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Rich Dad Poor Dad Summary

In Rich Dad Poor Dad, Robert Kiyosaki discusses his life experience growing up and watching two adults handle money differently and shares the valuable wisdom from the more financially successful of the two to readers in a comprehensible, simple way.

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Rich Dad Poor Dad Summary: About the Book?

Robert Kiyosaki shares valuable insights and reflections from his childhood. He grew up seeing how his dad and his best friend’s dad approached money in different ways. He watched as one grew wealthier through his mindset and actions while the other did not. 

His own father is the poor dad, who earned a lot of money but still had financial struggles. His friend’s dad, the rich dad, took a different approach and became wealthy as an entrepreneur. The rich dad gave advice to Kiyosaki throughout his life that helped him gain wealth. 

This book discusses concepts like cash flow, income, assets and liability, and balance sheets for the average reader to understand. These basics in financial literacy are the foundation of building wealth, and Kiyosaki seeks to share those widely. 

6 Key Ideas of the Book

  • Assets are the most important thing to buy.
  • Financial literacy must be taught.
  • Starting a business is more profitable.
  • You have to understand taxes and corporations.
  • The rich invent money, not make it.
  • Don’t work for just money; work to learn.

Summary 

Chapter 1: Introduction 

Kiyosaki introduces the concept of the book by sharing his story of growing up around these two men. In his life, he saw how important the information the rich dad gave him at a young age was to build his wealth, and how many other children don’t get that knowledge.

He criticizes the existing education system, claiming it is outdated and unfair. Students nowadays spend years of their lives learning about things they will never use when they should be learning practical concepts to make smart choices with money.

He emphasizes the importance of financial literacy as a way for people to gain freedom from their finances and demands for this to be more widespread information. There is a call to action directed towards the education system to start including this in the curriculum for students.

This introduction of Rich Dad Poor Dad dives deeper into the story behind the poor dad and the rich dad in Kiyosaki’s life. He grew up in Hawaii and was close with his best friend’s dad, who he considered a second dad.  

He witnessed two different perspectives on wealth and money between these two dads. While both believed in the importance of education and making money, they took different routes to approach this. The poor dad didn’t think critically about the money he was making.

On the other hand, the rich dad exercised his brain constantly when considering money. “Money is power,” the rich dad would say often. 

Kiyosaki dives into the first time he asks his friend’s dad about wealth at the age of 9. They wanted to learn from him, so he taught them through experience. His friend Mike and he spent every Sunday working for the rich dad to learn about earning and spending money. 

The rich dad made them work at one of his grocery stores to understand his hatred of the “rat race,” where they made only ten cents an hour. When they were frustrated, he offered them either the moral of the lesson or a raise. The boys demanded the moral of the lesson.

He explained the importance of spending your time having other people put money in your pocket, rather than working for someone to put money in your pocket. Kiyosaki still claims this was the most important lesson he learned. 

Chapter 2: Lesson 1 — The Rich Don’t Work For Money

Chapter two discusses the difference between how the rich and poor approach making money. The rich dad explains the importance of using one’s emotions critically instead of letting the emotions make the decisions. 

He explains that poor and middle-class people will make money out of fear, seeking security with their money. This closes them off to the real opportunities to take smart and informed risks that would result in big profits. 

Rich people, on the other hand, use their emotions to recognize good opportunities. They do everything they can to turn them into success. They work with the mindset to seek opportunities that create enormous wealth rather than just working for money. 

Kiyosaki encourages people to seek out alternative ways to earn rather than just depending on a traditional job for their entire life. However, to make smart choices in those alternative ways, you do need to be smart and make the right choices. This leads into the next chapter.

Chapter 3: Lesson 2 — Why Teach Financial Literacy? 

Chapter three stresses the overall importance of having financial literacy, no matter how much money you have. It’s not about the money; it’s about what you do with it. This chapter emphasizes paying off debts and investing in assets as soon as you can. 

The author updates readers that both he and his friend Mike ended up successful and wealthy. Kiyosaki retired at the age of 47, while Mike took over his dad’s business and ran it with productive growth. 

