Hello Readers! Wellcome to Blogking where you get all the interesting things for readings. In this blog, we are going to share the Book Summary of Rich Dad Poor Dad by Robert Kiyosaki.
The story follows a man (the narrator and author) who has two fathers: his own father, who is penniless, and the affluent father of his boyhood best friend, Mike. Although in very different ways, both of the author’s fathers taught him how to achieve. The author realized which father’s strategy made more financial sense. Throughout the book, the author contrasts both dads’ ideals, views, financial methods, and degree of dynamism, demonstrating how his real father, a poor and struggling but highly educated guy, paled in comparison to his wealthy father in terms of asset accumulation and economic acumen.
Because of one conspicuous lack of financial literacy, the author compares his poor father to those who are continually scampering in the Rat Race, helplessly locked in a vicious loop of seeking more but never being able to realize their ambitions of prosperity. They spend so much time in school learning about the world’s problems, but they never learn anything about money since it is never taught in school. His affluent father, on the other hand, represents the independently wealthy core of society who purposefully exploits corporations’ power and intimate knowledge of tax and accounting (or that of their financial advisers) to their benefit.
The premise of the book boils down to two concepts: a can-do attitude and courageous entrepreneurship. The author emphasizes these two concepts by focusing on the importance of financial literacy, how corporations’ power contributes to making the wealthy even wealthier, minding your own business, overcoming obstacles by not encouraging laziness, fear, cynicism, and other negative attitudes, and recognizing human characteristics and how their preconceived notions and upbringing obstruct their financial freedom goals.
Six important lessons are presented by the author and are discussed throughout the book:
• The wealthy do not work for a living.
Why Why is financial literacy so important?
• Taking care of your own affairs
• Corporations and taxes
• The wealthy create money.
• The necessity of working in order to learn rather than in order to make money
Table of Contents
Summary of the Book Characters
Rich Dad, Poor Dad follows three main characters: a poor father, a wealthy father (Kiyosaki’s second father), and a son (the author himself as the narrator of the book). Each character’s essence is as follows:
• Dad is a poor man who is well-educated but lacks street smarts.
• Rich father Has just eighth-grade education, but plenty of street smarts
• Kiyosaki – the onlooker who picks up lessons from both but internalizes only the attributes of the wealthy father.
Dad is in such a Bad Situation.
The author contrasts his impoverished father to the millions of other fathers who want their sons to achieve well in school so that they can acquire a nice job with a reputable company. Poor Dad was a traditionalist who believed in working hard, saving money, and not buying things he couldn’t afford. He believed that having a decent position with a strong firm was something to strive for, thus he is disappointed when his son leaves a large, renowned company.
Poor dad sees education as a ticket to success. He had a doctorate and had attended Ivy League universities, but he was constantly broke. He was convinced that he would never be wealthy, and the author points out that this belief became self-fulfilling.
Poor dad was more concerned about getting a decent education than with money. “I’m not interested in money,” or “money doesn’t matter,” his poor father would always declare, according to the author.
Poor dad was worried about things like employment tenure and security, Social Security, vacation and sick leave, corporate insurance, and wage rises and promotions, according to the author. The author had the impression that his poor father was more concerned with these problems than with the job itself. The author refers to this as being “caught in the Rat Race.” His poor father toiled away tirelessly, yet he never prospered monetarily.
Poor dad’s approach to money was to work hard in order to have enough money to pay the bills (as opposed to affluent dad’s method of making money work for him).
Dad is a Wealthy Man.
The author said that he realized his rich father made a lot more sense than his poor father when he was nine years old. The author learned not to declare, “I can’t afford it,” but rather to question, “How can I afford it?” from his wealthy father.
He illustrates this notion by recounting an instance in which he and his best friend Mike were hired by Mike’s father. Rich dad offered them pitiful pay on purpose to incite rage and a sense of injustice in them, leading them to learn that the only way to get ahead is to work for oneself, not for others. When the author complains to rich dad about how he can’t afford to buy anything with his income, rich dad tells him to ask “how can I make more money?” rather than concentrating on his low wages, because this stimulates the brain to take action. When someone says, “I can’t afford it,” his wealthy father claims that his brain shuts down. As a result, it discourages initiative and encourages apathy.
