Happy Indulgence

Apropos Book

Rich Dad Poor Dad is about Robert Kiyosaki and his two dads—his real father (poor dad) and the father of his best friend (rich dad)—and the ways in which both men shaped his thoughts about money and investing.

You don’t need to earn a high income to be rich.

Rich people make money work for them.

Rich Dad Poor Dad Recitation

1: The Rich Don’t Work for Money

2: Why Teach Financial Literacy?

3: Mind Your Own Business

4: The History of Taxes and The Power of Corporations

5: The Rich Invent Money

6: Work to Learn—Don’t Work for Money

The ideas presented in Rich Dad, Poor Dad aren’t particularly profound or fancy, but the concepts were entirely new to me. This is especially true of how the book taught me to think of money not as an end-goal, but as a tool for wealth creation.

I realized that the concept of trading time for money just isn’t the smartest way to go through life. Your money should work for you—not the other way around.

Here are some of his key concepts:

Being rich = freedom .Rich people make money work for them, while most everyone else works for money

Financial education is a key to success.

In regards to that last concept, Kiyosaki has a lot to say. For example, I just love this quote from the first chapter:

“Most people never study the subject [of money]. They go to work, get their paycheck, balance their checkbooks, and that’s it. On top of that, they wonder why they have money problems. Few realize that it’s their lack of financial education that is the problem.”

Lifestyle Inflation

It trained to go to school and focus on getting good grades within our field of study.

Once that’s done, we hop on board with the masses and work for an employer who pays us a regular salary along with some other nice perks. That’s cool I suppose and we’re happy with that (for now)…

But that state of happiness doesn’t last very long.

Kiyosaki says humans by nature are greedy, emotional, and impatient.

So within time, when we get raises or a promotion, we end up spending more. The more we make, the more we spend. "Like fool having a big party"

As a result, lifestyle inflation kicks in and we have nothing saved for in our assets column.

Rich dad says you either end up

1) offsetting your income with your expenses(in most cases, the poor), or

2) building up your liabilities column (usually the middle-class because they get themselves into debt so that they can buy more of what they think makes them happy).

It’s a never-ending paycheck to paycheck cycle and we eventually want more and more.

But what the masses don’t understand nor see is that they cannot sustain this inflated lifestyle because they’re working hard (and not smart) for their money.

Rich dad says the cycle typically goes like this:

Get paycheck —> spend —> eventually get promoted and paid more —> spend more (e.g. upgrade to bigger houses, cars, boats, vacations, etc.) —> no assets that generate income for you

And the end result?

Hm, I guess there is no end…

The masses become trapped in the “Rat Race” with no savings and no investments.

According to Bankrate, over 65% of Americans save little or nothing — and half could end up struggling in retirement.

Your home is not an asset. It is a liability.

Speaking of savings and investments, Kiyosaki does not consider your primary residence as an asset. In his view, if your home carries a mortgage and does not generate any income, then it is not an asset but a liability.

The same applies to your financed vehicles. In the end, he’s saying that you’re just borrowing to consume.

In my personal opinion, your house is considered an asset if:

1) it generates an income stream and/or

2) if you are set on selling it down the road and using that money to invest in growth and/or income-generating assets.

In some cases, people have their mortgage paid off but never plan to sell because they are set on living there forever. In this case, I personally wouldn’t consider this an investment either because again, it would only be used for consumption. 

Also, for the sake of simplicity, we will not assume any HELOCs or the use of debt to make money either.

Challenging the stereotypes

This book will help you debunk your most common notions related to money and wealth.

For example, consider the following excerpt

Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth.

This book does excellent work in challenging your thinking about how to make your money work for you.

Don’t make negative statements about yourself. Instead, ask yourself open-ended questions.

Other than those personal examples that he gives, I still enjoyed the book very much. It will seriously motivate you to think outside of the box and ask: How can I become happy and rich? How do I escape this rat race?

Instead of thinking “I can’t,” he motivates you to think of your obstacles as open-ended questions.

For example, don’t think “I can’t afford this.”

Instead, ask yourself “How can I afford this?”

5 reasons why you won’t be rich even when you’re financially literate.

Aside from the points I mentioned above, one of my favorite parts of Rich Dad Poor Dad was near the end when Kiyosaki writes:

“Once people have studied and become financially literate, they may still face roadblocks to becoming financially independent.”

Why?

Answer: People may still not be able to build wealth because of the following five reasons:

1. Fear (this one is my favorite which I discuss more in the next section)

2. Cynicism

3. Laziness

4. Bad habits

5. Arrogance

Earning power comes with your knowledge — not your degree.

No matter what financial stage you’re in, I strongly recommend you to beef up your education in “financial literacy” if you’re aspired to build wealth or become rich.

Do not, and I repeat, DO NOT stop learning once you’re done school. The day you graduate from University should be the beginning of your real learning journey — not the end.

While you’re acquiring new knowledge, you also need to apply what you learned. Even if it means taking a little bit of risks sometimes.

Here’s what Robert Kiyosaki said in the book:

“Once we leave school, most of us know that it is not so much a matter of college degree or good grades that count. In the real world, outside the academics, something more than just grades is required. I have heard it called many things; guts, chutzpah, balls, audacity, bravado, cunning, daring, tenacity, and brilliance. This factor, whatever it is labelled, ultimately decides one’s future much more than school grades do.”

Best quotes from Rich Dad Poor Dad

I was inspired by many of the quotes in Rich Dad Poor Dad.

This section, especially his point about fear, caught my attention because I can see that far too many people are “Chicken Little” about everything in life. This is especially true when it comes to losing money.

“For most people, the reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich.”

People generally like to play it safe and that’s why they’ll never see gains.

Kiyosaki says you can play it safe and never lose a dime, but don’t expect to win either.

He went on saying that most people are afraid of losing, so they lose.

Those who take risks aren’t afraid to lose because they know that in order to win, you have to lose. In other words, winners are not afraid of losing.

Here’s one of my favorite quotes from the book:

“Failure inspires winners. Failure defeats losers.”

After finishing Rich Dad Poor Dad, this point was my biggest take away because I was able to relate to it. I admit that there are things I fear in life, but I’ve been diligently working on that to let it go.

Few idea from the book that deeply inspired me are:

Rich people invest in assets while middle class acquire liabilities. And they spend their life in a myth that they have an asset.

E.g. A house is never an asset as long as you are living in it. Only if you buy a property and rent it out, it is your asset.

How much money you keep with yourself does not matter at all. What matters is how you are making this money grow.

The greatest asset we have is our skill set and we should always keep investing in it.Earning power comes with knowledge and not your degree.Take responsibility of your financial future.

It is very important to build your own safety net rather than living in dismal of old age, without any pension and or financial aid.Learn financial discipline and curb wasteful or impulsive expenditure.

Don’t be afraid of losing. Being broke is temporary, being poor is eternal.Lastly, don’t work for money. Let the money work for you.

The Verdict

In my view, Rich Dad Poor Dad is one of the classics in the field of wealth management.

This book has helped me a lot and there is no denying the fact that it is mind-set shifting and thought-provoking book.

If you want to set your money basics right, you simply can’t afford to miss reading this book.

Cheers to your success!!