I first discovered ‘Rich Dad, Poor Dad’ last year when I was in the second year of my Economics (honours) degree. I couldn’t put it down, and I’m not exaggerating when I say that it completely changed my life.
The ideas presented in the book Rich Dad, Poor Dad aren’t particularly fancy, but the concepts were entirely new to me. This is true that the book taught me to think of money of not as an end-goal, but as a tool for wealth creation.
Up until that point, I had thought that all I needed to do was to find the right job and I’d be set.
But after reading this book, I realized that the concept of trading time for money just isn’t the smartest way to go through life. Your money should work for you—not the other way around. The author of Rich Dad, Poor Dad, Robert Kiyosaki, believes precisely that. Here are some of his concepts:
- Being rich = freedom
- Rich people make money work for them, while most everyone else works for money
- Financial education is a key to success.
In regards to that last concept, Kiyosaki has a lot to say. For example, I just love this quote from the first chapter:
“Most people never study the subject [of money]. They go to work, get their paycheck, balance their checkbooks, and that’s it. On top of that, they wonder why they have money problems. Few realize that it’s their lack of financial education that is the problem.”
More key concepts:
- Assets are things that produce cash-flow. You become wealthy by accumulating assets.
- Wealth comes from having enough assets, which generate enough income to cover all of your expenses. That way, there is enough left over to invest in more assets.
This book has been an amazing investment of time for me. For the beginners who desire to achieve economic prosperity, Kiyosaki offers workable insights based on real life experiences. It teaches ideas about applied economics that should have been taught to us in schools or at home. The principles of financial literacy- Accounting, Investing, understanding markets and relevant laws are explained in a way that even a layman can fully relate to them.
The author emphasizes the importance of sound finances for a better meaningful life. He argues that while one may be academic genius, a topper, a gold medalist, there is every possibility of ending up as a failure without financial know-how. The book teaches the difference between assets and liabilities in a way we never imagined.
The author says that while the rich invest in assets and let money work for them, the middle class invests in liabilities naively considering them as assets and work for money. For example, expensive house/car is a liability for rich and an asset for the poor. The rich take risk, but the poor always play safe when it comes to investment and returns. The rich create assets to pay their expenses, the poor balance income and expenses without ever pondering about it.
The difference, the author says lies in thinking. “If you have to invest in something, invest in financial literacy”, the author asserts. It is lack of financial literacy that middle class salaried people think Mutual funds as a safe option for investment, reposing more faith in the fund manager than their own understanding of finances. All this, the author mentions, was taught to him by his rich dad, a man whom he met in childhood. The Poor Dad tells him “I can’t afford it”, while as Rich Dad teaches him “How I can afford it.” This difference of mindset between the two Dads emerges from an understanding of finances. He expects his experiences will help others in arriving at better financial decisions.
A common criticism of this book is that while it is inspiring, by the time you reach the end of the book, you wander what the first step is. That’s actually fine with me. I believe everything starts with inspiration. What separates those that are successful from those that are not is that the successful people take that inspiration—and then they act on it. They do not let fear and never-ending analysis paralyze them (Kiyosaki calls this “analysis paralysis”).
This book awakened in me an almost insatiable appetite for digging deep into financial books. Soon after reading it, I found myself tearing through book after book on personal finance, learning and absorbing all that I possibly could. As a result, I learned so much more than I would have otherwise. If nothing else, that alone is worth the price of the book.
Reading Rich Dad, Poor Dad is for sure a fulfilling investment of time. You get more returns than your investment the moment you start turning page after page of this book.
Written by-
Aditi Agrawal