Rich Dad Poor Dad claims to teach you the differences between working for money and making money work for you as well as the myth of having to earn a high income to be rich.
However, it might wonder if it is just an overhyped scam.
If you want to know whether you should spend your valuable to read the Rich Dad Poor Dad book, this comprehensive review is for you. You will get all the answers here.
I have read Rich Dad Poor Dad a few times. So I can tell you everything you need to know about this book.
At the end of this book review, I’ll also tell you the best way to achieve financial success.
Table of Contents
What is Rich Dad Poor Dad?
Rich Dad Poor Dad is a book that explores the steps to becoming financially independent and wealthy by combining autobiography and personal experience.
The author claims to teach you the things that were never taught in school. Instead, he claims to provide you with the knowledge that the upper-class passes on to their children for becoming and staying rich.
To support his claims, he points to his highly successful career as an investor and his ability to retire young at the age of 47.
The life of Robert Kiyosaki, the author of Rich Dad Poor Dad, was shaped by two influential fathers.
Kiyosaki’s biological father, Poor Dad, was a highly intelligent and very well-educated man. The poor father believed that hard work would lead to good grades and a meaningful job. However, Poor Dad failed to make good money despite having all these good qualities.
Kiyosaki’s best friend’s father was the Rich Dad. Rich Dad believed that financial education is essential for making money work for you. He believed in learning how money works and making it work for you.
Although Rich Dad was an eighth-grade dropout, he eventually became a millionaire through his financial acumen.
In the book, Kiyosaki describes how Rich Dad made money and what mistakes Poor Dad made.
Kiyosaki discusses six lessons he learned from his Rich Dad in the first six chapters, which make up around two-thirds of the entire book.
Is Rich Dad Poor Dad a scam?
Rich Dad Poor Dad isn’t a scam. There are valuable insights, but it’s not a bible for achieving financial success.
You cannot become rich by simply reading this book. In fact, the book doesn’t teach you anything practical. It’s more about cultivating a rich mindset. You will not learn a business model that you can start to make money.
Rich Dad Poor Dad has been criticized by many commentators for promoting several misconceptions mentioned in the book, and some figures are overstated.
Moreover, some commentators have pointed out that Kiyosaki’s “Rich Dad” story may be fictionalized. It seems that Robert presents it as a real-life story to make it more persuasive. This is a smart approach, but some people might consider it a scam or an unethical tactic.
In the following section, I’ll discuss some concepts in this book are questionable.
9 Misconceptions of Rich Dad Poor Dad
1. The Educational system is flawed
Many times in the book, Robert mentions the shortcomings of our traditional education system.
Robert claims that the educational system is predominantly designed to produce employees and could negatively impact entrepreneurs. The school talks very little about financial literacy.
I don’t fully agree with this. The educational system is not flawed. It serves an important purpose to ensure every person contributes to the development of society in different aspects. We need doctors, nurses, engineers, accountants, manufacturers etc.
Robert seems to ignore the basic theory of division of labour. Society should be diverse in order to prosper. The world doesn’t need a lot of entrepreneurs.
Robert seems to project his own value or desire about entrepreneurship onto the educational system and falsely claims it is flawed. If the educational system only talks about entrepreneurship, society will not be able to function properly.
2. Your primary residence is not an asset
Most people now consider their primary residence a valuable asset. According to Robert, a home does not generate positive cash flow, so it is not an asset.
Robert says that in spite of the fall in the value of rental properties, positive cash flow means you still make money month after month. On the other hand, home values don’t always go up.
I don’t agree with this. Your primary residence should be an asset as well because you can sell it whenever you want. Also, if you purchased your home at a low price, you might be able to gain a lot from the increase in home value when the market booms. It doesn’t make sense to treat your home as a liability.
3. Develop a broad skillset
Capitalism revolves around having a marketable skill set that is practical and marketable. In order to stay financially stable, you need to provide tangible value people are willing to pay for.
To succeed in business, Kiyosaki recommends building systems, managing money, and leading teams. He also emphasizes the importance of cultivating a habit of learning a broad range of skills.
While I agree that learning is important, I don’t agree that one should develop a very broad skill set. It takes a lot of time to master one skill. So it’s not possible to learn many skills at the same time. If your skill is just mediocre, you won’t be able to make any money with it.
