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RICH DAD POOR DAD is Robert Kiyosaki's best selling book about the difference of mindset between the poor, middle class and the rich
In this rich dad poor dad book summary, we will break down some of my favorite lesson from the book rich dad poor dad to help you become more financially literate. So, let’s hop into it,
Lesson 1; the rich don’t work for money- money works for them
The first lesson that this book teaches is that the rich people don’t get rich by being paid higher salaries but instead they get rich by owning thing that generates money for them e.g. (a business).
Rich people use their money or income to buy assets that generates more money to them. And they reduce their spending on expenses and buying liabilities (a liability is something that takes money out of your pocket and the example of it can be a car or the house that you live in.) but on the contrary poor people either spend all their income on expenses or buying liabilities that takes money out of their pocket. And the key to financial independence is having money that generates more money. In short you want your money to make enough money
so that you don’t have to work
Lesson 2; Buy assets, not liabilities
As I mentioned earlier buying great assets that generates money and avoiding liabilities is the key to getting financial freedom and in the second chapter of the book Robert Kiyosaki emphasis on this subject. And he says that real assets are those businesses that don’t require your active management, stocks, bonds and other securities the book summed this up by saying “think of each dollar as your employee that works 24 hours a day tirelessly to make you money” and he states that the biggest obstacle in front of poor people is knowing the difference between an asset and a liability. So you may ask what the difference between an asset and liability? And to put it simply an asset is something that puts money in your pocket and a liability is something that takes money out of your pocket.
Lesson 3; why teach financial literacy?
“It’s not how much money you make its how much money you keep”
The biggest financial lesson to learn is that it’s all about how much money you keep not how much money you make and surely without financial literacy you will lose your money soon and it doesn’t matter if you have a degree because a person can be highly educated, professionally successful and financially illiterate.
In this section of RICH DAD POOR DAD Robert Kiyosaki shares a simple history. In 1923, the greatest leaders and businessmen joined together in a meeting in Chicago. Twenty-five years later, nine of them had their lives end in the following ways
· Four died broke
· One went insane
· Two were released from prison
· Two committed suicide
this unfortunate turn was likely due to their lives drastically being affected by the great depression and 1929 market crash and he tells this story in order to inform the reader that it’s not about how much money someone makes it is about how much money he/she keeps because at the end of the day all that matters is how much money you have not how much money you earned .
Lesson 4; Mind your own business
“The rich focus on their asset column while everyone else focus on their income statements”
In this chapter Robert states that a lot of people work for everyone except themselves and he says that you should mind your own business and that financial struggle is often directly the result of people working all their lives for someone else, many people will simply have nothing at the end of their working days to show for their efforts and in order to become financially secure a person needs to mind their own business and create a business of their own and he says that “start minding your own business keep you daytime job but start buying real assets, not liabilities”
Mohammad Iqbal Abid