Book Review

Is Rich Dad Poor Dad A Good Book?

What does Rich Dad Poor Dad Teach You?

The rich don’t work for money. They make money work for them

I started reading the book last month.

I think I was late in starting it — at least by 10 years.

Rich Dad Poor Dad is a must-read for everyone. It is not only for those who manage money in their household or want to get rich. This is about creating a mindset that will help you navigate life better.

But this is going to help those more who fit the following profiles:

• If you want to retire (early or on time) and have financial security
• If you seek to get out of the rat race
• If you look to work for yourself
• If you aspire to manage money better
• If you want to free up your time by achieving financial freedom

Robert Kiyosaki was a young boy when his financial education started. Circumstances inspire Robert and, his friend, Mike to explore how to make money. The two friends go to “Rich dad”, who is Mike’s Father, to learn. And that is how their and our education start.

The kids were taught to think clearly about money. They learned that they should not wait for money but search for opportunities. We can either work for money or make money work for ourselves. If we learn how to employ money, we will have control over it.

Rich Dad also emphasized that the greatest wealth is education. Education in a particular skill is important. But personal finance literacy is pivotal in becoming successful. Money comes and goes in our lives. Financial intelligence teaches us how to keep money.

It’s not about how much money you earn but how much you keep

In the book, Robert outlines a few principles and action points. Let me share three of them without spoiling the book much.

Don’t Save Money — There’re better things to do with money

A lot of us are used to saving money in banks. While that generates some return, money can achieve much more.

Robert suggests we spend our money on building assets that will generate income for us. For him, those assets are in Real Estate and Stocks. For us, it can be anything we are comfortable with.

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• If you want more passive ones, you can explore the stock market, bonds, passive funding, REIT, cryptocurrency, etc. These investments require more education and guidance.

True assets generate income. An example would be a stock that can give dividends or increase capital value. Robert believes that the road to financial freedom is through assets. Our income from assets should be enough to cover our expenses. Only then we can retire and have financial freedom.

Calculate your Wealth — to check how close you are to financial freedom

Robert encourages us to ask this question —

How long will we survive if we stop working today?

This question can help us understand how wealthy we are. I have written a separate article showing how to calculate that.

This formula uses earnings from assets, monthly expenses, and debt payments to check how many months we can survive if we stop working.

Pay yourself first — Tax and bills can wait

Robert doesn’t encourage being late with payments. However, he strongly recommends paying yourself first. By that, Robert means that we should first pay for accumulating assets. Then with the residual amount, we will pay taxes, bills and clear other payments.

This is a risky approach, right? That is the point. If we pay the bills first, we will only invest what is left. If we invest first, we will still have to pay bills. In the second case, if we do not have enough to cover our bills, we will push ourselves to earn more. Without that extra push, our earnings may not increase at a fast pace.

I can relate to this example as my student loan has pushed me to be more intelligent with money. Without that push from my loan officers, I wouldn’t work as hard to make more.

Once you start paying yourself first, you will see that building assets requires knowledge. You will eventually need more knowledge and education to manage your assets better. The book lays out the principles of how and where to start.

In this book, Robert shares lots of personal experiences, guidelines to follow, reasons that stop people from managing money better, and financial tips. All of those learnings will put you in a good place to start.

But of course, from there, the journey will only begin.

My opinion of this book

By now this should be obvious that I strongly recommend this book. I felt that I should have read it at least 10 years ago. This has helped me tremendously and I want to follow through.

I am now more interested in learning about various investment instruments. You can imagine what my next order of books will cover.

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