Therefore, I think the better approach is to focus on one high-income skill.
4. Employees are broke and miserable
Despite the fact that I truly enjoy the freedom of being self-employed, not everyone can take this route. It is possible to enjoy your job and make a lot of money. There are many high-income employees in many professions.
However, Kiyosaki teases those who work for others and says they are generally broke and unhappy. This is very biased.
Kiyosaki seems to omit the risks and downsides of business ownership. Of course, there are ways to manage risk, but still, there are risks if your business sells products or services.
I do business as well, so I don’t discourage you to do business if you are interested. Actually, there are some ways to build a business risk-free thanks to the internet. I will tell you more about this business opportunity at the end of this review.
5. Academic learning isn’t valuable
Kiyosaki tends to undervalue academic learning and traditional learning. In fact, academic learning is very important.
We often don’t realize that studying academic subjects develops a range of important skills. Studying academic subjects affects both our brains and our lives.
Throughout our lives, we often have many questions, doubts, and anxieties. Academic subjects like science, maths, geography and so on can answer most of these questions. We also gain an appreciation for the miracles of science through a scholarly study. We learn that many of these miracles are scientific rather than magical.
In academic subjects such as math and physics, we solve a lot of logical problems, and this also prepares us for the real world when we have to solve some of our daily problems logically. By solving problems logically, we can avert many situations in life that would otherwise be unwanted.
Also, ironically, Robert conceded that accounting could be the most important subject in the world if you wish to be rich long-term.
6. Investing in real estate is the best way to get rich
The whole book is about how to get rich.
However, Robert seems to stick too much to real estate, which irritates me. It’s true that real estate investing can be a great way to build wealth, but not everyone is suited for it.
The benefits of investing in real estate are numerous, but Kiyosaki seems to imply that it’s a sure way to get rich. As a business, it’s no different from any other. The risk of failure can’t be avoided, and knowledge, experience, and luck are all needed to succeed.
In fact, real estate investing is not easy and the capital risk is huge. There are other ways to get rich without any capital risk. I will tell you more about this opportunity at the end of this review.
7. Pay yourself first
Kiyosaki suggests paying yourself first, meaning your savings. But I don’t completely agree with this.
Do not get me wrong, I am in favor of prioritizing saving, but you shouldn’t risk stiffing the people you owe money, wrecking your credit score, and accruing fees and interest by paying yourself first. The first thing you do is pay off your creditors and essential living expenses, then you set aside your savings, and finally you reverse engineer the rest of the budget.
You may go bankrupt if you always pay yourself first and ignore your debts.
8. You must become an entrepreneur to get rich
To get rich, you need to be an entrepreneur, Kiyosaki says. I disagree. I personally don’t think everyone is cut out to run a business, and I know some people who built significant wealth without having their own business.
9. Downplays investment risk
Rich Dad Poor Dad tends to downplay investment risks in every chapter. Robert says that after understanding your risks, you should be prepared to accept them. The key to managing risk is to understand it first. However, even if you understand risk, you cannot eliminate it.
When you invest, you need to understand where your risk is coming from in order to use risk management techniques and strategies. Nevertheless, there are always some risks. There are risks in buying stocks, buying property, and any other investments.
Therefore, I don’t recommend people to do investment before they have a large sum of spare cash. And to generate a large amount of cash, you can start a risk-free side-hustle, which I will tell you about later.
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Are there any lessons you can learn from Rich Dad Poor Dad?
Even though I found some misconceptions in Rich Dad Poor Dad, I did manage to learn some valuable lessons from the book.
Most of us end up broke because we have a completely different approach towards money. We usually view money as a goal to buy the things we desire, but rich people view money as a means to generate more wealth.
In addition, poor people tend to believe that loving money is the root of all evils, while rich people understand that the lack of money is the real problem.
But, the hardest part isn’t making money; it’s keeping it. We’ve seen so many overnight millionaires go broke within a few years because they don’t know how to hold on to their wealth.
In his book, Kiyosaki shares his experience of having two dads with completely different attitudes towards money, life, and freedom – one was poor, while the other was wealthy. And based on his experience, he shares some vital lessons on financial freedom that I’ve learned and listed below.
If you’re keen on knowing more about the book, you can read the complete summary.
