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Introduction to Rich Dad Poor Dad

Rich dad poor dad book written by Robert kiyosaki

Rich dad Poor dad book was 

written by Robert Kiyosaki. He is a Japanese American. This book was sold in 51 languages by more than 41 million copies world wide.

Robert Kiyosaki was born in Hawaii(USA) in a small family,Robert father holds a PHD. calls his own dad a Poor Dad because he always says ” To earn money, we need to study hard and we must do a job”.

He has a friend named Mike. Mike’s father was a businessman. Robert calls him Rich Dad. Because he teaches "How money works for us” .Even Though he doesn’t have a proper education he earned a lot.

 That’s why Robert follows Rich dad’s path Robert says ” If you earn more, you tend to spend more.but,you cannot become rich “.This post explains how to become a rich person and how to make money works for us. So,read this article completely.

This book,rich dad poor dad has 6 lessons to earn money. Robert gathered all the teachings of Rich dad and compiled into 6 lessons. Now,let us see what is there in these 6 lessons.

The 6 lessons of rich dad poor dad book:

Rich will not work for money Even though Robert & Mike came from Poor & Middle class families. They studied in a private school where rich kids also study. Robert & Mike understood that they were poor by seeing the clothes & things of Rich Kids. They decided firmly to become rich. Robert asked his father ” How to become rich?” ,Poor dad said ,”Use your Brain”. 

They didn’t understand what poor dad said. Now,they went to ask Rich dad the same question. Rich dad said ” I know the answer.but,I will Educate It through work”.He hired them in his supermarket to work for 2 days a week. He also said he will give 10 cents as wages. After 2 weeks Robert vexed with the work & went to Wealthy dad.

Then, Rich dad gave a smile and said : “People who works for wages are the same as you. They are satisfied with promotions and salary Hikes”."They think their problems get solved with these". “But,the main problem is lack of knowledge in Finance Subject”.

In that way,Robert increased his wages to $2 and gave one suggestion. The suggestion is “Start an organisation or business along with your current job”. That organization must become your asset and through that asset you should get income.

Robert still had some doubt. One day,when he was thinking about this,he saw a lady Martin who works in a supermarket throwing Comic Books. Robert loves Comic Book Ups. Robert asked Martin to give that book.

He took an empty room in Mike’s house and turned it into a library with that book and he appointed Mike’s sister as Librarian. He also told her to collect 10cents from the kids who come to that library to read books.

In this manner, Robert implemented his 1st lesson of rich dad poor dad book.

Rich dad poor dad book

Now,Robert understood that,Rich won’t work for money.but, money works for them.why should we Educate financial literacy? We often see the Wealthy people becoming poor without proper money management. Michael Jackson, Arthur Cotton, Steel Company owner Charles Schwab comes under this category.

The reason for this is lack of financial literacy.To construct a house,we need a strong foundation.In the same way,to become rich,we need strong Financial Literacy.

Lesson 1: what is Financial Literacy?

Robert divided this into 4 boxes,We call this as a Profit and Loss Statement. We call the other one a Balance Sheet. Income means your salary Expenses, means your daily expenses. Asset means, “The item which generates income”.

House is an Asset which generates Rental Income. Liability means Obligations or Loans If you purchase anything, then, the money you pay for it becomes your liability. Car Loan EMI is a Liability.

Lesson 2 : how this cash flows in Poor, Middle class and Rich families. 

First,let’s see Poor families cash flow. They spend the salary for their daily expenses, clothes,food,movies etc .By month end,their money flows from the Income box to the Expense box. These people can’t live without a job.

Lesson 3: Middle class families cash flow:

 Money flows from Income box to Expense box & Liability box. Their salary is used for daily expenses, Taxes, EMI’s, Credit card bills. They can live without a job with their savings. Even If their salary increases, their problems will not be solved. They can survive with their savings. After that,they are also the same as poor families.

Lesson 4: Rich people’s cash flow.

They invest their salary in Stock markets or Real estate investing or Bonds or any Businesses. Then,they get returns in the form of Dividends, Rent or Interest. They will fulfill their needs with that income. They can live happily even without a job.

In this whole story,the poor dad treated his house as Asset. But,Rich dad asks us to treat it as liability. why? because,we have to pay EMI. In this way,Rich becomes Richer,Poor becomes poorer. This is called Financial Literacy.

 How many of you are feeling that the company you are working for is your own company? If you feel like that, then nothing will be left for you. If you look back,you will see the whole life working for your boss.but,not for yourself.

Robert gave here one beautiful example, Mcdonald’s founder Ray Kroc says,"I am not doing Hamburger business, I am doing Real Estate”,McDonalds Purchases land and set up franchise and give it to lease, Along with the Hamburger sales revenue,they also generate Rental income.

