Rich Dad Poor Dad is a wealth amassing book by author Robert Kiyosaki. The book is based on the advice he received from his normal, well-educated father, whom he refers to as a “poor dad” and his friend’s father who had a much lower level of education but calls him a “rich dad”. Both fathers had very different views on how one should achieve success, and the book contrasts the two approaches to finally show the reader the superiority of the rich dad’s money-making principles.
His father’s naturalistic approach viewed education as the key to success. Interestingly, his father is portrayed as more interested in education than money in the belief that more education will eventually lead to more money. He likens his father’s natural approach to the approach many parents adopt as a societal standard of financial security — sending children to school and college to get a good education and then a decent job in a stable company. His father’s natural idea of financial success was built around what the job offered—stability, promotions, and social security. Robert Kiyosaki describes this as being trapped in a mousetrap — his natural father seemed to work constantly and relentlessly but never moved forward financially.
His friend’s father (Rich Dad) was much less educated. However, he is the one who provided the practical answers about what it takes to move from mousetrap to wealth. Rich Dad has stuck to the principle that education only produces people for employment and not people who can manage their finances wisely. Robert Kiyosaki of Rich Dad taught that the question on the mind of anyone who wants to be in control of their financial goals should always be how to make more money.
Robert soon realized that “Rich Dad” was very eager to invest. In Rich Dad Poor Dad, Robert Kiyosaki states that an investor’s focus is on accumulating assets such as rental real estate, bonds, and stocks while staying away from liabilities such as cars, homes, or boats. This is because assets generate income while liabilities eat up that income. Once one clearly differentiates between their assets and liabilities, they will be able to form a stable financial foundation.
Another basic principle that runs throughout the book is the need for financial literacy if one wants to get rich. Rich Dad Poor Dad asserts that financial literacy will help you accelerate your financial growth by providing you with the knowledge to make wise financial choices even before you have the money. If you are not smart about money, it will be difficult for you to make sound financial decisions even when you are offered a huge amount of money, losing it as quickly as you earned it.