Here are the 10 lessons:
Lesson 1: The rich don’t work for money
According to the author, the wealthy take advantage of opportunities in life, while the poor ignore them since they are too preoccupied to think about what they can do for sustenance and security.
Middle-class and poor people aren’t taught to take risks and they work in sheltered, salaried jobs under fear and greed.
Lesson 2: Know the difference between assets and liabilities
Kiyosaki explains that assets are the key to financial freedom. So, what exactly is an asset? It’s something that puts money in your pocket. On the other hand, liabilities take money out of your pocket.
If you want to become rich, you need to start investing in assets like shares and property. These are things that generate cash flow, appreciate in value, and have a market. On the other hand, poor people tend to add liabilities to their lives. These are commitments and obligations that cost money and don’t earn income.
To achieve financial freedom, you need to limit your liabilities to the bare minimum. That means avoiding purchases that will drain your wallet without bringing in any money.
Those who continue to get richer invest in assets and prioritize their financial future. On the other hand, those who fail to purchase assets accumulate liabilities and remain poor.
Lesson 3: Mind your own business
You shouldn’t meddle in your employer’s business. It doesn’t belong to you, so it’s not your concern.
If you want to achieve financial independence, you should explore options for starting your own business and becoming your own boss.
The author stresses the significance of building assets, such as stocks, bonds, real estate, royalties, mutual funds, etc. Assets are anything that generates income.
Lesson 4: The history of taxes and the power of corporations
According to the author, the wealthy manipulate the less affluent to safeguard and grow their wealth. They do so by playing the investment game, leveraging their knowledge of corporate structures, and using legal loopholes to reduce their tax burden.
Unlike the rich, who earn money, spend it, and then pay taxes, the poor and middle class tend to earn, pay taxes, and then spend what is left. This creates a disadvantage for those who are not financially literate and fail to take advantage of investment opportunities.
To counteract this, the author suggests that readers increase their financial IQ by studying investing, accounting, and law. By doing so, they can gain a deeper understanding of the system and learn how to navigate it more effectively.
Lesson 5: Don’t work for money
To achieve financial freedom, you need to possess certain skills.
For instance, Robert Kiyosaki talks about a woman who holds a master’s degree in English literature. When he suggests that she should learn how to sell, she takes offense. Kiyosaki emphasizes that if one is serious about becoming wealthy, it is essential to learn how to manage people, systems, and cash flows.
Therefore, to be financially successful, it is crucial to master the skills of selling, marketing, and communication.
Lesson 6: Learn to manage risk
You might think that investing is a risky game, but the real risk comes from not knowing what you’re doing. In his book, Kiyosaki gives us some solid advice: if you want to reduce the risk, then you need to increase your knowledge.
Now, don’t get me wrong. Kiyosaki isn’t telling you to go back to college or anything like that. Nope, he’s saying that you can gain valuable knowledge simply by reading books or chatting with people who know what they’re talking about when it comes to investing.
So, whether you’re new to investing or you’re a seasoned pro, remember this: the more you know, the better your chances of success.
Lesson 7: Overcome obstacles
Kiyosaki explains the five personality types that impede human success: fear, cynicism, bad habits, laziness, and arrogance.
He believes that fear is natural, but how you handle it matters. Being rich is, after all, more of a psychological than a skills game.
A person should pay more attention to rewards than to obstacles.
Who is Robert Kiyosaki?
Robert Kiyosaki is a Japanese American born in Hilo, Hawaii. With an estimated net worth of over $100 million, Robert Kiyosaki is a successful investor, motivational speaker and entrepreneur. Under the Rich Dad brand, over 26 million copies of his books have been sold worldwide. However, it was the Rich Dad Poor Dad seminar that generated the most profit for him.
Upon graduating from Hilo High School, he went to the U.S. Merchant Marine Academy. During the Vietnam War, he served as a gunship pilot and was recognized with the Air Medal as a graduate of the academy.
In 1975, Kiyosaki worked as a sales person for Xerox machines after leaving the Marine Corps. He later founded his own business which sold Velcro surfer wallets.
Although the company was successful for a period of time, it unfortunately went out of business.
At the beginning of the 1980s Kiyosaki tried his hand at a business that certified rock band t-shirts. The business was sold in 1985.
