🚀 The Book in 1 Sentence

When it comes to money, the only skill most people know is to work hard, and (un)fortunately, the rich don't work for money.

🎨 Impressions

This was such an eye-opener for me. Coming from a family that didn't discuss generational wealth or wealth building exposed me to the possibility that I could change that.

Who Should Read It?

If you've ever considered how to go about building wealth and don't know exactly where to start - start here. This book is written in laymen's terms and Rob sticks to the vernacular while exposing his ideas, concepts, and the best part - the stories.

☘️ How the Book Changed Me

• It created a sense of possibility that I could achieve this mysterious thing we call wealth.
• It provided me with a guide to how to start.
• Lastly, it destroyed my perspective when it comes to 401ks - thankfully.

✍️ My Top  Quotes

• “You’re only poor if you give up. The most important thing is that you did something. Most people only talk and dream of getting rich. You’ve done something.”
• “Emotions are what make us human. Make us real. The word 'emotion' stands for energy in motion. Be truthful about your emotions, and use your mind and emotions in your favor, not against yourself.”
• “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.”
• “Workers work hard enough to not be fired, and owners pay just enough so that workers won't quit.”

📒 Summary + Notes

Poor Dad was Kiyosaki’s biological father, a man who was highly intelligent and very well educated. Poor Dad believed in studying hard and getting good grades, then finding a well-paying job. Yet, despite these seemingly positive attributes, Poor Dad didn’t do well financially.

Rich Dad was the father of Kiyosaki’s best friend. He had a similar work ethic to Kiyosaki’s real dad, but with a twist. Rich Dad believed in financial education, learning how money works, and understanding how to make money work for you. Although he was an eighth-grade dropout, Rich Dad eventually became a millionaire by putting the power of money to work for him.

The book is written from Kiyosaki’s perspective of how Rich Dad went about making money and the mistakes that Poor Dad made. The first six chapters of Rich Dad Poor Dad makeup about two-thirds of the book and discuss the six lessons that Kiyosaki learned from his Rich Dad.

Chapter 1: The Rich Don’t Work for Money

Oftentimes people misunderstand the title of this chapter, and mistakenly believe that it means the rich don’t work. In fact, the complete opposite is true.

Instead of reading the chapter title as “The Rich Don’t Work for Money”, what Kiyosaki means to say is that “The Rich Don’t Work for ***Money.***” Note that by putting the emphasis on the word “money” this section takes on an entirely different meaning. Rich dad teaches him that from a young age - making him work for free.

The truth is that the majority of rich people do work very hard, but they go about it differently than most people do. Rich people – and people who want to become rich – work and learn every day how to put money to work for them. As Rich Dad says, “The poor and middle-class work for money. The rich have money work for them.”

Kiyosaki also notes that having a regular job is just a short-term solution to the long-term problem (or challenge) of creating wealth and financial freedom:

“It’s fear that keeps most people working at a job: the fear of not paying their bills, the fear of being fired, the fear of not having enough money, and the fear of starting over. That’s the price of studying to learn a profession or trade, and then working for money. Most people become a slave to money – and then get angry at their boss.”

Welcome to the middle class - aka “the rat race”

Most of us know what the phrase rat race refers to, but if asked, how would we define it?

One definition is “The endless routine of working for everyone but yourself.” This means you do all the work, while others – the government, bill collectors, and your bosses – take the majority of the reward.

We usually talk about the rat race as something we’re all a part of. At the same time, we also talk about it as something we hate. So why keep racing?

Well, because most people’s lives are dominated by their fear of society’s disapproval. We live with this external pressure from society that dominates our actions without us even considering the consequences. Here are a few:

• Go to school and study hard.
• Get your degree and specialize
• Stay in your position to get raises
• Focus on your 401k

This is still the mantra preached today, even though it is outdated advice founded on the ideas of our parent's parent's past. Back then, you were likely to land a job right out of college, work for the same company for decades, and retire with a cushy pension. Today, this is more of a guaranteed recipe for a life of financial struggles.

The truth is that you can study hard, get into a good school and graduate into a high-paying job without ever seeing financial growth because you’re still stuck in the “rat race.” Your bosses – not you – are getting rich from all your hard work.

Nevertheless, we still believe in and follow the above mantra out of fear of violating the expectations that have been drilled into us since birth. The result? We may be avoiding poverty, but we’re certainly not growing any wealthier.

Fear of society’s disapproval prevents us from leaving the “rat race” and growing wealthy.

