Changing your mindset about money through the story of Robert T. Kiyosaki growing up with a rich and a poor father.
🚀 The Book in 3 Sentences
- This book will fuel your motivation to make long-term, financial decisions.
- It does not give explicit advice, but rather then display the right mindset to have.
- It also shows the importance of the willingness to learn about the boring stuff.
How I Discovered It
My sister recommended me this book on a casual walk.
Who Should Read It?
Anyone who is afraid of dealing with finances, lacks motivation, or is in an entrepreneurial phase.
☘️ How the Book Changed Me
The thought of money is not a bad thing in itself. I realised that the earlier you start getting into habits like investing, the easier and more natural it will be later on.
It also broadened my horizon, not relying on a job for financial stability and to be always striving for more.
📒 Summary + Notes
The Tale of Two Dads
The author had two dads growing up. One came to be “rich”, while the other turned out to be “poor”.
Rich not necessarily meaning having a lot of money, and poor not meaning having no money.
Both were successful in their careers and had a good income.
The rich one did turn out to be one of the wealthiest man in Hawaii, vs the other being a well paid teacher, yet still late to pay the bills.
Teachings of the Rich Dad
The way the rich dad taught the boy was not as in a regular academic education. Instead of lecturing him, he taught him the way life teaches you things.
As a deal, in order to teach them how money works, he let them work for him for a few cents as children. Until they got fed up, and wanted to change something. Thus teaching them they should not find the blame in someone else, the rich dad, but themselves for letting them be exploited.
Next he cut their pay completely, letting them work for free for three weeks, to teach them that people put a price tag on themselves. People live in fear of not getting enough money, or loosing money. In order to truly be rich, they need to discard this fear.
1. The rich don’t work for money, they let money work for them.
The rich dad believed that the thoughts you have shape your life.
Saying “I can’t afford” something, demonstrates mental laziness. Instead, say “How can I afford it”? Asking yourself this requires you to use your brain, the best computer in the world.
Rather than playing it safe and trying to get a secure job, one should learn to manage risks.
2. Financial Literacy
Do you know the difference between an asset and a liability? Assets have value, produces income or appreciate. They have a market where the asset can easily be bought and sold. Liabilities have costs a associated with them.
A personal residence isn’t an asset unless it appreciates enough to offset the costs of ownership. Rental property is an asset because it can generate passive income to exceed the expenses of operating and financing real estate.
Buy income-producing assets.
3. Mind your own business
- Pay off your debts and start investing in income-producing assets
- Stay financially healthy by spending your time and investing in assets
Your profession and your business can be separate things.
4. The History of Taxes and the Power of Corporations
Buy an expensive Porsche as a business expense before tax applies. The rich understand the power of corporations and legal and tax advantages.
Business owners with a corporate structure:
- Pay taxes
Employees who work for corporations:
- Pay taxes
Financial IQ consists of:
- Accounting Skills
- Investment Strategy
- Market Law
5. The Rich Invent Money
There are two types of investors:
Investment packages are bought by people who entrust their money to a developer or fund manager. This is the way that most people invest, such as buying shares of an ETF or putting money into a real estate crowdfunding venture.
Professional investors look after their own investments, research the market to find deals that make sense, then hire professionals to manage the daily oversight. Professional investors have three things in common:
Most people overlook the financial opportunities in front of them.
6. Work to Learn – Don’t Work for Money
Kiyosaki first joined the army to learn how to manage people, then he joined Xerox to become one of the top sellers.
Seek work for what you will learn, not what you will earn.
7. Overcoming Obstacles
The primary difference between a rich person and a poor person is how they manage fear.
The 5 biggest obstacles people face on becoming financially independent:
- Fear; Think Big, don’t be scared to loose
- Cynicism; Don’t let yourself be paralysed by others cynicism
- Laziness; Don’t get into the rat race. Take care of yourself first.
- Bad habits; Pay yourself first. Makes you to look out for opportunities.
- Arrogance; Educate yourself. Find an expert.
8. Getting Started
- Find a strong emotional reason.
- Power of choice. Choose daily what to do.
- Power of association. Don’t listen to frightened people.
- Power of learning. Develop a money making Formular.
- Pay yourself first. Manage cash flow, people and personal time.
- Select great people and compensate them generously.
- Focus on ROI first.
- Follow a role model
- If you want something, you have to give something first.