RICH DAD POOR DAD (BOOK REVIEW)
BOOK REVIEW
BOOK TITLE :
RICH DAD POOR DAD
BOOK
AUTHOR: ROBERT T. KIYOSAKI
FIRST
PUBLISHED: 1997
CATEGORY : FINANCIAL LITERACY
AUTHOR’S
PROFILE
Robert Toru Kiyosaki (born April 8,
1947) is an American businessman
and author. Kiyosaki
is the founder of Rich Global LLC and the Rich Dad Company,
a private financial education company that provides personal finance and
business education to people through books and videos. Kiyosaki is the author
of more than 26 books, including the international self-published personal
finance Rich Dad Poor Dad series of
books which has been translated into 51 languages and sold over 41 million
copies worldwide
BOOK SUMMARY
As the book title suggest rich dad poor dad
is the book based on two fathers’ lessons related to money, financial
education. The author has narrated the fact that he had two fathers one is real
and other one is his friend’s father.
The author’s real father was a government employee which he considered as poor
dad and his friend father was a self-employed person or a businessman which he
considered as rich dad. In the whole book, the author has described the lessons
which he learns from his both the fathers. Rich dad and poor dad here does not
means that both of them have huge difference of money. In reality both the
father’s earning was good but the difference was lie in their mentality,
financial education, perception about money. Both the fathers have totally
different opinions, valid reasons, concepts related to money and finance.
Readers will find so many points of differences between rich dad and poor dad.
Here the author has also focussed on the fact that mere having of formal
education, getting good grades and learning a profession doesn’t guarantee a
person financial independence because schools, colleges, universities have only
taught us how to have work for money. Subject related to money is never taught
in schools that why majority of students in their whole life will struggle
financially. According to him, schools and colleges were designed to produce
good employees instead of employers. For the author one who want to become
financial independent has to master the subject of money, increases his
financial intelligence and learn how money works? In this book the author has described the
difference between rich peoples and poor people’s thinking, habits, behaviours,
attitude related to financial education. This is the all-time international bestselling
book in the category of personal finance. The author has briefly described his
experience and journey towards how he become financially independent at a very
early age. There is no doubt in that this book is the first step for an
individual to achieve financial independence. The author has comprehensively
mentioned the what are differences between rich and poor i.e. why rich are
become more richer and poor become more poorer? the author has focuses on
highlight the important difference between rich and poor is in their mentality
and thinking habits and lack of financial education which results in majority
people were poor. The author has divided the whole book in 9 chapters or 9
lessons which every one has to learn, understand and master to become rich.
LESSON-1”
THE RICH DON’T WORK FOR MONEY”
“THE POOR & MIDDLE CLASS HAVE WORK FOR MONEY
THE RICH HAVE MONEY WORK FOR THEM.”
The author has tried to mentioned the basic
difference between rich and poor peoples is that riches don’t work for money
for their whole life. They don’t work hard what the majority of people were
doing in rat race. Instead of it they play it smart game that they work hard
for several years in starting, keep their expenses at minimum and acquire more
& more assets. According to the author view rich don’t work for money
rather they have money work for them. Peoples life forever controlled by two
emotions i.e. fear and greed. Fear of being without money motivates to do hard
work and when pay check is received then second emotion greed arises in mind.
When we get pay check greed or desires starts thinking about all the wonderful
things money can buy. This pattern is set the more they earn the more they
spend. This is what the author called a rat race. This can be understood with
the help of an example of a donkey dragging a cart with its owner dangling a
carrot just in front of its nose. The donkey’s owner may be known where he is
going but the donkey is chasing an illusion. Tomorrow may be there is another
carrot for donkey i.e. new desires and money is carrot.
LESSON-2”WHY TEACH FINANCIAL LITERACY?”
“IT’S NOT HOW MUCH MONEY YOU MAKE.
IT’S ABOUT HOW MUCH MONEY YOU KEEP.”
1.
