Rich Dad Poor Dad summary
Rich Dad Poor Dad summary

Thanks for visiting my Rich Dad Poor Dad summary and review, I believe that you’ll get some good use out of this summary. It’s really a great book and easy read, so if you like the summary, you’ll definitely like reading the book.

In 1997, businessman Robert Toru Kiyosaki made his first break into authorship at the age of 50. Kiyosaki debuted as a writer by self-publishing a book on the fundamentals of financial intelligence, Rich Dad, Poor Dad. To date, Kiyosaki’s 207-page guide has sold over 26 million copies and become one of the world’s most critically examined pieces of financial literature.

Kiyosaki wrote Rich Dad, Poor Dad to encourage a conceptual reexamination of wealth as not only matter of assets, but a fundamental state of mind. The book explores what Kiyosaki indicates as subtle differences in the distinct world views held by those with and without substantial means.

Rich Dad, Poor Dad envelopes and delivers Kiyosaki’s financial philosophy within the context of his own childhood. In a coming-of-age narrative chronicling his Hawaii upbringing, Kiyosaki refers to the two men in his life who inspired his book’s title: his biological father, Ralph H. Kiyosaki, and his financial mentor, whose identity Kiyosaki has kept confidential.

The life of Kiyosaki’s late biological father, highly educated but horribly debt-ridden, serves as a portrayal of what Kiyosaki identifies as a fundamentally “poor” mindset. The poverty-conducive mindset epitomized by Kiyosaki’s father is contrasted to that of his mentor, far less academically decorated than Kiyosaki’s father and yet astronomically wealthier.

While Kiyosaki’s degree-holding father created mountainous debt, Kiyosaki’s mentor had become a multimillionaire with only an 8th grade education. Seeing the contrast between his father and mentor’s lives firsthand was what compelled Kiyosaki to deeply question the traditional education system as reliable source of financial intelligence.

Rich Dad, Poor Dad is both a financial guide and controversial challenge against traditional education’s efficacy as true vehicle for life preparation. Essentially, Kiyosaki’s criticism frames traditional education as somewhat of a paradox; a system made for life skill development that, ironically, leaves many its students without the practical knowledge to lead stable lives.

Blind faith in academia and a drought of real financial education, Kyosaki expresses, are what engineer the financially self-destructive mindset that led his father to a life of financial struggles and unresolved debts.

Ultimately, Rich Dad, Poor Dad encourages readers to critically reexamine their fundamental interpretation of wealth. Kiyosaki describes the difference between poor mindsets and rich mindsets as a simple divide between outward-based and inward-based focus. Rather than fixating on the assets that signify wealth, Kiyosaki presents the true form of wealth as a base state of mind.

Without further ado, here is my Rich Dad Poor Dad summary and review:

Lesson 1: The Rich Don’t Work for Money

Kiyosaki begins by declaring that the poor and wealthy classes have a fundamentally different comprehension of work. He states, “The poor and middle class work for money. The rich have money work for them.”

The notion that poor and middle class people interpret money as something exclusively earned through extensive human effort is what Kiyosaki identifies as the basis for their conventional, linear framework of life – that framework being a hard-earned traditional education which, hopefully, leads to a secure job that provides a consistent salary in exchange for their continued effort.

Kiyosaki suggests that the powerful influence of this uncontested conventional framework results in most people never considering any kind of life apart from it. This unfathomable realm that lies outside of the poor and middle classes’ conventional framework is what Kiyosaki describes as the home of the wealthy.

While the idea of the conventional path through life that Kiyosaki states the poor and middle subscribe to appears comfortable in concept, he goes on to state the the reality is generally far from satisfying. Kiyosaki suggests that the poor’s learned fear of being without means in the absence of a way to manually generate it creates an anxious compulsion to spend it unnecessarily.

The end result of this constant oscillation between fear and compulsive spending is a massive hole of debt that grows increasingly difficult to escape from.

Kiyosaki states that the average person’s level of fear nearly always overpowers their passion, discouraging them from taking time away from work to invest in assets that accrue value instead of dropping in value; therein lies Kiyosaki’s first lesson in adopting a wealthy mindset.

Kiyosaki ends by pointing out the irony in how frequently people with 9 to 5 jobs claim that “money isn’t everything”. He states that if these people were truly as disinterested in money as they claimed, then they wouldn’t sacrifice 40 hours a week for it. That concludes the first lesson of this Rich Dad Poor Dad summary.

Rich Dad Poor Dad Summary Review Quote 1
Failure quote

Lesson 2: Why Teach Financial Literacy?

In this chapter of this Rich Dad Poor Dad summary, Kiyosaki addresses the lack of comprehensive financial education in traditional education systems. Even in classes designed for financial literacy, he observes, the material is usually limited to nothing more than one or two stock market term definitions.