The book teaches us a new way. A better way.

• It's okay to be a b student - there is life beyond school.
• Get general experience in your field and build mental models.
• Start a business and take control of your income
• Invest in real estate

He explains that the middle class has one income, followed by several expenses, then liabilities.

The rich, have multiple income streams, which get used for buying more assets, and those assets pay for the liabilities while contributing to the income.

Chapter 2: Why Teach Financial Literacy?

The second chapter of Rich Dad Poor Dad explains the difference between an asset and a liability. Chapter 2 drives home the point that it’s not about how much money you make, but about how much money you keep.

An asset is something that has value, that produces income or appreciates, and has a market where the asset can easily be bought and sold:

• Assets produce income
• Assets appreciate
• Assets do both

Conversely, liabilities take money out of your pocket because of the costs associated with them. When Rich Dad Poor Dad was first published back in 1997, Kiyosaki created a lot of controversy with this statement.

That’s because by definition, a personal residence isn’t an asset unless it appreciates enough to offset the costs of ownership. On the other hand, rental property is an asset because it can generate enough passive income to exceed the expenses of operating and financing the real estate.

As Kiyosaki writes in Chapter 2 of Rich Dad Poor Dad, “Want to grow rich? Concentrate your efforts on buying income-producing assets – when you truly understand what an asset is. Keep liabilities and expenses low. You’ll deepen your asset column.”

Chapter 3: Mind Your Own Business

There are two key messages in this chapter.

• First, pay off your debts and start investing in income-producing assets as soon as possible.
• Next, stay financially healthy by spending your time (instead of your paycheck) and investing as much of your money as possible in assets.

Kiyosaki notes in Chapter 3 of Rich Dad Poor Dad that most people confuse their profession with their business. In other words, they spend their entire lives working in somebody else’s business and making other people rich. Set time aside to work on your own business even if part-time. Your best investor can be your current employer. Meaning you get your paycheck and use that to invest in yourself and your business.

One of my favorite quotes from this section is:

“The primary reason the majority of the poor and middle class are fiscally conservative is that they have no financial foundation. They have to cling to their jobs and play it safe. They can’t afford to take risks.”

Chapter 4: The History of Taxes and the Power of Corporations

When reading this chapter, it’s important to keep in mind that Kiyosaki wrote Rich Dad Poor Dad as a motivational book, not to provide expert financial or tax advice.

For example, Kiyosaki writes about the time he bought a Porsche and treated it as a business expense, using before-tax dollars. Buying a high-end luxury car when a much less expensive make and model would do could put an investor on the fast track to an IRS audit. This gets talked about a lot on TikTok. I've seen tons of influencers discussing how you can purchase a G-Wagon and write it off because of the tax-codes weight class. The code is in place for people who actually need a business vehicle. Car write-offs continue to be the #1 way the IRS will run an audit. Most influencers work from home - what do you need a business vehicle for? IRS isn't stupid. 😭

But putting Porsche aside, the points made in this chapter discuss how to play the investment game smart. The rich understand the power of company structures and the tax code and use every legal means they can to minimize their tax burden.

Compare how business owners and investors with corporations such as C Corps, S Corps, or LLCs pay taxes to how most people pay tax:

Business owners with a corporate structure:

1. Earn
2. Spend
3. Pay taxes

Employees who work for corporations:

1. Earn
2. Pay taxes
3. Spend

Notice that employees who work for somebody else spend their money post-tax, while business owners earn and spend before paying tax.

Chapter 4 of the book also covers the four main components of what Kiyosaki calls “Financial IQ”: Accounting, Investment Strategy, Market Law, and Law.

As Rich Dad Poor Dad reminds us, understanding the legal and tax advantages significantly contribute to building long-term wealth:

“For instance, a corporation can pay expenses before paying taxes, whereas an employee gets taxed first and must try to pay expenses on what is left. . . Corporations also offer legal protection from lawsuits. When someone sues a wealthy individual, they are often met with layers of legal protection and often find that the wealthy person actually owns nothing [in their own name]. They control everything, but [personally] own nothing.”

Chapter 5: The Rich Invent Money

This is my favorite chapter and it's 100% true. Inventing money means finding opportunities or deals that other people don’t have the skill, knowledge, resources, or contacts for.

When I was 6 years old I started my first business. Air-Condition salesman.

I would ask my mom to buy me remote control toy cars. I would open these bad boys up, and remove the engine. From there, I would take the box the car came in and cut out propellers. Make a hole in the middle and place that into the engine. I would then tape a battery to the engine core and attach the positive and negative wires to the battery, the portable fan would run.