This chapter is a basic need for every
individual who is in search of where to invest to become rich or what to
acquire to become rich. The author has mentioned the fact of great depression
which affected many high net worth individuals financially. Also, he explains
the fact it not the having more money will solve the problem but intelligence
will solve the problem and produces money. He also gives so many real-life
examples of persons who earn well but not able to manage it which result in
poverty. These types of person are called instant millionaires. If one wants to
become rich, he needs to master financial literacy. According to the author
rich peoples acquire assets but poor and middle class acquire liabilities that
they think are assets. He suggested that an asset is one which puts money in
your pocket whereas a liability is something which takes money out of your
pocket. And I think this is the most important difference which every one needs
to think of it while spending.
2.
Most people’s think that their house is their
biggest asset or dreaming to acquire a new house on credit at the earliest. The
author has said that house on credit is not your asset rather it is a liability
which you incurred for over the period of life. He suggested that if a person
wants to buy a house first thing, he needs to do is invest in some income
producing assets. Then wait for sometime to grow them and results enough
cashflow to meet your monthly expenses. And then you can think of buying a
house as your asset’s column has enough cash.
3.
As most peoples were employees here the
author has said that they work hard their whole life but the problem is that
they have what is left after paying to government in the form of taxes, to the
banks in the form of interest on loan, credit card fees and interest, to the
employer in the form of deductions of perquisites. That’s the reason why
majority of employees cannot able to become financially independent. More you
work hard more you pay to above three first and then left is your share.
4.
Author has summarised the fact that rich buys
assets, poor have incurred expenses and middle class acquires liabilities they
think of that assets.
LESSON-3”MIND YOUR OWN BUSINESS”
“WEALTH IS A PERSON’S ABILITY TO SURVIVE SO MANY NUMBER OF DAYS,
IF HE STOPPED WORKING TODAY.”
BY R. BUCKMINSTER FULLER
1.
In this chapter or lesson the author has
focused to every individual has to start minding his or her own business. Here
business only means that one should have to focus on increasing their asset
column. Find the ways how you can build a better asset column. The author has
suggested to invest or buy some real
assets. The term real assets comprise of business that do not require my own
presence, stocks, bonds, income generating real assets, royalties in respect of
books, music, patents etc. and any other thing that produces income or
appreciates. These are all the income producing assets in which everyone has to
invest and grow financially.
2.
Author has also given the example of
MC.DONALD founder Ray Kroc, how he become financially independent. One day ray
asked a questions to his friends that tell me I am in what business? Most of
them answer was oh everyone knows that you are in hamburgers business. Ray said
that “that’s what I thought most of you would say”, but in reality, it’s not
the hamburger business which makes me rich but the location of each franchise
which results in maximum sales and profits for me. So, I am in real estate
business because it all depends on the franchise location.
LESSON-4”THE HISTORY OF TAXES AND POWER OF CORPORATION”
“IF YOU WORK FOR MONEY, YOU GIVE THE POWER TO YOUR EMPLOYER,
BUT IF MONEY WORK FOR YOU, YOU KEEP THE POWER AND CONTROL IT.”
1.
In this chapter author has focused on two
aspects first is on taxes and second is on companies. First the taxes by
government is not a right thing or right approach to reduce gap between rich
and poor. Most rich persons take the advantage of tax planning from chartered
accountants. In reality they pay tax minimum by getting tax advantages this
makes government to levy high taxes and in reality, ultimately the upper middle-class peoples have
to suffer.
2.
Second aspect related to corporation,
according to the author the corporation is the biggest secret of rich. Mostly
rich peoples formed corporations and made investments via these corporations.
The benefit of this is that corporations are allowed to earn and spend and then
pay tax on what left but for an employee situation is different like first he,
earn then pay taxes on income and remaining portion left for spending. This is
the major difference between an individual and a corporation. Also, government
give multiple benefits to corporations in the form of tax relief, deductions
and certain expenses allowed before tax on income.
3.
The author has focussed that peoples who
wants to become financially independent has to work on their financial IQ by
gaining knowledge of four broad areas, such are accounting, investing,
understanding markets, the law i.e. tax advantage and protection from lawsuits.
LESSON-5”THE RICH INVENT MONEY”
“THE SINGLE MOST POWERFUL ASSET WE ALL HAVE IS OUR MIND,
IF IT IS TRAINED WELL, IT CAN CREATE ENORMOUS WEALTH.”
