The cover had always been in the back of my mind but I figured it was another ‘get rich quick’ book and dismissed it as such. Finally, when I was gifted the book, I read it cover to cover out of obligation.

And it was my first “aha” moment!

This is my “gateway drug” book to all the other personal finance books! I didn’t think it was possible to make more than an hourly wage.

I could slap myself for being so prejudiced in the first place.

If I had read Rich Dad, Poor Dad years ago, I probably have been further ahead in my financial journey!

Is it a financial help book? Not in the way you might think.

I call it the “gateway drug” type of book in the way inspires you of the possibilities outside of the traditional 9-to-5. It changes your mindset in how you view money and gets you thinking outside of the traditional framework of making money.

RICH DAD VS POOR DAD

Overall, I enjoyed this book. It’s one of the first I’ve read that opened me up to possibilities other than the traditional career. It’s relatable by using parables and simple storytelling. Kiyosaki observes how differently a rich dad’s and a poor dad’s attitude towards money affect their futures.

The Poor Dad did everything right and as told – earning a Ph.D, advocating for hard work and formal education, yet struggled with bills and his career nearly all his life. He believed money was the root of all evil [this myth needs to die].

The Rich Dad was a successful business owner who believed in self-learning and having money work for you. He believes money is a tool [yes, it is!] to improve our lives, and that formal education does not include financial literacy in their curriculum. Ironic and shameful.

It was then, the protagonist Kiyosaki, realised that his Poor Dad was poor not from the lack of money he earned, but from his mindset and attitude about money.

“Look around; the richest people didn’t get rich because of their educations. Look at Michael Jordan and Madonna. Even Bill Gates, who dropped out of Harvard, founded Microsoft; he is now [one of] the richest man in America, and he’s still in his 30s.”

– Robert Kiyosaki

We all started like the Poor Dad believing in money myths and taboos – which were just old programming to keep you poor.

You’ve heard of that linear way of life: go to a good school, get a high-paying job, work hard, get married and have a house with kids along the way, and retire around 65 with a pension. A very outdated, and no longer viable, outlook.

And somewhere along the way, greed and lifestyle inflation set in. The more you get paid with every promotion, the more likely you’ll spend it rather than saving it for your asset column. And the cycle continues.

What if I don’t spend that much, but have no high income?

What Robert is saying is that it doesn’t take degrees (expensive pieces of paper) to make a rich person. Your earning power is not dependent on your degree.

WHAT THE BOOK IS and is NOT

You won’t find what stocks to pick or how to organize your portfolio. There’s not going to be a concrete way shown to you about how to make a million dollars.

What Kiyosaki is driving home is the different perspective of money and often the emotions tied with it. Once you’ve understood this mindset, you’re less inclined to let outside influence dictate your behaviours and fears. You’re more likely to break out of the cycle [aka the rat race], and be truly rich.

The ability to change yourself sets the foundation for being able to change your life to what you really want.

LESSON 1 – the rich do not work for money

Majority of the people are often trapped in the paycheck cycle with the following reasons that keep them poor – despite being financially literate:

1. Fear (the need to chase security and safety)
2. Cynicism
3. Laziness
4. Bad Habits
5. Arrogance.

“The pattern of getting up, go to work, pay the bills…their lives are run forever by two emotions, fear and greed. Off them more money, and they continue the cycle by also increasing their spending. This is the Rat Race.”

Kiyosaki explains that the common attitude towards money is to play it safe and secure. You’re more likely to stay in the job out of fear (of when your next income will be, if you can pay your bills, etc.) and the need for a sense of security. But rather than saving and growing your asset column to escape the rat race, most people will consume more if they are given more money.

LESSON 2 – the importance of financial literacy

Because it’s not about how much you make, it’s about how much you keep.

And the foundation of being wealthy is good financial education – not quick fixes. Kiyosaki emphasises the rich buy assets and the poor and middle class tend to buy liabilities.

A clear way to determine if you’re buying an asset vs a liability is to ask: does it put money in my pocket or take money out of my pocket?

An asset will constantly give you returns. Whereas a liability will take up your funds.

LESSON 3 – MIND your own business

Kiyosaki explains that people usually work their entire lives for someone else.

At the end of it, some don’t have much to show for it. He explains this is mostly accredited to the school system in youth – you’re encouraged to be what you study rather than owning a business.

How to start minding your own business? Begin with these two fundamentals:

(1) Education.

(2) Assets and Liabilities.

Kiyosaki explains there is a significant difference between having an income and having a business. Kiyosaki claims to keep your day job and use it to build these to be worthy assets to own:

• businesses that you own but do not need to manage day-to-day
• stocks
• bonds
• income-generating real estate
• royalties from intellectual property (ie, music, literature, patents)

In that case, having 9-to-5 is the ultimate hack. You’re exchanging your time for money to funnel into assets. It will pay the bills and your skills to eventually leave your job.

LESSON 4 – a short History of taxes

Did you know that having a job is the highest taxed income there is? The majority of the people accept this as the norm.

In Canada, the more you earn means the more the government take their cut. While everyone in power can justify that the money is used for society – we know the truth. It’s theft.

That’s one of the reasons why the rich don’t have jobs. The rich voluntarily educate themselves to understand corporate structures, which allows them to avoid being taxed. Having a decent financial IQ, which the middle class lacks, pays off.

More money in your pocket is a good thing.

LESSON 5 – work to learn, not for money

Kiyosaki believes to increase your income – degree or not – most people would just have to master one skill. Often boring skillsets like investing, accounting, marketing, or law, make making money considerably easier.

TL;DR

• The rich do not work for money; they focus on building assets
• The poor and middle-class work for money, often believing working hard and the lack of financial literacy is the acceptable norm.
• Money is not the root of evil; the lack of money is the root of all evil.
• Financial education is so important, it is fundamental to being rich.
• Self-learning > formal education (Study to work for a good company vs study to build your own company)
• Assets and liabilities are different. Assets generate money whereas Liabilities take money away.
• “The reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich.” In other words, winners are not afraid of losing.
• Train yourself to think richly by asking open-ended questions to yourself. Rather than “I can’t afford this”, ask yourself “How can I afford this?”
• Pay yourself first
• Don’t take risks with money; learn to manage risks with money

FINAL THOUGHTS

Prior to reading “Rich Dad Poor Dad”, I had a prejudice against the book and its author being an MLM or get-rich-quick scheme. I was dead wrong.

I had every type of fear described in the book in my relationship with money and hoarded every penny rather than investing. I didn’t even know what the word meant since I was stuck in the poor, 9-5 mindset. The fear of losing kept me from what a joyful life I could lead. Now I know there are more opportunities than a degree and a 9-5. =)

I honestly wish I tossed aside my initial judgement and read the book sooner. While it may not be best for the advanced, it’s the best kind of gateway book for beginners starting out in personal finance.

What do you think of the book? Do you have more of a poor mindset or a rich mindset?