Book Summary: Rich Dad Poor Dad by Robert T. Kiyosaki

Quick Summary: Rich Dad, Poor Dad combines autobiography and personal advice to explain how to become financially independent and wealthy. It is the author’s belief that the knowledge the upper class passes down to their children is what makes them rich (and stays that way). 

You do not have to read the entire book if you don’t have time. This book summary provides an overview of everything you can learn from it.

Let’s get started without further ado.

Rich Dad Poor Dad Key Takeaways

  1. Educate your children financially
  2. Replace every negative ‘can’t do’ thought with a ‘can do’ healthy attitude
  3. Take risks and get smart with experience
  4. Be financially literate
  5. Have control over your spending habits
  6. Stay focused and mind your own business
  7. Pay yourself first
  8. Learn about how corporations pay taxes
  9. Train your mind to take bold steps
  10. Make smart people buy your idea
  11. Never have any attitude that prevents you from getting rich

Rich Dad Poor Dad Characters

In Rich Dad, Poor Dad, there are three main characters: poor dad, rich dad (Kiyosaki’s second father), and the son (the author himself as narrator). Each character has its own personal characteristics:

  • Poor dad – educated but lacking financial literacy
  • Rich dad – very little education (eighth grade), but high financial IQ
  • Kiyosaki – a spectator who learns lessons from both but internalizes only those of rich dad

Chapter Summaries

Chapter 1: Rich Dad, Poor Dad

In this chapter, Kiyosaki tells how he and Mike, the son of a wealthy family, decided to become rich because other rich kids at their school excluded them.

Their partnership allowed them to collect used toothpaste tubes throughout the neighborhood. At the time, the tubes were made of lead, so the boys tried melting them down to turn the lead into nickel.

The poor father was very amused by this. He then informed them that what they were doing, printing their own money, was illegal and was called counterfeiting. Mike’s father was advised to support the boys.

At that time, the rich dad did not own several businesses in Hawaii, but he did own several businesses. Consequently, he had figured out how to make money, according to the poor father.

They had to wait until the rich dad saw them, and then he would make a deal with them. After that, he would hire them for a pittance of 10 cents an hour in one of his supermarkets, and in return, he would show them how to make money.

Despite some misgivings, the boys agreed and set to work. A frustrated Kiyosaki became angry after waiting three weeks and nothing happened. The rich dad was still waiting when he went to his office to protest.

The rich dad sent Kiyosaki back to do the same work without pay when he expressed a desire to learn how not to work for money. Kiyosaki was taught to earn money with his mind. Therefore, he would not receive payment for his work at the supermarket.

The rich dad asked the boys three weeks later if they had learned anything. He explained to them that they would either learn not to work for money, or they would work hard for little money and end up relying on a meager pension. If they chose the latter, they would get full pay for working in the superette. When the boys refused, he raised the wages until they were outrageously high for the time – $5 an hour.

When they refused, he proudly told them, “You have proved that nothing can be bought.” His words showed that they were not guided by emotions such as fear or greed. Instead of being guided by these emotions, he encouraged them to use fear, greed, or other emotions to get them to work constructively.

Chapter 2: The Rich Don’t Work for Money

Even if a person earns a lot of money, they will be a slave to it due to their fear and greed. The person who conquers fear or greed will become rich. Poor people stay poor because they are ruled by greed or fear, says rich dad.

Rich dad believes that fear and greed cause society to become more expensive for everyone, not the government or the rich.

One cannot work for money in order to be free. They should instead seek out opportunities to earn money without having to work. While the boys worked for no wage, their rich dad encouraged them to find a way to make money.

Most people are too busy seeking money and security to see these opportunities. Well, as the author says, “that’s all they’re going to get.”

Chapter 3: Why Teach Financial Literacy

Rich dad’s son, Mike, is running the empire of his father and is immensely wealthy because he is doing better than his father. Even if Kiyosaki did not work, he has accumulated enough wealth to continue to grow on his own. As a result, he has decided to retire.

He is fond of narrating how the richest people in the world, in 1926, ended up impoverished, dead, or otherwise bankrupt 25 years later. Several factors may have contributed to the 1929 crash, according to him. 

When people focus on money instead of acquiring an education, money will come and go. They will be swept away by the extreme differences of today, which are greater than those of the 1920s.

Maintaining wealth regardless of market changes requires a solid financial foundation. What is an asset and what is a liability is the most important concept.