1.
Here author has stated a fact that land was
wealth 300 years ago, so the person who owned the land owned the wealth. But
later wealth was in factories and production and America rose to dominance. The
industrialist owned the wealth at that time. Today the wealth is in information
and the person who has the most timely and accurate information owns the
wealth.
2.
Second fact that the author has mentioned
that there were two types of investors. Those belongs to first category were of
common type of investors who simply buys a packaged investment. They invest in
stocks, mutual funds. It is a clean and a simple way of investing. Then there
is second type of investors who creates investments. They usually assemble a
deal in the same way a person buys components and builds a computer. The author has mentioned that if
one wants to be a second type of investors then he or she needs to develop 3
main skills. Three skills were:-
·
Find an opportunity that everyone else has missed.
·
Find different mediums for raising money.
·
Organise smart peoples
LESSON-6”WORK
TO LEARN- DON’T WORK FOR MONEY”
“WORKERS WORK HARD ENOUGH TO NOT TO BE FIRED AND,
OWNERS PAY JUST ENOUGH SO THAT WORKERS WON’T QUIT.”
1.
In
this chapter the author has tried to explain that initially a person needs to
work to learn not to earn. This means that in the early time period of working
a person needs to focus on learning little about lot. He or she try to learns everything or maximum what they
can inspite of they getting low pay. Because in the long run it will be
beneficial for them to learn skills and make more money.
2.
According
to author switching from one company to another is not a bad thing if you learn
different skills rather it will be beneficial for them as they will be able to
get more knowledge and experience. Workers should not think about of job
security to much. He also said the every one needs to learn marketing and
selling skills. These are the two most important skills required to become
financially free. Because when a book or novel becomes popular or famous then
its not win the title of best author rather it wins a title of best seller
book.
LESSSON-7”OVERCOMING OBSTACLES”
“FAILURES INSPIRES WINNERS AND DEFEAT LOSERS.”
According to the
author there are five reasons why peoples struggle financially or people with
financial education still not able to develop abundant asset columns that could
produce a large amount of cash inflows.
These reasons are:-
1.
FEAR:-
fear of losing money
2.
CYNICISM:-
unchecked doubts and fear
3.
LAZINESS:- by staying busy to avoid investments
4.
BAD
HABITS:- of paying to self-last
5.
ARROGANCE:-
of what not known
LESSON-8”GETTING STARTED”
“THERE IS GOLD EVERYWHERE,
MOST PEOPLES ARE NOT TRAINED TO SEE IT.”
The author has
described 10 steps which a person needs to implement to become rich and
financially independent. All these 10 steps were practically possible and
doesn’t require any formal degree or education. One needs to simply practice
and master these 10 steps. The steps are :-
1.
Find
a strong reason why you want to be rich.
2.
Make
daily choices; power of choices.
3.
Choose
friends carefully; power of association.
4.
Master
a formula and then move to next one; learn quickly.
5.
Pay
yourself first; power of self-discipline.
6.
Pay
your brokers well; power of good advice.
7.
Be
an Indian giver; power of giving something for nothing.
8.
Use
assets to buy luxuries; power of focus.
9.
Choose
heroes; power of myth.
10. Teach and you shall receive; power of giving.
MY VIEWS
Well this was my
first ever book which I had read apart from the academics. Till now I had read
this book for 3 times and still I found there is something new to learn.
Although books don’t consist any picture but it covers many graphical
presentations apart from the text which makes this book quite interesting. I
suggest to every reader if you understand basic financial terms or having
knowledge of finance then this book is very helpful for you. But for a person
who doesn’t possess any finance knowledge or understanding about finance this
becomes little difficult to clearly understand the author’s point of view. This book has the power of
changing your mentality or thought process regarding finance. For students
belongs to commerce background this book is a master piece and enhances their
knowledge to a different level. In the end, I only say that this book is the
first step towards personal finance journey for every person. Every person
should read this book once in life as early as possible.
BEST
WISHES
NAVAL
KISHORE
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