What is missing from the curriculum, Kiyosaki asserts, are the tools that students will need to apply financial knowledge to succeed, prosper, and protect themselves in the real world.

Kiyosaki links this lack of relevant financial education to the poor and middle classes’ tendencies to mistake liabilities for assets. Being conditioned to spend everything on liabilities and nothing on assets virtually ensures that many in the poor and middle class never have a chance at escalating.

To represent the asset versus liability problem more clearly, Kiyosaki states that the majority of people consider a house to be something that grows in value after they purchase it. Unfortunately, what these people don’t understand at the time of purchase is that the expenses of home ownership will greatly inhibit their freedom to invest in real assets.

Kiyosaki concludes the chapter by stating that a person’s spending habits will be a far greater factor in their wealth than their salaries; on the contrary, bigger salaries usually only result in lifestyle inflation with same consistent net loss of earnings.

In addition to confusing liabilities for assets, Kiyosaki also points to widespread confusion of wealth for net worth. Net worth, unlike wealth, is not a figure that represents what a person has to feed themselves. Only by correcting the mistaken comprehensions of wealth, net worth, liabilities and assets can a person stand a chance at escaping the cycle of poor-mindedness.

Rich Dad Poor Dad Summary Review Quote 2
This is a Great Quote! 

Lesson 3: Mind Your Own Business

The next keystone of poverty that Kiyosaki highlights is the poor and middle class devoting most of their time and effort to serving one of three entities: their company of employment that pays them, the government taxing them, and the bank that disburses their loans. By Kiyosaki’s calculation, the average American’s time spent working to pay the government can total up to six months.

Kiyosaki suggests that there should be a differentiation between one’s business and their profession. While having some level of formal schooling and a stable job are far from unnecessary for many people, Kiyosaki states that there should always be some focus on one’s personal asset column.

An asset column doesn’t need to take the form of a billion dollar business; it can be as simple as allocating a portion of the day job’s earnings into easily managed stocks, bonds, intellectual properties, and other small value-accruing investments.

The formula that Kiyosaki suggests is to buy assets first and liabilities later. Instead of purchasing anything on impulse, Kiyosaki asserts the value of instead buying an asset that can eventually cover the cost of the liability on its own. This finalizes the 3rd Lesson of this Rich Dad Poor Dad summary.

Lesson 4: The History of Taxes and the Power of Corporations

The fourth lesson begins by examining the advent of income taxation, along with a look at moments throughout history in which the rich were targeted for their means. In the current day, Kiyosaki states, wealthy people have developed a greater level of finesse in legally circumventing taxes while the middle class takes the brunt of the blow.

Kiyosaki identifies one of the most valuable tax solutions employed by the rich: Internal Revenue Code Section 1031, also called “like-kind” exchange. With 1031, one may legally choose not to pay taxes on real estate sales if the proceeds go towards funding another real estate purchase.

The corporation is another favorite tax-beating tool. Corporations, unlike individuals, are taxed after expenses instead of before them. Because of the unique post-expense tax rule applied to corporations, it’s possible for those who own them to legally write off their leisure purchases.

Kiyosaki goes on to describe financial literacy in terms of four specific components:

  1. Accounting. Being capable of reading and fully comprehending all different types of financial statements.
  2. Investing. Understanding the process of wealth-generated wealth. A basic comprehension of how investment strategies can be flexibly modified and planned.
  3. Understanding markets. Knowing the fundamental relationship between supply and demand. Knowing the distinction between technical investments, which are emotionally charged, and fundamental investments, which are based in economic sense.
  4. Law. A complete understanding of tax laws and lawsuit risks.

This concludes the Lesson #4 of this Rich Dad Poor Dad summary.

"If you failed..." - Summary review of Rich Dad Poor Dad
“If you failed…” quote from the Summary of Rich Dad Poor Dad Review

Lesson 5: The Rich Invent Money

One of the most important lessons of the Rich Dad Poor Dad summary.  Kiyosaki beings the fifth lesson by referencing a point in history when land itself signified wealth, approximately three centuries ago. Kiyosaki moves on to speak of the Industrial Revolution’s transference of wealth to industrialists, and then returns to current time, in which he identifies wealth as information.

Kiyosaki states that while people oftentimes lament not being able to afford the discounts they come across, they are also missing out on highly accessible opportunities that aren’t in plain sight.

The conventional framework of working, saving, and borrowing prevents them from seeing the manufactured nature of both probability and capital; this is in direct contrast to the rich, whose livelihood is oftentimes owed to being conscious of hidden opportunities that most would overlook.

