‘Rich Dad Poor Dad’ lessons remain relevant
“Rich Dad Poor Dad,” written by Robert Kiyosaki, has garnered lots of praise since it was first released in 1997. It is a legendary book that educates people about financial freedom. The book has a huge fan following all over the world and has sold more than 32 million copies since it was published.
The story of the book is about the two fathers of the author — Robert Kiosaki. As per the Journal review – Poor Dad here is referred to Kiyosaki’s biological father, who is a highly educated professional with a Ph.D. But, he was financially poor with limited money. The Rich Dad, on the flip side, is referred to Kiyosaki’s friend’s father, who was a high school dropout. But, he was financially very rich.
In the book, Kiyosaki writes about the financial lessons that learned from his rich dad.
Kiyosaki in this book has encouraged investing in assets that will give you continuous cash flow in the future. He conceptualized the entire strategy of passive income in five important lessons.
A. Rich don’t work for Money
Kiyosaki in his book has explained how rich people make money work for them through their hard work. They do not work 8 hours a day to have a high income. Rather they utilize their 24 hours to analyze how to generate cash flow from assets. They believe in maintaining a strict budget and invest the residual amount into something that will further generate more cash flow. He explained how middle-class people are trapped in the circle of fear and greed to take a risk for any investment. The rich people leave behind these boundaries and focus on turning each opportunity into profits. This is why they keep on getting rich while others remain poor.
B. Why teach financial literacy
Here Kiyosaki has talked about financial literacy which is never provided in schools or universities. According to him, one should have an in-depth knowledge of accounts and should be able to differentiate between an asset and a liability. He has advised individuals to spend money on assets that will generate cash flow while keeping the liability expenses minimum. He also stressed that general people just do the opposite and that’s the reason after retirement they end up with nothing.
C. Mind your own business
In the book, Kiyosaki has explained this concept by giving the example of Mac Donald’s. He explained how Mac Donald’s is extremely popular by owning the best real estate locations in America even if their burgers are not best in the world. It still draws the American crowd endlessly. Through this example, he wants to state individuals to concentrate on ways to become their own boss rather than working for anyone else. He has given the examples of the best kind of real assets like- Properties, mutual funds, bonds, stocks and how they help in generating profitable cash flow.
D. History of taxes and power of the corporation
Kiyosaki here shows how general people spend half of their income on taxes by the rich running corporations hardly spend any. As per the employed income law, a person when gets taxed, half of their money is gone. They spend what is left after paying taxes. While the corporation or business owners spend huge sum of money like they want to and pay taxes with what is left. His main point is to encourage individuals to gain knowledge on accounting, financial markets, financial law and make their best utilization to hand government taxes efficiently.
E. Work to Learn, Don’t work for money
Here Kiyosaki has given stress to develop skills for achieving financial freedom. He has motivated readers to focus on management skills, communication skills and understand the process of cash flow for a better future. He also encouraged readers not to thin any opportunity as small rather cultivate in learning extra skills. You never know which skills lead you to a life-changing opportunity. His main motive is to advise individuals to focus on skill development rather than just working for money.