Background
This book explains how rich people think and how rich people become rich and keep on getting richer. The author Robert Kiyosaki shared these lessons and stories of growing up with two dads. The poor dad is his biological, educated and government employed father while the rich dad is the father of his best friend who is into entrepreneurship and investing.
I highly recommend that you read the book Rich Dad, Poor Dad.
Big Ideas
- Greatest Wealth
Many people are too focused on money but as Robert Kiyosaki said we need to focus on increasing our greatest wealth. The greatest wealth is our financial intelligence. We must keep on investing in our financial intelligence. When we do that, we will be more valuable, be flexible, be open minded and we will grow richer. We need to prioritize financial literacy.
- Thoughts and words
Our thought and words are powerful. We need to have a victor mindset and not a victim mindset. We have the power to choose our words, then choose the words of victor. Here are some of the examples:
Instead of saying “The reason Im not rich is I have kids”, say “The reason that I have to be rich is because I have kids.” Instead of saying, “Don’t take risk”, say “I will learn to manage risk”. Instead of saying, I”I can’t afford that”, say “How can I afford that.”
- Working for money
Most people are staying in their job because of fear. Fear of not making it on their own. Fear that they may not be able to pay their bills. And when things go tough in their job, they blame and complain other people.
There is nothing wrong about having a job. However, according to MJ Demarco, in his book Millionaire Fastlane, working on a job for money is a slow lane to wealth. Trading our time for money is not enough to achieve financial freedom faster because our time is limited.
Here is the guiding question that we may ask to ourselves:
What would you dare to do if you are guaranteed to succeed?
Go out and always do what you are afraid to do as when you do it often, the fear will vanish.
Another emotion that take over is greed. When poor people received income, they used it in buying things they don’t need to impress people that doesn’t even care.
- Accumulate Assets
The rich people focus on acquiring assets. Rich Dad Poor Dad book taught about the right assets that rich people acquire. Those are income generating assets. Before, I thought buying a house is buying an asset. I learned that a house can only be classified as an asset it generates income such as being used as rental property. But if a house is being used by the owner, it is more of a liability as owning it has related expenses such as interest payments on mortgage and repairs. On the side note, this is a different identification of assets and liabilities in accounting.
In Rich Dad Poor Dad’s definition:
Asset is something that puts money in my pocket. Liability takes money out of my pocket.
In addition, purchasing a house requires use of large amount of cash as down payment which could have been used in starting a business or in investments. This is called opportunity cost.
I am not saying that buying a house is a bad decision. I agree that it is a personal decision. You may also check my other blog post on guide in buying a house to know if it is worthy to
buy a house than to rent and vice versa.
To sum it up, the rich gets richer because they focus on acquiring income generating assets.
Wealth is Time
How long could you survive if you stop working?
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Quotes
from Robert Kiyosaki, Rich Dad Poor Dad
” The poor and middle class work for money. The Rich have money work for them.”
“God will not have his work made manifest by cowards.”
“I want to teach you to master the power of money. Not be afraid of it. And they don’t teach that in school.”
“ If you don’t learn it, you become a slave to money.”
“I am concerned that too many people are focused too much on money and not on their greatest wealth, which is their education. If people are prepared to be flexible, keep an open mind and learn, they will grow richer and richer through the changes. If they think money will solve the problems, I am afraid those people will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.”
“This pattern of treating your home as an investment and the philosophy that a pay raise means you can buy a larger home or spend more is the foundation of today’s debt-ridden society.”
“In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk.”
“Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.”
“An intelligent person hires people who are more intelligent than he is.”
“Leadership is what you need to learn next”
“The poor and the middle class work for money. The rich have money work for them.”
“I can’t afford it’ shut down your brain. it didn’t have to think anymore. besides, it also brings up sadness. a helplessness that leads to despondency and often depression.
‘How can I afford it?’ opened up the brain. forced it to think and search fro answers. it also opens up possibilities, excitement and dreams and created a stronger mind
and dynamic spirit.”
“Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.”
“Excessive fear and self-doubt that were the greatest detractors of personal genius.”
“Stop blaming me, thinking I’m the problem. If you think I’m the problem, then you have to change me. If you realize that you’re the problem, then you can change yourself, learn something and grow wiser. Most people want everyone else in the world to change themselves. Let me tell you, it’s easier to change yourself than everyone else.”
“In the real world outside of academics, something more than just grades is
required. I have heard it called “guts,” “chutzpah,” “balls,”
“audacity,” “bravado,” “cunning,” “daring,” “tenacity” and
“brilliance.” This factor, whatever it is labeled, ultimately decides
one’s future much more than school grades.”
“We all have tremendous potential, and we all are blessed with gifts. Yet, the one thing that holds all of us back is some degree of self-doubt. It is not so much the lack of technical information that holds us back, but more the lack of self-confidence.”
“I find so many people struggling, often working harder, simply because they cling to old ideas. They want things to be the way they were; they resist change. I know people who are losing their jobs or their houses, and they blame technology or the
economy or their boss. Sadly they fail to realize that they might be the problem. Old ideas are their biggest liability. It is a liability simply because they fail to realize that while that idea or way of doing something was an asset yesterday, yesterday is gone.”