Many people do not know the difference between assets and liabilities. When they do not understand how assets and liabilities work, they end up making poor financial decisions.

Assets are things that provide you with income. Generally, a liability is something that costs you money, meaning it causes expenses.

Rich people acquire assets, while middle-class people acquire liabilities. This is the fundamental difference between the two groups. Rich people are not defined by money, but by cash flow.

When middle-class people’s income increases, their expenses increase, which is one of the most common pitfalls for them. When they get into debt, they get advice on how to stretch the debt over several decades. The result is that they take on more debt because they have more income.

Because of this pattern, people from the middle class and poor backgrounds struggle with financial problems regardless of their income.

The concept of assets is often taken as fact. In reality, it is these assets that keep people trapped. A house is an important example. But in reality, it’s a liability. In the form of taxes and maintenance, a house causes expenses instead of bringing money to its owner. That makes the house a burden.

In the net worth statement of a wealthy person, assets that generate income dominate. Expenses for liabilities are then covered without regard to earned income. The middle class fails to do this and constantly struggles. If a person can cover their expenses without working, they are considered wealthy.

Chapter 4: Mind Your Own Business

To be financially secure, a person must mind his own business. To take care of one’s own business, one must build one’s own fortune. Taking care of someone else’s wealth is a waste of time. Taxes are paid to the government, liabilities are paid to the bank.

The only way to pay for yourself and work for yourself is to buy or build up assets.

It is important to know what an asset is. An asset is not an expensive item because it loses its value when purchased and taxes are incurred when resold.

Business assets are assets that do not require the owner’s presence to operate. Typically, these are bonds, stocks, income-producing real estate, notes, and royalties that generate income, increase in value, and have a market.

Assets should be acquired only if their expenses can be comfortably covered by the income generated by the liabilities.

Chapter 5: The History of Taxes and the Power of Corporations

Robin Hood was considered a crook by his rich father and sympathetic by his poor father. According to Kiyosaki, it is this charm that has caused pain to the poor and middle class because they approve of taking from the rich to give to the poor.

The concept of taxation can be explained this way: taking from the rich to redistribute to the poor and middle class.

However, this backfired because the rich do not pay taxes while the middle class and poor do.

According to the rich father, there were no taxes in England and the United States at first. In wartime, taxes were imposed only for a short time. Then, at the turn of the 20th century, taxes became permanent. Originally, taxation affected only the rich, so people accepted it.

However, as the government wanted to spend more and more money, it extended taxation to other segments of the population. The rich responded by forming corporations to protect their wealth from taxation. Rich people avoided paying taxes, but the middle class and poor people did.

According to Kiyosaki, the rich will always outsmart the non-rich because they have solid financial education and play by different rules. When it comes to taxes, different rules apply to corporations than to employees.

Accounting, investing, understanding the market and knowing the law are all part of financial literacy.

Chapter 6: The Rich Invent Money

Kiyosaki believes that people today have problems because they cling to old ideas and do not expand their financial intelligence. People entrench themselves in patterns that do not work the way they used to instead of paying attention to the feedback they receive from life.

The rich invest their money in such a way that they get their initial investment back quickly at a profit. With that profit, they make more money. In essence, they have made money out of nothing (since they got their initial investment back).

Kiyosaki accomplishes this by buying, selling, and renting real estate. To purchase properties at a fraction of their actual value, he goes to auctions and yards. After selling them below their actual value, he still makes a profit.

Since he recovers both his investment and his profits, he creates money out of thin air. He then buys more real estate. Due to a special law, he does not have to pay tax on the profit he makes.

So he does not have to make any down payments out of his own pocket when he raises money this way. Creating money from nothing often takes only a few hours or days.

This kind of work is done by professional investors. The qualities of a successful entrepreneur include the ability to spot opportunities that others do not, raise money without relying on a bank, and manage people to advise and protect the business.

Chapter 7: Work to Learn, Don’t Work for Money

If you specialize in your education, you will be cornered because you can only serve a niche market. Your skills will become worthless in the event of a disaster. Financial ruin will be the result.

Kiyosaki encourages people to work for many companies and in many positions to gain as much experience as possible. From there, they can then start a business and invest.

To ensure the protection of one’s rights as an employee, Kiyosaki recommends working only in unionized companies. Not doing so exposes one to financial risk.

Among the most important skills to learn is how to sell. The same goes for marketing and advertising. Those who have these skills have a better chance of making a living than being underpaid.

