The book I read recently is on the topic of finance. You’ve heard of it before, I’m sure, it’s called Rich Dad, Poor Dad by Robert Kiyosaki.
I knew of this book years ago. In fact, my Brother read it. It was always on my list of books to read, but it wasn’t until I was in the book store and that I’ve begun taking more interest in developing my financial education that I decided to pick up this book.
After learning about Robert Kiyosaki through watching videos of him on YouTube, I couldn’t be more of a fan. Through Rich Dad, Poor Dad I learned a lot of valuable lessons. I’m going to go through a few of them here.
1) Become Financially Educated.
This is one of the biggest things I’ve taken from Robert Kiyosaki. He says most people spend years in school but learn nothing about money or finances. He stresses how money is something learned at home and is usually taught by your parents, not through the school or education system. We all need to take it upon us to become financially educated and literate.
One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not in school. Most of us learn about money from our parents. So what can a poor parent tell their child about money? They simply say “Stay in school and study hard.” The child may graduate with excellent grades but with a poor person’s financial programming and mind-set. It was learned while the child was young.
Money is not taught in schools. Schools focus on scholastic and professional skills, but not on financial skills. This explains how smart bankers, doctor and accountants who earned excellent grades in school may still struggle financially all of their lives.
One of my favorite segments of the book is when he talks about learning as much as possible and developing your skill sets in different areas. To learn areas such as sales, marketing, communication, management, etc… and how valuable they are.
He tells a story about how he was interviewed in Japan by a woman. This woman was an extremely talented writer and had written many novels, however, none of them had cracked the best-seller list. When Robert was talking to her, he asked her why doesn’t she learn sales? She says “Oh, I hate sales. I don’t want to be one of those people” and she goes on and on.
Robert Kiyosaki said, “There’s a reason why I’m a best-selling author instead of a best-written author.”
The lesson from that is to learn to sell. Sales is a valuable asset and will get you far. You could write the best book in the world, but if you can’t sell it, then what’s the point?
2) Have Money Work For You.
Most people WORK FOR MONEY, instead of having money WORK FOR THEM.
The poor and the middle class work for money. The rich have money work for them.
Most people spend their lives going through school and getting an education so that they can WORK FOR MONEY. They spend all their time working for someone else. For example, they work for a paycheck and are making the owner/shareholders richer. Then they work for the government, which takes its share from their paycheck before they even see it. And of course, the harder they work and more money they make, the more of it is taken from the government. And finally, they work for the bank to pay off their mortgage and credit card debt.
Instead, acquiring assets that produce income is a way of having money work for you. Examples are passive income (real estate) or portfolio income (stocks, bonds, etc…).
3) Acquire Assets, Not Liabilities.
Robert says we must know the difference between an asset and a liability, and buy assets.
Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets.
Here are more examples of assets that Robert Kiyosaki recommends we acquire:
- Businesses that do not require your presence.
- Stocks
- Bonds
- Mutual Funds
- Income-generating real estate
- Notes (IOU’s)
- Anything that produces income or appreciates or has value.
A liability is anything that is an expense or depreciates in value.
4) Own a Corporation.
Another great thing Robert talks about is the tax advantages of owning a business. He mentions how a corporation can do so many things that an individual cannot. Like pay for expenses before it pays taxes.
Employees earn and get taxed and they try to live on what is left. A corporation earns, spends everything it can, and is taxed on anything that is left. It’s one of the biggest legal tax loopholes that the rich use.
A fantastic summary he has for it is:
The Rich with Corporations
1. Earn
2. Spend
3. Pay Taxes
People Who Work for Corporations
1. Earn
2. Pay Taxes
3. Spend
