Rich dad poor dad summary

Rich Dad Poor Dad Summary

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About the Author

Robert Kiyosaki is an American businessman who founded Rich Global LLC and the Rich Dad Company. The latter focuses on private financial education through the mediums of books, videos, and speeches.

He has also written over 26 books, including the best-selling Rich Dad, Poor Dad (which sold over 41 million copies worldwide).


Summary in one sentence Rich Dad Poor Dad tells the story of a boy who has two fathers, one rich and one poor, to help you develop the mindset and financial knowledge needed to build a life of wealth and freedom.

The Book in Three Sentences:

  1. Rich Dad Poor Dad is about Robert Kiyosaki and his two fathers—his biological father (poor dad) and the father of his best friend (rich dad), and how both men influenced his views on money and investing.
  2. You don't have to make a lot of money to be wealthy. Little money can compound into great wealth if you invest it in the right assets.
  3. Rich people make money do their bidding.

The Five Big Principles

  1. The poor and middle classes both work for a living. The wealthy have money working for them.
  2. What matters is not how much money you make. It is the amount of money you keep.
  3. Rich people amass assets. The poor and middle classes accumulate liabilities that they mistake for assets.
  4. Financial intelligence refers to what you do with money once you have it, how you keep people from taking it from you, how you keep it for a longer period of time, and how you make money work hard for you.
  5. Our minds are the most powerful asset we all have.

Rich Dad, Poor Dad Lessons:

Lesson 1 - We all need financial education

Financial literacy is uncommon. 
The vast majority of students will graduate from high school with no financial knowledge
They will have gained knowledge that will enable them to pursue specific profession, but they will not know how to keep the money they earn. 
They will have learned how to make money but will have no idea how to spend it. 
Earning money merely reinforces the cash flow pattern in your mind. 
This cash flow pattern can be controlled with financial literacy to help you build wealth.

Lesson 2: The difference between the rich and the poor.

Robert begins the book by describing the primary distinction between the rich and the poor. 
Both the poor and the middle classes work for living. The wealthy have made their money work for them.
Non-wealthy people will always seek out traditional methods of making money. 
They will work hard in school, get good grades, and then find secure job with secure benefits. 
Most people choose this path because they are afraid of being without money. 
This desire to receive paycheck is quickly replaced by desire to spend what they have earned. 
Even if these people receive bonus or raise at work, they will respond by spending more money. These people believe that money brings happiness, but that happiness is elusive. So they keep working to satisfy their desires and overcome their fears.
Robert advises you to take a step back and forget about paychecks. Begin to consider innovation. Most people are caught up in the rat race and miss out on obvious opportunities. You can take advantage of opportunities and earn far more money if you are willing to take a step back. According to Robert, investing your time in creating assets that generate money is far safer.

Lesson 3: Change yourself

Robert emphasizes how important it is for us to realize that changing ourselves is easier than changing others. You must therefore acknowledge that you are the issue rather than blaming others for your lack of wealth. 
You can improve yourself, gain knowledge, and become wiser if you recognize that you are the issue.It will take combination of drive, enthusiasm, and interest to learn. 
Having stated that, you must learn to control your rage effectively. 
Robert claims that fury is crucial since passion is nothing more than the union of love and anger. Passion must guide us rather than fear.

Lesson 4: Use Accounting to keep your money

The majority of people believe that making money is the most effective way to become wealthy. Although you must earn money, it is more important to understand how to manage your money. 
Wealth is not the same as net worth. The number of days you could survive if you stop working today is your wealth. Accounting is not particularly interesting subject, but is very essential is you plan to be rich. 
Robert believes accounting is the most important subject if you want to be rich. 
The first and most important lesson is to distinguish between an asset and liability. 
Assets are the items you should acquire. 
People who are wealthy acquire assets, while those who are poor acquire liabilities.

A liability is something that takes money out of your pocket. 

Many people consider purchasing home to be an investment. 
However, there are numerous liabilities associated with owning home, including mortgage payments, insurance, property taxes, and large sums of money invested in the property. 
As result, we should consider home to be liability. 
Determine what assets can be purchased to cover the liabilities associated with a home.