Kiyosaki presents two opposing financial paths to take in one’s life:

  1. Work many hours earning, sacrifice significant earnings for tax payment, save the remainder, and have the remainder taxed.
  2. Hone your financial knowledge and use the power of ingenuity to form your own assets.

While the majority’s investment strategy is usually to purchase a packaged investment and trust in the stockbroker or real estate company that provided it, the wealthy form their own packages. Kiyosaki highlights three essential skills to develop in order to follow the investment creation process of the rich:

  1. Become adept at spotting overlooked opportunities
  2. Study the art of fundraising.
  3. Develop a skill for getting intelligent, competent people to gather and collaborate.

While the steps to achieving investment mastery do necessitate some risk, Kiyosaki states that these risks can be managed by ensuring that enough time is dedicated to understanding both the investment itself and being fully informed about the nature of the market. This finishes up the 5th lesson of my Rich Dad Poor Dad summary.

Don't waste a good mistake - Rich Dad Poor Dad Summary

Lesson 6: Work to Learn – Don’t Work for Money

Kiyosaki urges young readers to pursue fields of work that mentally challenge and enrich them, rather than making the mistake of qualifying jobs based entirely on the salary.

Learning just a small amount of information about many different things, Kiyosaki states, is superior to specialization; he attributes the former to being rich and the latter to employment. Kiyosaki encourages young readers to seek out jobs that teach practical skills in cash flow management, system operation, and the human factors of business. Kiyosaki particularly emphasizes the value of studying sales, communication, and marketing; not only does he describe these three skills as being instrumental to wealth development, but he also states that they blend well with many other skills.

Overcoming Obstacles

In terms of asset column development, Kiyosaki indicates five common sources of hesitation that even people with financial experience are sometimes affected by.

  1. Fear – Kiyosaki stresses that it’s not just a common fear that stops people from developing their assets, but specifically, a fear of losing their money. Kiyosaki states that not even the rich are immune to periodically losing money, but they counterbalance these losses by leveraging them into new potential avenues for success.
  2. Cynicism – Kiyosaki states that when fear and about have been allowed to fester for a long enough period of time, cynicism is born. The cynic is described as having an endless reservoir of fatalistic excuses, a sworn commitment to criticism, and a religious opposition to analysis for fear of being convinced otherwise. Where a poor-minded person would make an excuse against real estate investment due to not wanting to get their hands dirty, Kiyosaki states that a rich-minded individual would purchase the property at a profitable price that leaves enough left over to hire a manager for the property in their place.
  3. Laziness – Kiyosaki points out the ironic fact that secretly lazy people oftentimes keep themselves busy just to avoid starting something more challenging. Rich people, Kiyosaki states, have a level of passion that surpasses their worries about the effort involved.
  4. Bad habits – Kiyosaki asserts that one’s life is oftentimes more an indicator of our daily habits than our educational history. Kiyosaki stresses the imperative need to pay oneself before those who demand our time or money for employment, rent and taxes; paying oneself in this context does not refer to physical money, but physical, mental, and financial care.
  5. Arrogance – Kiyosaki states that arrogance is a fusion of ignorance and the ego, and that the best counterweight for it is in-depth financial education.

Getting Started

In this section of the Rich Dad Poor Dad summary, Kiyosaki offers some general pointers for the best ways to stay within a wealth-generating state of mind.

  1. Have reason greater than reality. Kiyosaki states that one’s desire to rich should be rooted in the kind of conviction that transcends their reality; otherwise, he warns, the reality of life will become too difficult to keep carrying on. Kiyosaki asserts that conviction to defy reality and chase wealth comes from a firm belief in one’s right to have freedom over labor.
  2. Choose daily. This point emphasizes that the commitment to wealth generation needs to be a daily affair that comes down to every single dollar. Each spent dollar, Kiyosaki states, is an indicator of our chosen identity.
  3. Choose friends carefully. This point asserts the importance of choosing one’s company based on their positive, empowering values. The best type of company is composed of supportive people who are neither obsessed with money nor cynically dismissive of it.
  4. Master a formula and then learn a new one. Rather than being locked down to the linear formula of “work, bills, retirement”, Kiyosaki asserts an alternative commitment to a formula based on investing in specifically-targeted assets. After acclimating to the process of turning overlooked opportunities into assets, Kiyosaki states, a fundamental shift in perceptiveness will reveal other opportunities as well; this will emerge alongside a new level of discipline.
  5. Pay yourself first. Here, Kiyosaki reiterates the value of taking care of one’s basic needs – in physical, mental, and financial health – before sacrificing time or money to any other parties that request them.
  6. Pay your brokers well. Kiyosaki states that an important aspect of asset column development is ensuring that every professional person who either helps you earn or save money, from lawyers to accountants, should be compensated generously.
  7. Be an “Indian giver.” In this point, Kiyosaki assets that no investment should be made without the assurance that one’s leverage for success is greater than the calculated risks. It is a matter of not only the ROI, but the complimentary assets that accompany it as well.
  8. Assets buy luxuries. This point is a reiteration of the earlier statement that luxuries should always be paid for by assets, and not by the capital that could be used to create assets.
  9. The need for heroes. Here, Kiyosaki states the importance of having skilled investors as role models and using their success as a source of motivation.
  10. Teach and you shall receive. The act of sharing information with another person, Kiyosaki states, is a mutually beneficial exchange. He expresses a belief that the things one gives will be proportional to that which is given in return.
Summary review of Rich Dad Poor Dad
“Winners are not afraid of losing…” 