From total revenue,they get 80% only from Rent. So,here Robert says,Along with your job,earn some assets such as Stocks,Bonds,Mutual Funds, Patents or any other Income generating assets. This is the secret of Rich people.

Lesson 5 : how the tax system was started.

Once upon a time,there were wars between different countries. At that time, due to lack of sufficient funds kings asked people to donate some money. In the 1799-1816 war – Britain, In 1861-1865 war – America,Collected taxes. Later,they brought an Income Tax act. Mostly,middle class families suffer with this tax system. Poor people won’t have Income. so,they won’t pay any tax. Rich people have businesses and companies.So,they can set off their income with expenses to save tax.

Lesson 6 : the power of corporations.

corporation means one organisation or one company. If you start a company, you can set off the expenses.such as travelling, Car maintenance, Insurance etc.,

 with business income to pay less taxes. One more way rich people use to reduce tax is whenever they sell any asset such as land,building,they invest the capital gains in govt.schemes to save tax.

Robert Says “Every businessman should be aware of Accounting,Investing,Marketing & Law. Robert created a game called “Cash Flow”.There are 2 paths in that game. One path,which is outside called Fast Track.

These are six lessons of rich dad poor dad book:

Another path,which is inside is called Rat Race. The game is about the Rat which was in the inner path should come to the outer path(Fast Track).Some people study hard, get a job and work for their boss.

Robert symbolically calls them as “People struck in Rat Race”.To come out of this Rat Race,there is only one way,”To become aware of Money, Accounting & Investing”.Along with that,people should know these 3 points to become rich:

Identify the opportunities in the surrounding.Robert always searches for cheap houses for sale. One day he saw the Board “House for Sale”.The board was there for a long time. The owner of that house was desperate to sell that house at any cost,Robert discussed with him. 

Robert bought that house with 20,000$ less than actual cost. After a few years,when the price increased,He sold it for double the rate.

In that way we should find opportunities. Learn to Invent Money Before starting any work, many people Protest that they don’t have money. Bank will not give us loans For this. Robert did one thing,Once he found a deal of a 20 lakhs apartment selling for 12 lakhs only,But,Robert didn’t have any penny. 

Robert borrowed 1 lakh and paid advance. He made an agreement to pay the balance amount in 90 days. Robert explained the deal with the person from whom he borrowed 1 lakh. That person liked that deal.

Now,Robert gave that house to that person. That person gave 50,000$ as commission to Robert for showing a good deal. Robert says,”Investing means not just investing money, it means gaining knowledge on Finance Intelligence”.Take the Financial advice of Financial Experts Give them good commission.

Then only they come up with good ideas. By following these 3 points you can easily. invent money,work to learn.but,don’t work for money Everyone in schools, colleges, workplace tells one thing Gain specialization in any one field. 

That means improving more skills in your field. Poor dad also tells the same thing to Robert.Poor dad says “Know more about less things”.Rich dad says “know less about more things”.Robert says JOB means Just Over Broke. That means,you won’t get anything from Job,Working under a boss for lifelong is like Rat Race.

How much you increase your skills in one field, you will depend that much on that particular field only.

For example,

 A cricketer after retiring cannot actively work in another field.

 Many big companies hire students from business schools and train them to lead a company in future by shifting constantly from one department to another. In the same way, rich people also train their kids to gain different fields.

Finally, to become successful in life, remember these 3 things. Robert Says “If you master these 3 things money will flow to you automatically”.Till now we have seen 6 lessons of rich dad poor dad book.

Now,

Robert asks us to get rid of these 5 things which stops us from obtaining financial freedom: 

• Fear of losing money. 
• Never be jealous of other people 
• don’t think about your company getting bankrupt. sharp your brain
•  Never say “I can’t buy this”,Instead say ” How can I buy this”.

First start spending on yourselves later pay your loans and bills. Roberts says “if you pay yourself first,then pressure starts building upon you to earn money”. Never be Ignorant,Know about money through Books and Seminars. 

Before concluding this,Robert gave some Personal suggestions.

• Know the reason why you have started?
• Why do you have to do that?
• What you want?

Make friendship with rich people to gain knowledge on money. Everyday you will come to know about many principles and rules that follow one after another. Don’t say ” I will donate when I have money”, The Law is “Give money Receive Money”. Make some rich person as your Role Model and inspire them. Start working now without any late work.this is a small and quick summary of Rich dad poor dad book.

Conclusion:

Through the summary this book named rich dad poor dad,we all got a moral message. This is the easy way to under the story.