Lesson 5: How taxes have benefited the rich

The wealthy are now playing more sophisticated game. They are legally exempt from paying taxes, whereas the middle class is responsible for the majority of government spending. 
Historically, taxes were enacted by the poor and middle classes in order to tax only the wealthy. 
Taxes, rather than punishing the wealthy, punish the poor and middle class. The government's appetite for money grew once they tasted it. 
The problem was that the government's appetite for money was so strong that taxes on the middle class were soon imposed. It trickled down from there.
The 1031 exchange (USA) is critical tax tool used by the wealthy. 
It is also known as the "like-kind" exchange.The like-kind exchange allows you to postpone paying capital gains taxes on real estate sales.
You can accomplish this by reinvesting the proceeds from the sale in another piece of real estate. 
Furthermore, corporations enable you to create separate assets that generate income. 
The key distinction here is that, whereas individuals are taxed before expenses, corporations are taxed after expenses. 
Because of this simple rule, as corporation, you can legally deduct vacations, car expenses, health club memberships, and restaurant meals and pay tax on what is left. 
The poor pay taxes first and then spend their money. The rich are spending money and then paying taxes later.
The wealthy have outwitted the intellectuals. They have learned how to legally avoid paying more taxes.This is only possible because the wealthy are well-educated financially. 
Finance is not taught in schools, so the average intellectual is unaware of how the wealthy avoid paying taxes. Rather than allowing the government to punish them, the wealthy respond to new tax laws.
Robert has provided the following four fundamentals of financial literacy:
1. Accounting Reading and comprehending financial statements.
2. Investing The science of making money through creativity, strategy, and formulas.
3. Market Understanding The science of supply and demand; technical (emotional) and fundamental (economic sense) investments.
4. Law Knowing your taxes and avoiding lawsuits.

Lesson 6: Don't confuse your profession with your business

The majority of people labor for no one except themselves. 
They initially service the business's founders, then the government through taxes, and lastly the mortgage owner's bank.
The majority of the time and effort spent by the poor and middle classes is working for others. 
For no other reason than to pay their taxes to the government, the ordinary American works five or six months out of the year.
Don't mistake your business, or your asset column, with your occupation. 
The usual route of going to school and finding work is typically necessary. 
The issue is that you typically become what you learn. Instead of concentrating on the asset column related to your subject, concentrate on your own. 
Keep working your regular job and invest your earnings in assets. 
Stocks, bonds, mutual funds, rental properties, notes, and intellectual property royalties are among the assets you can use while doing job. 
Never remove money from your asset column once it has been added. 
Prior to purchasing liability, make sure you have an asset that will create enough income to pay for it.

LESSON 7 - Your mind is your most valuable asset

In three hundred years, we defined wealth in terms of land. 
The industrialists owned wealth during the Industrial Revolution. 
Today, knowledge is wealth.
Poor people frequently lament their lack of resources to take advantage of the offers they encounter. They only see putting in lot of effort, saving money, and borrowing  as feasible options
The wealthy are aware that their mind is their most priceless possession.
The majority of investors purchase packaged investments from real estate firms, stock brokers, etc. 
The wealthy make investments by putting together contract themselves.
You'll need to master three abilities to achieve this:
  1. How to find chance that no one else has seen
  2. How to get funding
  3. How to arrange bright individuals
  4. You'll need to take chances.
  5. Assume you are knowledgeable about investments and understand them; isuch instance, it is less dangerous than it would be for someone who is just rolling the dice and hoping for the best.

LESSON 8 - Become a generalist rather than a specialist

Young people are urged by the author to "seek work more for what they will learn than for what they will earn.
Instead of seeking to be specialist, try to learn little bit about lot of things. 
Specialization is for career advancement, not for financial gain. 
Take the jobs that will help you develop the crucial management abilities for handling cash flow, systems, and people. 
The author advises you to look for positions that will help you hone your marketing, sales, and communication abilities. 
These abilities are all required for generating riches and they compliment one another perfectly.

LESSON 9 - The asset columns of the financially literate

Even those who are financially competent may fail to create asset columns for the following five reasons, according to Robert:
1. Fear Specifically, the fear of losing money. 
People that are successful do not fear losing their money. 
The wealthy do not amass their wealth by never experiencing loss. They get knowledge on how to control their losses and turn them into gains.
2. Cynicism Cynicism is expensive and results from unbridled dread and mistrust. 
pessimist will always find reason why something is not possible. 
They critique rather than analyze. People who don't want to invest in real estate can say, "I don't want to fix toilets," as an illustration.
Rich dad would purchase home at price that would enable him to hire property manager to  and still maintain positive cash flow.
3. Laziness – Usually, the laziest people are the ones who are busy. 
People keep themselves occupied to escape issues they don't want to deal with or to avoid doing the work required to acquire the capacity to become wealthy. 
The desire of the wealthy overcomes their lethargy.
4. Bad habits – Our lives are more reflection of our habits than our education. 
The author advises that you "pay yourself first" as general rule. 
Prioritize your own financial, physical, and mental well-being over that of your employer, tax collector or landlord.
5. Arrogance According to the author, arrogance is the result of ego and ignorance. 
The remedy is simple: financial literacy.

