. If we would learn and master just one more skill, our income would jump exponentially. When it comes to money, the only skill most people know is to work hard.
When the author came out with his first book “If you want to be rich and happy, don’t go to school”, a publisher suggested he change the title to “The Economics of Education”. But the author knew that the title wouldn’t sell.
Most people work hard to get a secure job, focusing on pay and benefits in the short term. What they should do is seek work that will teach them the skills they’ll need. The world is full of talented poor people. They must take the time to learn more skills. The better you are at communicating, negotiating and handling your fear of rejection, the easier life is, Being technically specialized has its strength and weakness. People in this category must expand their communication skills.
If you like the post, give this book (Rich Dad, Poor Dad) a read. It will be worth it.