While his poor father put time and effort in education, he had little experience with investment, according to the author. His wealthy father, on the other hand, was an expert in the financial game because that was all he did. His wealthy father’s attitude toward money was reflected in the remark “the absence of money is the basis of all evil” (his poor dad, on the other hand, believed that the love of money is the root of all evil).
Rich dad, according to the author, also promoted the notion that taxes punished producers while rewarding non-producers. He was the kind to bring up money at the dinner table, and the author depicted him as someone who learned to manage danger rather than avoid it.
The Father’s Son (Robert T. Kiyosaki)
The author of Rich Dad, Poor Dad begins his book by stating that he is fortunate to have had two fathers. He absorbed great skills from both of them, but it becomes clear in Chapter One that his father was more financially savvy. He contrasts and analyses both fathers’ perspectives on working hard, receiving an education, saving and investing, and recognizing how the rich and poor have quite different behaviors. He credits his financial expertise to the numerous chats he had with his wealthy father.
The author takes a straightforward approach to the subject of money, emphasizing the importance of accounting knowledge so that the reader understands the difference between assets and liabilities. He draws simple graphs to depict the entrance and outflow of money, as well as how the wealthy accumulate assets and the impoverished accumulate liabilities (expenses). Because he calls accounting “the most important subject in your life,” it’s clear that the author values accounting knowledge – no matter how dull it is.
The author efficiently conveys his thoughts by using several examples and anecdotes, exposing his pro-capitalist viewpoint.
The author also demonstrates his comprehension of the government’s and taxman’s operations, concluding that the middle class is the one who pays for the impoverished. The wealthy are the ones who pay little tax because they know how to manipulate tax laws to their benefit.
Book Summary of Rich Dad Poor Dad by Robert Kiyosaki : Summary of Chapters
The First Chapter: Rich Dad, Poor Dad
Robert Kiyosaki and Mike’s journey begins in Hawaii in 1956 when both boys were nine years old. A counterfeit nickel manufacturing enterprise was their first get-rich plan. To make the nickels, they used plaster molds and filled the molds with melted lead toothpaste tubes. Mike’s father disrupted their plot when he notified the lads of their unlawful conduct.
Following that day, the boys spent their spare time learning about business and economics from Mike’s wealthy father. The boys’ first instruction from Mike’s father was to despise the “Rat Race.” He was able to accomplish this by forcing the lads to labor for three hours for ten cents an hour in one of his grocery stores.
After a few weeks of being abused for labor, Kiyosaki wanted a raise, but his father instead reduced his income and told him to work for free. Both guys eventually grew tired of being underappreciated (and underpaid), and they met with Mike’s father individually. During their meetings with affluent dad, he apologized for the lack of money and gave them either the lesson’s moral or a salary hike. While rich dad gave them wage hikes, both boys preferred to learn the morals of the story. He began with twenty-five cents, a dollar, two dollars, and even five dollars, which would have been considered a substantial sum of money for an hourly wage, but the lads stayed steadfast in their determination to understand the lesson’s moral.
The Rich Don’t Work for Money (Chapter 2)
The author advises his audience to disregard what life teaches them. “The only thing life does is push you around,” he says.
This chapter discusses those who choose to play it safe since they were not trained to take risks at a young age. The author advances the concepts that the poor and middle classes work for money, that fear and greed generate ignorance and poverty, and that using one’s emotions rather than reasoning with emotions is important. The author also emphasizes that opportunities come and go in life; the wealthy identify them quickly and convert them into gold bullions.
Chapter 3 : Why Teach Financial Literacy
The story of Kiyosaki and Mike continues later in life, in 1990, and both of the now-adults have made remarkable strides in their financial and societal standing. Mike was able to take his father’s lessons and apply them to his own life. He took over his father’s enormous firm and expanded it in every way, and he is currently grooming his son to take over the company when he retires. Kiyosaki, for one, was able to retire with his wife Kim at the age of 47.
Charles Schwab, Samuel Insull, Howard Hopson, Ivar Kreuger, Leon Frazier, Richard Whitney, Arthur Cotton, Jesse Livermore, and Albert Fall convened at the Edgewater Beach Hotel in Chicago for a business meeting to discuss various investments and money schemes. A report published twenty-five years later said that the vast majority of the highly wealthy people who gathered in Chicago ended up in jail, dead, or impoverished. The main takeaway from the outcomes of these sad entrepreneurs is that financial literacy is required to be and remain safe. The ideology that the major 1920s entrepreneurs represented is still popular today, with some professional athletes making poor financial decisions and ending up with close to nothing. This particular lesson is intended to teach people how to be wise with their money before they get it, rather than after they have it. In a sense, you shouldn’t try to build a skyscraper or even a house without first laying a solid foundation. There is just one rule, according to Kiyosaki, that can help a person develop a strong foundation: realize the difference between an asset and a liability, and make sure you only control assets.