In Dallas, Texas, I sold these like crazy. 2-3 per month for a whopping $5. Keep in mind the cars cost $25-$30, but since I didn't pay for it my profit margin was 100%. The model above is just to give you an idea - it's a much more advanced version of mine.

Unfortunately, we never made it to that stage because the business was forcibly shut down once my mom caught wind of my venture. Let's just say she did NOT approve the business model.

In Chapter 5, Rich Dad Poor Dad explains there are two types of investors:

1. Investment packages are bought by people who entrust their money to a developer or fund manager. This is the way that most people invest, such as buying shares of an ETF or putting money into a real estate crowdfunding venture.
2. Professional investors look after their own investments, research the market to find deals that make sense, then hire professionals to manage the daily oversight. Professional investors have three things in common:

• Identify opportunities that other people have not found
• Raise funds for investment
• Work with other intelligent people

“Some people argue that there aren’t real estate bargains where they are, but there are prime opportunities everywhere that are overlooked. Most people aren’t trained financially to recognize the opportunities in front of them.”

We need to put on entrepreneur/opportunity glasses. 👓

Chapter 6: Work to Learn – Not to Earn

Poor Dad was intelligent and well educated and worked for money because job security meant everything to him. Rich Dad became a millionaire by working to learn.

As Kiyosaki writes:

“I recommend to young people to seek work for what they will learn, more than what they will earn. Look down the road at what skills they want to acquire before choosing a specific profession and before getting trapped in the Rat Race.”

In fact, that’s exactly what Kiyosaki did. He joined the Marines after graduating from college and learned the essential business skills of leading and managing people. After serving his country, Kiyosaki joined Xerox, overcame his fear of rejection to become one of the top five salespeople in the company, then left the corporate world to form his own business.

Chapter 6 of Rich Dad Poor Dad then discusses the synergy of management skills needed for success in business:

• Cash flow management
• Systems management
• People management

Overcoming Obstacles

Chapter 7 of Rich Dad Poor Dad begins by noting that “the primary difference between a rich person and a poor person is how they manage fear.”

Robert Kiyosaki isn’t talking about the type of fear that some people have when going to the dentist. The book, “fear” is about the fear of losing money and how to handle that fear.

It’s one of the five biggest obstacles people face on the path to becoming financially independent:

Fear

Losing money is a fact of investing life, and so is the fear that comes along with it. Kiyosaki notes that he’s never met a rich person who has never lost money, but he’s met plenty of poor people who have never lost a dime because they’ve never invested. That hit hard huh?

Real estate investors who choose to act only on a “sure thing” are paralyzed by fear in disguise. People who can’t see the big picture and think big are the ones who almost never, ever succeed in investing or in life. Look up dollar cost averaging and get started today.

Cynicism

Everybody has doubts that affect self-confidence, and it’s easy to fall into the trap of playing “What if?” especially when friends and family are constantly reminding you of your potential shortcomings.

Things like the economy crashing, interest rates rising, and tenants not paying their rent are common “what if” fears that all real estate investors have. While these are important items to consider, it’s important not to allow the cynicism of others to overtake your control. Otherwise, you may become immobilized as opportunities pass you by. Look, the economy is always “ about to crash”.

Laziness

In today’s interconnected world it’s easy to confuse being busy with actually accomplishing things that matter. In fact, according to Rich Dad Poor Dad, busy people are often the laziest.

Busy people arrive at the office early and leave late. They bring work home to finish at night and on the weekends. Before they know it, the people and things that matter most to them have disappeared.

Instead of giving in to the call of the rat race and mistaking action for accomplishment, successful real estate investors are proactive and take care of themselves and their wealth first.

Bad habits

Habits control behavior. For example, most people pay their bills first before they pay themselves. The result is that there’s usually very little left over at the end of the month for investing.

Paying yourself first – even if you don’t have enough money to pay other people - makes you financially stronger, mentally and fiscally. In a way, it’s a form of reverse psychology.

When you develop the habit of paying yourself first, you become motivated by the fear of not being able to pay creditors. In turn, you begin looking for other forms of income like investment real estate.

Arrogance

Investors know what makes them money. But it’s the things they don’t know – and don’t know they don’t know – that makes them lose money. When people become truly arrogant, they honestly believe that what they don’t know doesn’t matter.

