RICH DAD POOR DAD - BOOK REVIEW AND SUMMARY

Rich Dad Poor Dad follows snippets of Robert Kiyosaki’s childhood as he starts learning about money from the young age of nine. The name of the book comes from Kiyosaki’s real father who was the “poor dad” and his friend’s father who was the “rich dad”. His real father was a professor who earned a lot yet always struggled financially, while his friend’s father, an entrepreneur who left school at an early age ended up as one of the richest people in Hawaii. Kiyosaki often tried to understand the perspective of both his rich dad and poor dad, however, his rich dad’s advice is what helped him gain knowledge of finances and acquire wealth. The book introduces the concepts of cash flow, balance sheet, income statement, assets, and liabilities in a simple manner, easy for everyone to understand. The author wishes that everyone was taught the basics of finances from childhood like he was, which he lists as one of the reasons for writing this book. The importance of knowing the difference between assets and liabilities and focusing on investing in assets is emphasized through multiple chapters and called “the number one and the only rule”. Rich Dad Poor Dad consists of 10 chapters and an epilogue. Chapters contain simple explanations of basic finance concepts, often followed by pictures and examples from the author’s life or from his family and friends.

Introduction

Introduction explains the idea behind the book and emphasizes the importance of financial literacy over the standard, outdated education received at school. In the wake of constant global and technological changes, knowledge of finances might just be of the greatest use for financial independence.

Chapter One

Chapter 1 highlights the contrast between Robert’s rich dad and poor dad, as it shows both of their perspectives on money and wealth. Robert decides to follow the rich dad’s advice, which were based on six lessons: The Rich Don’t Work for Money, Why Teach Financial Literacy, Mind Your Own Business, The History of Taxes and the Power of Corporations, The Rich Invent Money, and Work to Learn Don’t Work for Money.

Chapter Two – Lesson One: The Rich Don’t Work For Money

In Chapter 2 Robert and his friend Mike ask Mike’s dad, the rich dad, to teach them how to be wealthy and successful. They start working for him every Sunday, and at the age of 9 learn what it is like to live as an average adult – earning money and spending it. Rich dad advises them to use their head over emotions when it comes to money.

Chapter Three – Lesson Two: Why Teach Financial Literacy?

In Chapter 3 Robert speaks about, as he says, ‘rule number one and the only rule’, which goes as follows “You must know the difference between an asset and a liability, and buy assets”. This chapter contains simple drawings explaining the basics of cash flow, income statements, and balance sheets.

Chapter Four – Lesson Three: Mind Your Own Business

Chapter 4 suggests that a person should focus on increasing their assets and in that way “work for themselves”, instead of working and earning money for someone else their whole lives (for employer, government, bank).

Chapter Five – Lesson Four: The History Of Taxes And The Power Of Corporations

Chapter 5 talks about the history of taxes and how understanding that concept and making it work to one’s advantage makes the difference between the rich and poor or middle class. The importance of financial IQ is also mentioned and it is based on four areas: accounting, investing, understanding markets, and the law.