This chapter captures the heart of the author’s argument for financial independence when it comes to beliefs about money purchasing freedom and the capacity to enjoy retirement without concern of outliving one’s money. “Intelligence solves issues and generates money,” he argues. “Money without financial intelligence is money that is quickly depleted.”
Financial literacy, according to the author, begins with a basic understanding of accounting. It’s critical to understand the distinction between assets and liabilities. To help readers grasp these two phrases, the author creates a simple picture of these two principles to encourage people to buy assets in order to solidify the asset column while limiting liabilities (expenses) to a minimum. According to the author, impoverished people stay poor because they do the opposite. They amass liabilities and have no assets, causing their balance sheets and income statements to appear out of whack. According to the author, it is important for people to understand that it is not how much money they make, but how much money they keep, and this is an important idea that this chapter concentrates on.
Chapter 4: Take Care of Your Own Business
The author gradually presents the concept of real estate investing in this chapter, using McDonald’s as an example. McDonald’s may not provide the best hamburgers in the world, but it owns the “most valuable intersections and streets in America,” he says.
The author advises people to mind their own business if they wish to become financially self-sufficient. They should not be concerned with their employer’s affairs; instead, they should seek to become their own bosses and grow their own enterprises.
The author continues to talk about accumulating assets. Stocks, bonds, mutual funds, income-producing real estate, notes, royalties from intellectual property, and so on are all legitimate assets in his eyes.
The author’s investment inclinations are revealed in this chapter: real estate and equities. He claims that when it comes to real estate, he starts small, trades his properties for larger ones, and then defers paying capital gains taxes using one IRS procedure.
Chapter 5: The Power of Corporations and the History of Taxes
According to the author, the poor allow huge machinery (corporations) to control them, whereas the wealthy understand how to employ big equipment. This means that the wealthy have the expertise and know-how to wield corporate power to defend and enhance their wealth.
According to the author, the advantage of a corporation over an individual is in how corporations pay taxes. Individuals earn money, pay taxes on that money, and live with the leftovers, as he clearly states. The corporation, on the other hand, earns money, spends it all, and then pays taxes on the remainder. Individuals may not realise how much they are being influenced, according to the author, because they work from January to mid-May to enrich the government by paying taxes on their earnings. Meanwhile, the wealthy are scarcely taxed.
One approach to escaping the monotony of daily life, according to the author, is to improve one’s financial IQ. This is accomplished by learning about accounting, investing, market analysis, and the law. According to him, being uninformed leads to bullying, whereas being informed means “you have a fighting chance.”
Chapter 6 : The Rich Invent Money
The concept of self-doubt is developed by the author. He claims that everyone is born with genius, but that this gift is stifled by self-doubt and fear. He claims that those who are courageous and adventurous, rather than those who are educated and brilliant, are the ones who succeed. People never go ahead financially, even if they have a lot of money, because they miss out on opportunities, he says. The majority of them simply wait for an opportunity to present themselves. The author believes that people should make their own luck rather than wait for it. It’s the same with money, he argues. It needs to be made.
The author highlights the importance of education in this chapter (although some critics say that he appears to downplay its importance). According to his findings, there are two categories of investors, each with a distinct mindset: those who prefer packaged investments and those who prefer to tailor investments to their specific goals.
The author advises individuals to hire smarter people since an educated person can increase his own knowledge base by leveraging the information of others, giving him an advantage over those who don’t know.
Chapter 7: Don’t Work for Money, Work to Learn
This is the chapter in which the author discusses the talents that people need to cultivate in order to be financially successful.
A young woman with a Master’s Degree in English Literature was insulted when it was advised that she learn to sell and conduct direct marketing. She didn’t believe she’d have to go so low to learn how to be a salesperson, a profession she despised, after all her hard work earning her degree. The author uses this example to show that there are other talents that people need to develop in order to assist them to achieve financial independence.
