This is a life changing book about passive income and terribly useful to understand how rich person’s mentality differ from a poor person. This is about Robert Kiyosaki and his two dads; poor dad, his own father well educated who has a PhD from a well known University in America, and the rich dad, the father of his best friend who never finished the eighth grade but has a strong financial education.
Both men were successful in their career working hard all their lives. But the poor dad work for money and most of the time struggled. The rich have money work for him.
This book is written by Kiyosaki’s perspective about how his rich dad succeeds in making a fortune and the mistakes of his poor dad. Both of his dads give him priceless advice but Kiyosaki started to listen to his rich dad’s advice. The book ends up giving some “getting started guides” applicable immediately even after reading that book.
- The rich don’t work for money, whereas the poor do
- Work to learn and don’t work for money
- Don’t save money, but invest it
- “There is a difference between being poor and broke. Broke is temporary & poor is eternal”
- “You must know the difference between assets and liability, and buy assets. Assets put money in tour pocket. A liability takes money out of your pocket”
- “The rich focus on assets columns while everyone else focuses on the income statement”
Chapter 1: The Rich Don’t Work for Money
I want to clarify one thing here, the rich do work and harder than the poor but to learn and not for money. So learning is their first priority, however, the poor and middle-class work for money where the money is their first priority. Therefore, the poor and middle-class exchange their time for money, whereas the rich exchange time to learning how to make money work for them.
Kiyosaki also says that having a regular job is a temporary solution to a long-term problem of achieving financial freedom. However, what prevents us from achieving financial freedom is fear. Fear of losing the job and starting over once again.
Chapter 2: Why Teach Financial Literacy?
In this chapter Robert Kiyosaki explains the difference between asset and liability. In a few words: asset puts money in your pocket, whereas liability takes money out of your pocket. An example of assets can be real estates, stock and bonds. Whereas an example of liability can be the brand new car, a new phone or TV. Liability can also become an asset if it puts money in your pocket, like a car if you use your car just for commuting then it is a liability but if you generate money from it, like driving it for uber or renting then it can be considered as an asset.
Chapter 3: Mind Your Own Business
The key message that Kiyosaki wants to give us in this chapter is that we should first pay off any debt that we carry and then start investing the remaining money in something that generates us an income.
The next chapter explains about taxes, the power of the corporation, and how rich people get over it almost “hide” without paying any taxes legally, it’s like the government is in their favour. On the other hand, how poor and middle classes are all victims of high-income taxes.
He also tells us how important it is to find skilled people who are able to save you a lot of time, trouble and find stuff at a better deal. So paying higher fees to an accountant, attorney or lawyer is not bad at all in return they provide a way better service or knowledge.