After struggling for nearly a decade to achieve success, Kiyosaki retired at the age of 47 to pursue other endeavors. Then he founded Cashflow Technologies, Inc. in 1997 and rose once again. He runs two of his brands under this company, Rich Dad and Cashflow.
Apart from running Rich Dad and Cashflow Technologies Inc. Kiyosaki has also invested in a number of other ventures.
He acquired a silver mine in South America in 2002, and he took a gold mine public in China in 2003.
According to his book, ‘Conspiracy of the Rich’, he mentioned that he intended to take the copper mine public when copper prices and values increased.
During his teenage years, Robert Kiyosaki began working with gold and silver coins. It is his theory that if you have a few dollars, you can buy precious metal coins, and by doing so you will be prepared to confront the “biggest crashes in history”.
The reason he claims to be a ‘gold bug’ is that he own several commodities like silver and gold, so he can protect himself from any losses that may result from the misprinting of the U.S dollar.
Additionally, Kiyosaki also owns and invests in real estate. It is no secret that he invests a great deal of money in real estate, and has a great deal of real estate development ventures. He is involved in various property management projects all over the country.
As he revealed in an episode of The Alex Jones Show in 2010, he owns large apartment complexes, hotels, and golf courses as part of his assets. Also, he has invested in various oil drilling companies, oil wells, as well as in a startup solar company that is still in its infancy.
It is to be noted, however, that he was harmed by the failure of his company, Rich Global LLC, which announced bankruptcy in August 2012.
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Is Rich Dad real or a myth?
Have you ever wondered if Rich Dad, the character in Robert Kiyosaki’s Rich Dad series, is a real person or a fictional character? Well, the truth is that there is no evidence to prove that Rich Dad exists as an individual. Several magazines have searched for his real estate files in Hawaii but failed to find any evidence of this person.
Robert Kiyosaki has told different stories about Rich Dad’s whereabouts, including once reporting that Rich Dad is deceased and another time stating that he had become disabled. In one of his books, Kiyosaki mentioned that Rich Dad’s family requested not to use their name.
However, Kiyosaki has also stated that Rich Dad is a composite character based on some of his advisors, including his best friend’s father, Dr. Buckminster Fuller, and others. In an interview with SmartMoney magazine in 2003, Kiyosaki candidly compared Rich Dad to Harry Potter, stating that he could be a myth like the famous wizard.
Despite the ambiguity surrounding Rich Dad’s existence, Kiyosaki has consistently maintained that the Rich Dad series is based on true stories about his fathers, and the books have been published as non-fiction. Nevertheless, the fact that Rich Dad may not be a real person may cast doubt on the reliability of the series.
In conclusion, the mystery surrounding Rich Dad’s existence may remain unsolved, but the lessons and insights shared in the Rich Dad series can still provide valuable information for anyone interested in personal finance and investing.
Rich Dad Poor Dad Pros and Cons
Pros
- It’s right that investing in assets will produce even more income
- Budgeting and expense control are encouraged
- Mentions the advantages of investing in real estate over other types of assets
- Underlines the importance of thinking and learning continuously
- Focuses on rich mindset
Cons
- It may be difficult to duplicate Kiyosaki’s success examples since they were unique to his situation
- Several sections of the book are also lacking in detail, making it more difficult to apply the concepts discussed
- Demonizes people who want to follow the herd rather than think for themselves
- Rich Dad Poor Dad is just a motivational book, so you cannot get any practical business advice
- Robert doesn’t teach you a business model to start making money
- There are a few misconceptions as mentioned above
Should you read the book?
Many people recommend Rich Dad Poor Dad to entrepreneurs, especially those just starting out. However, it has some shortcomings.
It seems to me that he discusses many controversial topics. I think that is the reason why it’s popular. People like controversial books.
It is best to take a grain of salt with some of what Robert Kiyosaki says. He tends to project a lot of his own preference or value, which might not be true for everyone.
The book offers a few positive lessons, but it isn’t as profound as the average personal finance blog today.
I don’t want to disappoint anyone who regards Rich Dad Poor Dad as the Holy Grail of personal finance, but I would not recommend it to someone who is looking for tips on how to manage money more effectively.
You might read it if you want to learn a different angle of looking into things. But don’t expect to become rich after reading this book.
What can you do to really get rich?
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