Kiyosaki tells stories of wealthy entrepreneurs and athletes who ended up in jail or penniless because they had no financial literacy. At all points in wealth building, you need to be smart with your money. The belief that once you have it you’re safe is wrong. 

He stresses his belief that money can buy financial independence and freedom, but not without intelligence with money. Thinking critically about money earned is powerful. The foundation of this, he states, is the basics of accounting. 

He encourages everyone to seek basic financial education and uses simple images to explain the basics of finance. He uses images in his to illustrate the basics of cash flow, income statements, and balance sheets. 

Understanding cash flow is essential to build wealth, as one has to fully understand the money coming in and out to see the big picture. Income statements and balance sheets are tools to help make this more clear.  

“You must know the difference between an asset and a liability and buy assets.” He advises everyone to pay off their debts as soon as they can and focus on investing in assets. The next chapter describes the process for doing this. 

Chapter 4: Lesson 3 — Mind Your Own Business

Chapter four recommends methods for increasing assets. Assets are a way for you to work for yourself, making money with your money. You can be a business with how you view your money. Assets create a solid passive income if done right. 

He explains the process of real estate investing by using McDonald’s as an example. While they may not have the best food, they do have the best locations, and there are layers of value in that. Their assets will continue to grow as all that property increases in worth. 

Other forms of assets, like stocks, bonds, mutual funds, income-producing real estate, notes, and royalties from intellectual property are discussed. He encourages everyone to seek out more of this type of wealth where possible in their life. 

Kiyosaki shares his preference for real estate and stocks, explaining how he started small with property investments and built up his portfolio by trading smaller ones for larger ones as they increased in value. He knew a trick with taxes that prevented him from minimizing his taxes, as well.

As he moves through the chapter, he encourages everyone to become their own boss. Minding your own business creates assets. Your time is used to build your business as an asset rather than putting your time towards building someone else’s asset and wealth. 

Chapter 5: Lesson 4 — The History of Taxes and The Power of Corporations 

The history of taxes is worked through to help you understand the ways that you use them to your advantage. Without knowledge of taxes, one can easily fall into the poor and middle class because the system takes advantage of them. The poor class let the corporations use them.

Kiyosaki criticizes how corporations and the rich are barely taxed. They make a lot of money, spend it, and are barely taxed on what is left. The individual, on the other hand, pays a lot of tax on the income they try to save. You should understand this to use it to your advantage.  

He coined the term “financial IQ” and splits it into four main areas: accounting, investing, understanding markets, and law. Everyone should increase their financial IQ by learning more about these topics to stand a chance against corporations. 

There are classes, books, and seminars that teach these concepts to people. Spending a small amount of time with these can make you far more than working a traditional job. 

Chapter 6: Lesson 5 — The Rich Invented Money 

This chapter breaks down investments, self-doubt, and how to be smart when investing your money. He explains that our society is full of people with fear and doubt, which suppresses their ability to earn. People focus too hard on earning rather than learning long-term skills.

Kiyosaki encourages people not to sit around waiting for money but to go and find it. There is no way to get ahead by waiting for something to fall into your lap; you have to create what you want and find profit in that. 

He pushes people towards education and training, stating that a “trained mind is a rich mind” and explains that it’s important to hire and surround yourself with people who are more intelligent than you. 

Instead of pursuing high earnings from a traditional job early on, he explains that investing in learning skills and taking a slight pay cut in the short term can often result in significantly more wealth if you see the pathway in the long run. 

Chapter 7: Lesson 6 — Work to Learn. Don’t Work for Money

Chapter 7 explains that there are a few main skills that one needs for success: management of cash flow, management of systems, and management of people. 

Kiyosaki provides an example of a woman with a master’s degree who was offered a sales position, but she denied it because she believed it was below her and her degree. He discourages attitudes like this, claiming there are other important skills people need. 

The author shares his own experience in joining the Marines, where he learned people and management skills over traditional academic skills. He moved on to work in a sales position and became one of the best in the company due to what he brought from that experience.

The skills that he highlights will help people with their management are sales, marketing, and communication. Intelligent geniuses who lack communication skills are, as he says, “one skill away from great wealth.” 