Certain training or professions are considered more important, while others are considered less important, even though they are necessary.

Excellent communication skills are essential to successfully promote and sell a product or idea. However, society believes that this skill should not be learned if one is pursuing academic education or higher status. Arrogance is an obstacle to people’s intellectual and financial growth.

There is a problem of compartmentalization and labeling in society. Many people are taught that any knowledge is worthless, so they remain ignorant. Hyper-specialization has led people to rely increasingly on a single skill. This makes them less flexible and less adaptable.

It seems that sales and marketing can be a permanent source of employment and income as professions evolve with technology, others die out, and new ones emerge. Basically, they serve to bring innovation and breakthroughs to society and investors.

Chapter 8: Overcoming Obstacles

The following reasons may prevent an individual from realizing their full potential even if they are financially literate:

Fear

The fear of losing money is a strong emotion that we all share. Only when people don’t know how to deal with loss do they experience fear. Loss teaches us how to cope. Utilizing it correctly will lead to victory. Playing it too safe, so afraid of losing, means they will never win.

Kiyosaki recommends playing it safe if fear is high. It will take time for assets to multiply over time, so a start must be made early. As a consequence, the path requires a person to be focused and to have a clear objective. Before becoming balanced in the way they take risks, they must continue to push through to the target.

Cynicism

In this context, a cynic is a person who always sees disaster coming regardless of what they intend to do. You can always expect them to cast doubt on any financial move or investment. 

People are often discouraged from taking advantage of opportunities due to noise. Keeping one’s goals in mind and motivating one’s actions rather than fears or what one does not want is the way to solve this problem.

Laziness

When people appear very busy, they are often occupied with tasks in order to avoid the one thing they need to do or the one issue they need to handle. A person who is motivated by greed will push forward with what they must do rather than distract themselves with distractions.

Bad Habits

A person must learn to pay themselves first on the path to wealth. This means that the first payment must come from their earned income every month in order to build assets. Then come expenses, including paying liabilities and taxes. 

It’s a good rule to pay yourself first to build the asset column even if the monthly income is insufficient to cover everything. There are many ways to generate extra income to cover the bill and taxes after that.

Arrogance

Being conceited and dismissing things one does not know as irrelevant, or unimportant, is a recipe for disaster. One must invest in education, whether that is through books, classes, or advisors, when uneducated or not familiar with a field. Money will be lost if one becomes arrogant.

Chapter 9: Getting Started

The following are ten steps that Kiyosaki offers to help people get started on their journey to financial freedom and wealth:

1). Find a reason that is greater than reality. For a person to walk on that path successfully, they must discover what they want and what they desire so that they can endure the hurdles and mishaps. This will keep them motivated when they encounter problems.

2). Make daily choices. Time and money are the two tangible assets everyone has, even if money is very little. As a person chooses how to spend this time and this money each day, they get closer or further away from being rich.

According to Kiyosaki, one can choose to be rich or poor. First, one must learn and build a financial education. It is important to learn new tools and to understand the perspectives of other successful people.

3). Pick your friends carefully. One should surround himself or herself with friends who can teach him or her. Someone should follow the example of a friend who is already successful in the manner he or she desires. 

A friend who is the opposite of that is someone to avoid. It would be beneficial to have friends who help one another, such as informing one another of the next market surge. That is insider trading, which is legal if you know how to do so.

4). Master several formulas to learn quickly. In order to become financially robust, you must acquire knowledge in various subjects. People will be given formulas to build wealth and assets in an ever-changing world.

5). Make sure you pay yourself first. Prioritize allocating income money to building assets and paying various bills and government obligations. Additionally, this should be coupled with self-discipline, and restraint, so that one does not become indebted and waits until their assets can cover their consumer expenses.

6). Make sure you pay your brokers well; good advice is powerful. A person should invest in good brokers and advisors to help them with their decision-making. As a result, people should always check with their brokers first to see how they manage their own finances.

7). Become an Indian giver. Don’t expect anything in return. The idea of an Indian giver is to give something and then take it back with interest. It’s always a good idea to look for the free perks that come with a deal. After the deal is closed, something should always be provided for free.

8). Using assets to purchase luxuries: the power of focus. Luxuries should be purchased with assets’ income. You should never pay for them with earned income or with assets. For building sustainable wealth, this requires self-discipline.

9). The power of myth: choosing heroes. When looking up to someone, people should choose someone who already possesses qualities, traits, and accomplishments that they also strive to achieve. In the future, thinking of what their heroes would do will guide them through their various challenges.