Train yourself to listen to what other people have to say, especially when it comes to money and investing. If you discover you’re ignorant about a subject, educate yourself or find an expert in the field.

Overcoming these five biggest obstacles on the path to real estate success requires a blend of balance and focus. There are plenty of “Chicken Littles” in the world today -- people with a victimhood mentality who live their lives in cynicism and pessimism.

Rich Dad Poor Dad suggests filtering negative people and their fears out of your life. Instead, concentrate on the big picture and always ask, “What’s in it for me?”

Getting Started

In Chapter 8, Rich Dad Poor Dad tells us that “there is gold everywhere, most people are not trained to see it.”

Part of this lack of vision and clarity comes from the world we live in. We’re trained from a very young age to work hard for someone else, spend the money that we earn, and borrow more if we run short.

Unfortunately, people who choose to become one of the masses never take the time to develop their financial genius.

Investing in real estate is the perfect example. The average person can spend a week out in the field and find nothing, while the investor who has trained himself can easily find four or five deals that make sense in a single day!

Here are the ten steps to follow to develop your financial genius and discover the gold that’s already out there, just waiting to be found:

1. Have a deep emotional reason or purpose for doing what you do, a combination of wants and don’t wants.
2. Understand the power of choice and choose daily what to do, including choosing the right habits and educating yourself.
3. Choose your friends carefully by leveraging the power of association, being careful not to listen to poor or frightened people.
4. Master the power of learning quickly and develop a formula for making money.
5. Pay yourself first by mastering the power of self-discipline to manage your cash flow, people, and personal time.
6. Select great people for your team and compensate them generously for their advice, because the more money they make the more money you will make.
7. Ask “How fast do I get my money back?” by focusing on return of investment first, followed by return on investment.
8. Use money generated by assets you own to buy luxuries by focusing on self-discipline to direct money to create more.
9. Have a role model to follow and tap into the power of their genius to put to your use.
10. Realize that if you want something, you need to give something first.

Still, Want More? Here Are Some To-Do’s

In the final section of Rich Dad Poor Dad, Chapter 9,  Kiyosaki pulls the key lessons of the book together into a checklist of actions you can start taking today:

• Stop doing what you’re doing by taking a break and assessing what is and isn’t working.
• Look for new ideas by finding resources on different and unique subjects.
• Find a mentor who’s been where you're going, take them to lunch and pick their brain.
• Always be learning by taking classes, attending seminars, and reading.
• Make lots of offers (always with escape clauses) because eventually someone will say “Yes.”
• Spend ten minutes each month for the next 12 months walking, running, or driving a certain area and looking for changes that create bargains.
• Shop for real estate deals when the market corrects, because profits are made when buying, not when selling.
• Learn how, when, and where to buy by investing in your education.
• Think bigger to get richer, because small thinkers don’t get the big breaks.
• Most people only look for what they can afford, so buy a bigger pie and cut it into pieces by finding a buyer first, then a seller.
• Negotiate volume discounts by thinking big, pooling people together, and buying in bulk.
• Read and learn from history, because history always repeats itself.
• Action always beats inaction.

Is Rich Dad Poor Dad Worth Reading?

The goal of Rich Dad Poor Dad is to motivate you to develop your own unique path to financial freedom.

While the book doesn’t take a one-size-fits-all approach with ready-made answers, it does provide an excellent framework for creating your own objectives to build wealth by investing in real estate.

Strengths

• Provides a contrarian view that is different from the “common knowledge” found in most personal finance education
• Focuses on turning income you earn into assets that produce even more income
• Encourages controlling spending and expenses
• Explains why investors should focus on real estate vs. other asset types
• Emphasizes the power of thought and continual learning
• Talks about taking action instead of just thinking about it

Weaknesses

• Success examples in the book are unique to Kiyosaki’s specific situation and may be hard to replicate
• Some parts of the book also lack detail, which may make the concepts discussed more difficult to apply
• Frequently demeans people who are more comfortable following the herd rather than thinking for themselves
• Rich Dad Poor Dad is a motivational book, not a book written by a financial expert

Conclusion

If you had to choose one key takeaway from Rich Dad Poor Dad, it might very well be that rich people are not always born rich. The reality in the U.S. today is that you don’t have to go to work for somebody else and join the rat race to make money.

Even though Kiyosaki first published Rich Dad Poor Dad nearly 25 years ago, the lessons he wrote about back then can still be put into practice today. Begin with your financial education, then create your own personal objectives to begin your path to long-term wealth and financial freedom.