Chapter 8: Overcoming Obstacles

Kiyosaki dives into the main obstacles that prevent people with good cash flow from building assets and wealth. Just because one can make high amounts of money doesn’t mean they’ll do the right things with it.

He warns people to be conscious of these top obstacles and advises the way through them:

  • Fear: One shouldn’t be afraid of failure. Failure can turn losers into winners if they learn and keep going. Fear is the number one thing that holds people back from building wealth, he claims. You need to play to win and start as early as you can. 
  • Cynicism: Cynicism closes doors and decreases opportunity. By analyzing situations in depth and thinking critically, one can avoid this and see the potential in certain situations that others choose not to. “Cynics criticize and winners analyze,” the rich dad states.
  • Laziness: Avoid saying that you can’t do something. He explains that by putting in the work and pushing through complacency, answers and solutions will appear. 
  • Bad habits: Put a stop to bad habits early to prevent your downfall. You have to motivate yourself from within to do this. It’ll only continue to push you into good habits that make you smarter with money.  
  • Arrogance: You need to identify and accept that you are ignorant about some things and then choose to educate yourself. By believing you know everything, you will miss time to learn and see other unique money-making opportunities. 

Kiyosaki explains that it takes more than a balance of skills but a serious focus and determination. It is essential to be greedy, but you should do it through the lens of viewing everything with what you can get out of it.  

Chapter 9: Getting Started 

With the basic foundation of knowledge now, Kiyosaki brings you the top tips that will give you financial freedom and strength. 

Have a Strong Purpose

The author encourages everyone to find a reason to do what they’re doing. A purpose is important for motivating yourself every day to seek out the possibilities. You can’t move with momentum without a purpose pushing you.  

Feed the Mind

It’s essential to continue to feed the mind and seek opportunities. Kiyosaki believes that by continuing to pursue knowledge in different fields or industries, you will find more opportunities. 

Choose Friends Carefully 

As the classic tale goes, you are a direct result of the people you surround yourself with. The author stresses this as an important point with money. Surround yourself with people who care about their finances, make smart decisions, and will encourage you to do the same. 

Study Something, Then Do It Again with Something Else

He believes that knowledge opens doors with money. Learning more skills from different fields and industries will allow you to see things differently, approach situations with a unique perspective, and find ways to make money that others don’t see. 

Pay Yourself First

Although it goes against what many startups do, he stresses that you have to pay yourself before others. You need to keep moving, and you deserve that.

Learn From History

He encourages everyone to read more history on how people have gained and lost money. Find heroes who have lived the life you want to and follow their lead. Learn from those that have failed. 

Teach and You Shall Receive

The power of giving is emphasized. What you learned to work should be passed down to those who have the same hunger to learn. It is a powerful step in the journey to be able to pass on your knowledge. You receive fulfillment that is greater than monetary gain for yourself. 

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

With tips and knowledge to be a financial genius now, the author takes you through the first steps to start living with this mindset. He shares the practical steps to incorporate into your life to build your wealth and continue to increase your financial literacy. 

Some of the top things he recommends are: 

  • Look for new ideas 
  • Find people who have done what you want to do
  • Take classes
  • Read books on what you want to do
  • Attend seminars 
  • Make a lot of offers 
  • Learn from history 

He urges people to take action because action beats inaction. Don’t get stuck and be complacent; keep moving with your financial goals. 

Other Inspirational Resources 

There is so much to learn from inspirational books, and they can be life-changing. If you’re hunting down more great knowledge, check out some of these other famous book summaries. 

  • Think and Grow Rich Summary: Napoleon Hill researched 40 millionaires to figure out the ways they became successful. He compiles this information into Think and Grow Rich, inspiring readers that they can achieve whatever they set their minds to. 
  • Never Split the Difference Summary: Former FBI hostage negotiator Chris Voss spills the details on ways to negotiate. He applies these strategies to every moment of daily life and how you can use them to get ahead and be successful. 
  • How to Win Friends and Influence People Summary: Dale Carnegie’s book discusses the best strategies you can use to influence people in every part of life. He explains the psychology of human connection and how to utilize this in your relationships. 

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