10). The power of giving: teach and you will receive. When you give with knowledge, you will always receive money. Our world reflects who we are. The positive and supportive will be surrounded by positivity and support.

Chapter 10: Still Want More? Here are Some To Do’s

There are also actions Kiyosaki recommends for those who wish to go beyond the ten steps. These are also steps he follows.

What you’re doing isn’t working towards your goal: The idea is to stop anything you’re doing that isn’t. Look for something new instead.

Look for new ideas: Read how-to books and other financial knowledge resources to discover new formulas and ways of making money.

Find someone who has already done what you want to do: People should always seek advice from others who have already done what they want to do. You can learn a lot from others’ experiences.

Take classes, read, and attend seminars: It takes a lifetime to develop a thorough financial education. Taking classes to learn how to make money is an excellent investment that will bring people closer to wealth.

Make lots of offers: Making many offers to a wide range of recipients is always a good way to look for opportunities. You might get a good deal from an offer you make. Others will be the start of negotiations. The improper wording can turn others away.

Jog, walk, or drive an area once a month for 10 minutes: By noticing slight differences, talking to people in the area, and seeing various signs in different places, you can find opportunities that others overlook.

Shop for bargains in all markets: Despite having different names for sales, every market has them. When a sale occurs, a market is in a slump. When the market starts to appreciate, buy in bulk and sell piecemeal. It’s important to remember that profit is made upon purchase, not on sale.

Look in the right places: To make a profit on buying something, people need to know when and where to buy things.

Look for people who want to buy first, then for someone who sells: People should buy large and think big. Then they should sell to people who think small and only want a part of what has been purchased. Profit is made that way.

Think big: Big spenders receive discounts. Bulk purchases are therefore a good idea. If they cannot immediately afford to buy in bulk, they can band together with others to achieve this. Poor people act alone or do nothing at all, and think small.

Learn from history: Study the stories of companies that started small but are now large, and learn from them.

Action beats inaction. A financial reward can only be obtained by taking action. Without action, there is no chance of winning.

 

Rich Dad Poor Dad Principles

Kiyosaki addresses the underlying issues that play into our financial motivations and psyche. If you apply its principles, this book will radically change the way you think and change the course of your life.

Here are principles from the book that will directly impact your mindset and actions when it comes to investment.

  1. The rich don’t work for money; they let money work for them.
  2. It’s about how much money you keep instead of how much you earn.
  3. Everybody else looks at their income statements, while the rich focus on their asset columns.
  4. In order to have a good financial IQ, you should be familiar with accounting, law, investment and the market.
  5. The rich invent money and to rise in this world you must have both courage and competence.
  6. Don’t work for money but work to learn.
  7. Overcoming fears.

About The Author

Investor and entrepreneur Robert Kiyosaki has an estimated net worth of over $100 million. 

His Rich Dad brand has published more than 15 financial self-help books, which have sold more than 26 million copies worldwide.

Rich Dad Poor Dad Review

In his book, Kiyosaki answers one of the most popular questions in the financial world: “How do I become rich?” He advises first understanding the difference between assets and liabilities before buying assets. Poor people, in his opinion, are poor because they spend their money on liabilities like homes, cars, and furniture. All of these things require maintenance or go down in value over time.

In order to pay their bills, rich people buy assets that generate income, such as stocks, bonds, real estate, and businesses.

A large part of Kiyosaki’s book explains how to invest in and profit from real estate, which is clearly one of his favorite assets to buy.

Without spending a dime he managed to buy and sell property in just a few days. In addition to that, he discusses how he found and flipped houses, as well as how he avoided paying taxes on his profits.

Our young generation needs to learn how to budget, save, invest, live within their means, and avoid drowning in debt. They can then move on to more advanced and complicated subjects, such as tax laws and buying property, once they have a solid understanding of those financial skills.

Therefore, if you are looking for a book to learn  about money, I would recommend “Rich Dad Poor Dad.” There are better choices. It would be a good book to start with if you are interested in buying and selling real estate.

Rich Dad Poor Dad Quotes

“I’d rather welcome change than cling to the past.”

 

“The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.”

 

“A person can be highly educated, professionally successful, and financially literate.”

 

“There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.”

 

“Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.”

View our larger collection of the best Rich Dad Poor Dad quotes.

Further Reading

If you like Rich Dad Poor Dad, you may also like reading the following books by Robert T. Kiyosaki:

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