Rich Dad Poor Dad – Highlights from a historical book we can all learn from
Earlier this year I read the book Rich Dad Poor Dad by Robert Kiyosaki. The book has been a bestseller for over 15 years, so some would say I’m a bit behind the times, but nonetheless, better late than never as it was a good read.
First of all, I think the book should come with a warning that ‘this book will make you hate your job!’ I read it. So I convinced my husband to read it. We both feel like we’ve been wasting time working hard at our careers for over a decade… but then we realized that’s not true and all is not lost… and I’ll explain why.
The main points of the book are that the rich find ways to make their money work for them, rather than the other way around (work for money). Kiyosaki also discusses how ‘financial literacy’ and understanding money have no place in the formal education system, they take place in the home, and this is why the rich remain rich and the poor remain poor, because that is all. they know.
Make your money work for you
The book explains that the conventional route for most people is to study hard in school, with the aim of securing a ‘good job’, and then spend a lifetime working hard for higher pay. We become dependent on our employers as we build our lives and spend most of our income on consumption and debt (mortgages, etc.). The poor and middle class trade their time for money in this way, they get caught up in the ‘rat race’ because as their income increases, so does their consumption (better cars, clothes and vacations) and they get more in debt ( bigger house, bigger mortgage).
Isn’t that what we all do, I hear you ask? No. The rich send their money out into the world and expect more money to come! Obviously there is a trick to this. Kiyosaki says that, fundamentally, it is about understanding a liability and an asset. The difference that is defined as an asset is something that generates cash for you. Take ownership for example. If you invest in a rental property and the monthly rent is more than the monthly costs, you are making a nice profit. You are not trading your time to achieve this monthly income, so this is an income generating asset. There are many other ways to invest in income generating assets eg business investments, stocks… the goal is to accumulate assets, while minimizing liabilities (a liability includes, you may be surprised to hear, the mortgage on the house in the one that lives). in)
financial education
He argues that we need to educate ourselves (and, in turn, educate our children) about financial literacy; he refers to this as “mind our own business.” This does not mean that we all start studying accounting degrees or that we quit our jobs and become freelancers. It is about learning the options and opportunities to manage our money. We must not be impatient on our journey to wealth, but we must learn to build foundations, and those foundations will ultimately allow us to have multiple streams of income, without relying on our paycheck. We must invest in ourselves, whether it be reading books, attending seminars, training courses, memberships in professional or training communities… if it is true that ‘we are what we learn’, then we must think about that!
Conclusion
In general, the book made me think. A lot. It made me think about work, money and the decisions that are made in life. It made me realize that I should think more about the long term when it comes to money and investments. It got me thinking about calling off the search for our next, slightly bigger house when we can afford it…or our next, newer (and if my husband has the word, sportier!) because, because that’s really what What we want. we should spend our money on… the answer is no. We should be looking to invest in assets that return us an income, and use that income to pamper ourselves from time to time.
It also made me realize the importance of looking beyond employment to generate income. In fact, it was reading this book that encouraged me to become a member of the SFM/Digital Experts Academy. I decided to invest in myself and my learning outside of work…something I haven’t done since college. I decided to learn how to start my own business, no longer working for ‘the man’ but working for myself, and most importantly (since I still had my full time job), I learned how to generate a relatively passive income. of my business I hope Kiyosaki is proud!
Perhaps one drawback of the book is that it is very focused on real estate investing. These are not necessarily easy investments for beginners. Also, while there is a lot of general negativity towards traditional employment, we all need to earn our money somewhere in order to make investments in the first place!
Rich Dad Poor Dad is not a quick get rich recipe; is an excellent book to get you thinking about financial education and a way to challenge your thinking about work and money.