Still Want More from this Rich Dad Poor Dad summary?

This section is a simple list of good habits and poor habits.

  1. Stop doing what you’re doing. Briefly take a step away from work to consider the pros and cons of your current situation.
  2. Look for new ideas. Digest as much information as possible from multiple instructional books written by different experts.
  3. Find someone who has done what you want to do. Make a point of socializing with people who have accomplished your goals, and ask if they would be willing to share their insight.
  4. Take classes and buy tapes. Don’t resist the notion of investing money into expanding your field of knowledge. Information, Kiyosaki states, is always a worthwhile asset in its own right.
  5. Make lots of offers. Disregard the fear of rejection and commit to making as many offers as possible until acceptance.
  6. First look for people who want to buy, then for people who want to sell. In any deal, always apply the fundamental knowledge you possess about supply and demand.
  7. Learn from history. Wherever you learn about success in the past, think of ways to reverse engineer that success.
  8. Action always beats inaction. No matter how uncertain you might be, the momentum to move forward with the plan will always be superior to waiting and worrying. This ends this section of the Rich Dad Poor Dad summary.

College Education for $7,000

In this section, Kiyosaki recounts a story of when a friend of his was in dire need of $400,000 to fund the education of his children. Kiyosaki helped his friend by guiding him through several real estate ventures, including the purchase of both a home and a storage facility, with corporate tax protection.

Kiyosaki concludes the section by stating that the idea of great wealth being necessary to earn wealth is inaccurate. More important than the money to invest, he asserts, is the depth of one’s knowledge. Kiyosaki declares that the most important step to starting is simply buying a book or attending a seminar. After overcoming hurdle of starting, he states that the top priority should be a commitment to constant practice.

Kiyosaki’s closing statement is this: “It’s what is in your head that determines what is in your hands. Money is only an idea.”


 

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The Best Rich Dad Poor Dad Quotes to Save

Robert Kiyosaki.

“My Poor Dad Often Said, ‘I’d Rather Be Happy Than Rich.’ My Rich Dad Said, ‘Why Not Be Both?'”

Robert Kiyosaki.

“Direct sales offers the education my rich dad taught: build your own network rather than working for a network.”

Robert Kiyosaki.

In 1997, in Rich Dad, Poor Dad, I stated, ‘Your home is not an asset.’ Real estate agents sent me hate mail.

Robert Kiyosaki.

“The most important job of the entrepreneur begins before there is a business or employees. The job of an entrepreneur is to design a business that can grow, employ many people, add value to its customers, be a responsible corporate citizen, bring prosperity to all those that work on the business, be charitable, and eventually no longer need the entrepreneur. Before there is a business, a successful entrepreneur is designing this type of business in his or her mind’s eye. According my rich dad, this is the job of a true entrepreneur.”

Robert Kiyosaki.

“Rich dad went on to explain that the world was filled with different types of entrepreneurs. There are entrepreneurs who are big and small, rich and poor, honest and crooked, for-profit and not-for-profit, saint and sinner, small town and international, and successes and failures. He said, The word entrepreneur is a big word and it means different things to different people.”

Robert Kiyosaki.

“Rich dad has taught me “You can’t do it” doesn’t necessarily mean “you can’t”. It more often means “they can’t”

Robert Kiyosaki

“My Rich Dad said, ‘All of us have the power of choice. I choose to be rich, and I make that choice every day.'”

 

“My rich dad taught me to focus on passive income and spend my time acquiring the assets that provide passive or long term residual income…passive income from capital gains, dividends, residual income from business, rental income from real estate, and royalties.”  Robert Kiyosaki.

“Money is not worth dying for. I know, because years ago, while nearly a million dollars in debt, suicide was an option. Rather than run, rich dad suggested I write down all the mistakes I made and then seek help. If I made accounting mistakes, I talked to an accountant. If there was a legal mistake, I talked to an attorney. That was my way out. That is how I got smarter.”

Robert Kiyosaki.

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