Management abilities are mentioned by the author. Individuals, he claims, must be able to manage cash flow, systems, and people. He then adds selling and marketing talents to the mix. Communication abilities are equally important to him. He claims that many people who have a scientific inclination and, as a result, a wealth of knowledge, fail badly in communicating. These are the people who are “only one skill away from becoming extremely wealthy.”
The author highlights one distinguishing feature of great wealthy families: they give money away — a lot of it – in contrast to the impoverished, who believe that generosity begins at home.
Chapter 8 : Overcoming Obstacles
Fear, cynicism, sloth, bad habits, and arrogance, according to the author, are five personality qualities that impede human beings. He argues that while fear is natural, how one response to it is crucial. The author expresses his admiration for Texas and Texans by saying, “When they win, they win big, and when they lose, it’s magnificent.”
The author asserts that it is not just a matter of balance, but also of FOCUS. He advises that the world’s Chicken Littles be disregarded. They’re only concerned about the sky falling, and they’ll be pessimists for the rest of their lives. He claims that he often hears individuals declare they want to be wealthy, but when told that money may be made in real estate, their first reply is “but I don’t want to fix toilets.” The author thinks it’s odd that they’re more concerned with minor details like mending toilets than with the future of real estate.
Finally, the author claims that being greedy is beneficial, thus when presented with a decision, one should always question, “What’s in it for me?”
Chapter 9 : Getting Started
This chapter contains advice on how to create and grow personal wealth. His first piece of advice is to find a reason to motivate yourself that is greater than reality. He suggests that by boosting the mind, one might awaken one’s inner financial genius. He believes that people must have a strong sense of purpose in life.
The next point to remember is to nourish your thoughts. The author claims that humans gain the power of choice by nourishing their minds.
The author also suggests that people pick their friends carefully. He advises readers to stay away from folks who constantly announce that the sky is falling and instead spend time with people who enjoy talking about money since they may have significant lessons to teach.
Although it is vital to choose what one studies, the author also feels that people should study one field and then go out and learn a new one.
Another recommendation that most individuals don’t follow, according to the author: pay yourself first. People must pay themselves first, even if they are cash-strapped. This goes hand in hand with effectively managing three things: cash flow, people, and personal time.
Another suggestion made by the author is to be generous. He believes that paying one’s broker handsomely makes sense because he is an ally and “your eyes and ears to the market.”
The author recommends that you have heroes. They are necessary in life since they not only inspire but also make things appear simple. They provoke the human mind to wonder, “If they can do it, why can’t I?”
Another piece of advice from the author is to “teach and you shall receive.” “There are powers in this planet that are far smarter than we are,” he says about this concept. You can get there on your own, but it’ll be much easier if the powers that be assist you. All you have to do is be generous with what you’ve got, and the powers will reciprocate.”
Chapter 10: Do You Still Want To Know More? Here are some suggestions for things to do.
This chapter is a type of follow-up to the preceding one. It provides readers with additional advice to assist them in achieving financial goals. One piece of advice is to stop doing what you’re doing if it’s no longer effective or viable. The author encourages readers to seek out new ideas and to pick the brains of those who have the necessary experience and have done what they want to achieve. He recommends continuing to study by enrolling in courses, purchasing cassettes, and attending seminars.
The author suggests looking in the correct places while seeking real estate investment prospects. One approach to achieve this is to go for a jog around the area of interest.
Rich Dad, Poor Dad’s Themes
One recurring topic in this book is that in order to be wealthy, one must strive to own the system or means of production rather than working for someone else. The author emphasizes that working as an employee is obviously restrictive; it closes one’s mind to other options and inhibits initiative.
The most potent asset is financial intelligence. The author argues that through studying accounting and investment principles, people will be able to recognize the difference between an asset and a liability; in fact, it is a more practical application of knowing what’s right and wrong. Creating a string of expenses is incorrect; nevertheless, accumulating assets is correct.
Unlike individuals who earn and then pay taxes on their earnings, businesses earn, spend what they want, and then pay taxes on the remainder. As a result, corporations wield a certain amount of authority. The wealthy understand how to use power; the poor do not.
True pleasures, according to the author, are experienced when they are the outer manifestations of wise asset creation and investing. He uses the example of his wife, who bought a Mercedes Benz because it was a car she wanted and worked hard to get. However, because of this human frailty, the author warns against keeping up with the Joneses and getting into debt.
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