1. In every fruit, there is a seed. Don't eat the fruit with the seed. Invest the seed in an income generating asset no matter how small, never bring it out again and watch the principle of compounding make you rich.

2. Focus on growing your asset column by using most of your money to buy income generating assets like stocks, bonds, real estate, intellectual property royalties and anything else that is valuable, generates income and has a ready market.

3. Use your assets to generate the money you use to pay for luxury.

4.Find a way to earn passive income. Create a business that you don't have to work on everyday that brings in steady cash flow. For example, you only create a digital product once and it keeps generating income for you even while you sleep. That's passive income because you are not exchanging you time to earn money with the product any more.

5. Don't work for money. Use your job as a means for acquiring knowledge in areas like sales, marketing, business systems management etc.

6. Keep more of the money you earn. The more money you are able to keep and invest, the more wealthy you will be. Wealth is not about how much money you earn, but about how much you are able to keep.

7.Have a motivation larger than reality: You must have a motive for wanting to get wealth. Riches for their own sake won't shield you from the harsh facts of life. Knowing what you don't want (such as to work your entire life, etc.) and what you do want is the first step in determining this reason.

8.Decide each day to be wealthy or poor every day and with every dollar.
Our purchasing patterns will reveal who we are (not the other way around).

9. Make smart friend selections.
Avoid cynics who are reluctant to discuss money. Surround yourself with financially educated people.

10. Learn one formula well, then go on to another: 
The standard advice to "work hard, pay your expenses, and save for retirement" is where most people stop. Additionally, you ought to pick up some new skills. 
You ought to develop your investing skills, for instance, in foreclosures. 
Before switching to another strategy, put this into practice and refine this method of earning money. 
Here, you need to develop two skills:
First, the capacity to broaden your thoughts and acquire additional formulae for creating cash. 
Second, the discipline to implement each one before continuing.
11. Pay yourself first: If you don't, you won't have any money left over to do so. 
12.Pay all the specialists you rely on, including your brokers, fairly. 
Choose experts who will help you make money (or save you money), and pay them well. This contributes to expanding your asset column.
13. Be "Indian giver": savvy investor will always ask, "How quickly can get my money back?"
Make sure you have big upside while keeping your downside to minimum. 
Think about the assets you receive as gift when you receive your money back in addition to the return on investment.
14. Assets buy luxuries: Hold off on purchasing luxury until you have built an asset to cover its cost.
The need for heroes: Look for investment role models who make it seem simple. 
Be motivated by them and emulate them.
15. Teach and you shall receive: You will learn more the more you teach others. 
There are other areas of life where this idea applies. Giving first will enable you to recieve things much more readily.
16. Quit what you're doing and take moment to consider what is and isn't working for you.
17. Track down successful person in your desired field: 
Embrace those that understand how to be successful in your industry.
Be open to learning: 
Be the complete opposite of haughty. Gain all the knowledge you can. 
Never assume you already know enough about subject.
18. Present variety of proposals; you never know which will be accepted. 
Making more offers can increase your chances of finding terrific deal. The process is always accompanied by rejection.
18. First, look for buyers, then sellers: 
This is tip for assembling deal. 
When you decide to market product, you want to be sure there will be customers. 
Once this is known, you can search for this product's sellers.
Study successful historical figures and try to be like them to learn from history.
19. If you are unsure about what to do, simply do it. Action always beats inaction.


"Money comes and goes, but if you understand how it works, you gain power over it and can start building wealth."


"There is a distinction between being poor and being broke. Broke is only temporary. "Poor lasts forever."


"You must understand the distinction between an asset and a liability and purchase assets. An asset is a source of income for you. A liability drains your bank account. The foundation of financial struggle is illiteracy, both in words and in numbers."


"Cash flow reveals how a person manages money."


"More money rarely solves someone's financial problems."


"Trying to keep up with the Joneses causes many financial problems."


"The wealthy acquire assets. 

The poor have only expenses. 

The middle class purchases liabilities that they believe are assets."


“Set your mind on a definite goal and observe how quickly the world stands aside to let you pass.”


"Financial hardship is frequently the direct result of people working their entire lives for someone else. When it comes to becoming what you study, too many people forget to mind their own business." They spend their lives looking after someone else's affairs and making that person wealthy. A person must mind their own business in order to become financially secure."


"Keep expenses low, liabilities low, and work hard to build a solid asset base."


"When you work for money, you give your employer power. If money works for you, you retain and control it. Each dollar in my asset column represented a great employee who worked hard to hire more people and buy the boss a new Porsche."

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