Rich dad poor dad summary. If you are to stop working, ask yourself, how much can you survive on your immediate savings? What I just asked you is a definition of wealth. Here, is a man named Robert T. Kiyosaki an American investor, businessman, author, motivational speaker, and financial commentator who became well known in recent years as he earns an estimated net worth of $80 million dollars. Want to know something interesting? He wasn’t raised in a wealthy background, in fact, his family was like most people who worked and doesn’t have good financial education and oftentimes struggle with money.
So then, how did Robert became so rich today? Let take a look as he explains in one of his best book called Rich Dad Poor Dad.
Robert T. Kiyosaki was born in Hawaii in April 1947. In 1957 at the age of 9 years old, little Robert was attending the same public school where the rich people in the town were sending their kids to, there were a lot of children whose parents were bankers, business owners, and doctors. Robert saw that the rich kids will separate themselves from him for that his family wasn’t able to afford the newest collection of bicycles. So one day Robert asked his father who had a Ph.D. and had completed multiple universities with excellent degrees. Dad, can you tell me how to get rich? Unfortunately, his dad didn’t know the right answer because he wasn’t rich himself so he responded with, well, use your heard son, stay in school get good grades so you can find a safe and secure job.
His real dad is who he referred to as poor dad. He wasn’t poor in his hand but he was making a lot of money but in the end, this man’s financial life turns to the worst. Now, little Robert had a friend named Mike and Mike father is who he referred to as Rich Dad, who started nurturing his son and Robert about how to become rich. At this point in time, rich dad wasn’t really rich yet, but soon became one of the richest men in Hawaii.
So then, what did Rich Dad thought Robert?
Rich dad poured a strong financial education into these kids’ mind of many important principles. To start off the lessons from rich dad poor dad summary…
Rich Dad Poor Dad Financial Lessons
1. Know the difference between Assets and Liabilities
You need to buy assets. If you want to be rich, this is all you need to understand most. See, the rich acquire assets but the poor and the middle class acquire liabilities which they sometimes think is an asset. The primary cause of financial struggle is simply not knowing the difference between an asset and a liability. An asset is something that puts money in your pocket. Liability is something that takes money out of your pocket.
For instance, let try a cash flow pattern of a normal individual. As soon as they get paid, they spend their money before they even receive it. In other words, they keep buying things that never brings in money (Liabilities). Let see the cash flow pattern of rich people. Rich people mostly focus on buying income-generating assets, be it businesses, stocks, bonds, mutual funds, income-generating real estate, royalties, note and anything that brings in money month after month. Also, they prefer to go with passive income than active income. By the way, active income is money you earn unless you work, while passive income works on the opposite, with passive income you don’t have to work before you can cash in.
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As mentioned before, poor dad was making a quietly amount of money from his job but his expenses always seem to keep up with his income, never allowing him to invest in an asset. As a result, his liabilities such as mortgages and credit card debt grew greater over time and this is the fault of having (income equals expense and asset is less than liabilities Inc = Ex & Ass < Lia) And suddenly this is what brought poor dad into debt even after he passed away. On the other hand, rich dad personal financial statement reflect as a result of a life dedicated into investing and minimizing liabilities, so he has income that is greater than expenses because his asset was greater than his liabilities (Inc > Ex & Ass > Lia)
This is practically why the rich are getting richer. Their assets generate more than enough income to cover their expenses with the balance reinvested into the asset column. The assets column continues to grow and therefore their income grows with it. You see both dads worked very hard, but they had the opposite attitudes and thought.
- One dad recommend “Study hard so you can find a good company to work for” the other dad recommend “Study hard so you can find a company to buy”
- One dad said “The reason I am not rich is because of you kids” whiles the other said “The reason I must be rich is that I have you kids”
- One said “When it comes to money play it safe and don’t take the risk” the other said “learn to manage risk,” one said “I can’t afford that,” the other said “how can I afford that”
Although both men had tremendous respect for education and learning. They disagreed and what they did was so important to learn. Robert learned from rich dad that the truth about the general population is that their lives are being run by two emotions, fear, and greed. That keeps them stuck in a pattern of getting up, go to work, and pay bills.
Fear has been this trap of working, earning money working, and hoping fear will go away from not having money. Instead of confronting the fear, we react emotionally instead of using our heads. The other motion which I called Greed is also the second reason why people work for money. They desire money that they think joy can buy. But the joy money brings is often short-lived and soon this more money for more joy will pleasure more comfort and more security.
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You see that same fear and desire is what makes a lot of people to be so dramatically about go to school for a better chance of high paying job. But don’t be discourage, education and job are more important but it won’t handle that fear. To handle that fear, you need to learn the power of money, not to be afraid of it. Unfortunately, most schools don’t teach about this and if you don’t learn it yourself you will become a slave to money. Ignorance of money can cause so much greed and fear that can lead you to life’s biggest trap of constantly working.
Rich dad said, learn to use your emotions to think, not think with your emotions. Examples of emotional thinking are like: I need to get another job, I deserve a raise, I want this job because it is secured. Instead of clearly thinking like: is there something I am missing here? This is our reality, for most people, your profession is your income. To the rich, your asset is your income. Apply this lesson to your life. If I were to ask you your definition of wealth, how long will you survive if you are to quit your current job? You might say, I no longer work for money, money works for me. Alright, that is so great to hear. Do you have any suggestions? Don’t forget to comment below. Remember, we are still on rich dad poor dad summary, the rest are on the way.