In 1997, Robert T. Kiyosaki and Sharon Lechter authored the book Rich Dad Poor Dad. It emphasizes the importance of financial literacy, financial independence, and wealth creation through asset investing, real estate investing, starting and owning businesses, and increasing one’s financial intelligence.
Lessons Learned from Rich Dad Poor Dad
1. Don’t work for money:
People with money don’t work for it. Your mind will start to think like an employee if you work for pay. You will perceive things differently if you begin to think differently, like a rich man. Rich works on their asset column; each and every dollar is the result of their diligent workers.
2. Resist letting your emotions rule you:
The two emotions of fear and greed consistently rule the lives of some people. People who are afraid are trapped in a cycle of working hard, making money, and hoping that eventually, their fear will go away. Second, the majority of us have the desire to become wealthy quickly. Yes, a lot of people become wealthy overnight, but they lack financial literacy. Therefore, educate yourself and avoid being greedy or afraid.
3. Acquire assets:
On the road to financial freedom, avoid purchasing liabilities. Liabilities are often purchased by people who mistake them for assets. Many people invest in luxury items first, such as large automobiles, bulky bicycles, or enormous homes. But the wealthy acquire assets, and those assets acquire luxury goods. The wealthy rent and buy homes in addition to paying for Lamborghinis. The rich purchase luxury items last, while the poor or middle class purchase them first.
4. Always follow the KISS principle:
Keep It Simple, Stupid (KISS) stands for. Don’t overthink things when you’re just starting out on the path to financial freedom. Keep things simple; they are, after all, simple. Assets put money in your pocket, while liabilities take money out of your pocket. Always invest in assets that will generate income for you.
5. Understand how assets and liabilities differ:
Whatever puts money in your pocket, such as stocks, bonds, real estate, mutual funds, rental properties, etc., is considered an asset. Anything that requires you to pay money out of your pocket is a liability, including a house, a car, a debt, etc. People often mistakenly believe that their home is their most valuable possession. A home is an asset when it makes money, such as when you rent out a home, and a liability when you live there permanently.
6. Avoid financial ignorance:
A person can have a solid educational foundation and achieve professional success while still lacking financial literacy. Any person should be well-versed in finances. We were not given financial education in our schools or colleges. Lack of financial education is the cause of many financial issues. Start educating yourself about money, and I recommend reading “Rich Dad, Poor Dad.”
7. Obtain More Wealth:
A person’s ability to survive for a predetermined number of days, or how long they could survive if they stopped working today, is considered their wealth. Think about your financial situation and whether you could make it a year without working.
8. Keep your mouth shut:
Keep working at your current job while starting a side hustle. Spend less time on your iPhone, at events, or engaging in other activities and more time growing your business. Before starting your own business, never quit your job. Don’t toil your entire life away for someone else. Create your own company and expand it.
9. Exercise your brain:
Your mind is your greatest asset. Many people keep an eye out for opportunities, but you can train your mind to see opportunities as well. Your mind can produce enormous wealth if you train it properly.
10. Learn technical skills:
Your financial IQ will be raised by learning these four technical skills:
- Accounting is defined as the ability to read numbers. If you want to build an empire, then this is an essential skill. By learning this skill, you will be able to understand the strengths and weaknesses of a business.
- Investing: It is the science of making money.
- Understanding markets: It is the science of supply and demand.
- The Law: A person who has knowledge of the law of tax advantages and corporations can get rich faster than others.
11. Find opportunities that everyone else missed:
“Great opportunities are not seen with your eyes. They are seen with your mind. ”
You can see many more opportunities with your mind than many people miss with their eyes. It is not rocket science, you just need to train your mind.
12. Learn to manage risk:
Investment is not risky, not knowing the investment is risky. If you want to reduce the risk, then increase your knowledge. This knowledge will not come by going to college, it will come by reading books or sitting with people who know the investment.
13. Learn management:
The main management skills are:
- Management of cash flow
- Management of system
- Management of people
The most important skills are those in sales and marketing. A fundamental skill for personal success is the ability to sell and communicate with people, whether they are customers, employees, fiancés, friends, or children.
14. Manage fear:
“Failure inspires winners. Failure defeats losers.”
Everybody is concerned about losing money. It applies to everyone. Rich people typically lose a lot of money, so they have a fear of losing money as well. The way the wealthy and the poor, however, handle fear is what really sets them apart. Many people find that the terror of losing money is much worse than the thrill of winning it.
15. Provide a rationale
While many of us don’t want to struggle, everyone wants to be wealthy. I get asked why I want to be wealthy a lot. I remarked, “I don’t want to die in poverty.” Choose your motivation—perhaps you want to build hospitals, help people, or travel freely. It is challenging to stay on this path if you have no motivation.
16. Pick your friends wisely:
Never make friends based on financial statements. Make friends with people of all income levels. Take notes on both. Both will teach you the most valuable lessons, but be selective.
17. Pay yourself in full first:
It is challenging to become wealthy if you are unable to control your behavior. Being wealthy is challenging if you lack management. Pay yourself first. When they have money, people frequently purchase cars or other luxuries. Contrarily, wealthy people acquire assets, and their assets enable them to purchase luxury items.
18. Spend money on luxury items:
Don’t buy luxuries before you get paid by your job or when you have some money. Purchase an asset, and it will cover the cost of your luxuries. Rich people buy luxury items last, while the poor buy them first.
19. Recognize the influence of giving:
“God does not need to receive, but humans need to give.”
Start giving money if you want it. Giving results in receiving more than giving. Always give to the less fortunate. You should make it a habit.
20. Read books:
Many books that you should read are mentioned by Robert in this book. Your mind will be opened by reading, and you will learn far too much. I advise you to read all of Robert T. Kiyosaki’s books. Your mind will be opened, and it might even point you in the right direction.