Rich Dad Poor Dad is an international bestseller on personal finance written by Robert T. Kiyosaki in 1997. The book is known across the world and has sold over 32 million copies over the years. In this piece, we are going to look at Rich Dad Poor Dad lessons on wealth.
One thing I am sure of is that you have also read the book. If not, you have heard of it.
Robert Kiyosaki went ahead to start a financial education firm called The Rich Dad Company. It helps people become better at personal financial management. This is the secret of all financial progress and abundance.
I have read the book severally and I obtained many lessons which I have used to build my financial life. I highly recommend the book if you have not read it yet.
Let us get right into the Rich Dad Poor Dad lessons.
11 Rich Dad Poor Dad lessons on wealth
1. The rich don’t work for money
This is the most profound lesson in Rich Dad Poor Dad. Robert avers that the rich do not work for money but money works for them.
Do not work hard looking for money, work hard to have money serve you, and your financial interest. Every dollar is a humble servant if used properly.
After making money, invest it to bring in more money. If you consume it, you lose it.
The rich became rich by allocating every dollar in the best investment vehicle. They calculate the ROI and the useful life of different investment projects and then make an educated move.
The truth is that you can never get rich by running after money. You only get rich by attracting it and employing it to bring in its sisters.
2. Own a corporation
Robert Kiyosaki believes in the power of corporations. Corporations were started to serve the interests of the rich.
The rich hide under corporations. This is because they can pay less tax and only bear only limited liability. The liability is limited to the level of their shareholding.
Corporations pay taxes after taking care of their expenses. Employees, on the other hand, pay taxes before paying for their monthly expenses.
Therefore, corporations pay less in taxes than employees with the same income level.
As an employee, you work for the following:
- Company. You work for the shareholders. You only make the owners of the business rich.
- Government. The more you work hard, the more taxes you pay. Most employees work from January to May just for the government.
- Bank. Most people have mortgage and credit card loans. They work hard to repay them and yet, they bring no income.
According to Kiyosaki, a corporation is just a file folder with some legal documents in it, sitting in some attorney’s office and registered with a state government agency.
Therefore, a corporation is not necessarily a big factory or office but a creation meant to serve the interest of the rich. To shield them when they make a mistake and help them make and save more money.
If you do not have one, you are not ready for financial abundance. After all, all the richest people in the world have them.
3. Get financial intelligence
Rich Dad Poor Dad lessons cannot be complete without this one. It is largely discussed in the book.
Financial intelligence is the knowledge of making, spending, and investing money. It is what rich people use to get their fortune. With financial intelligence, they make millions easily while many people struggle to make a living.
According to the book, financial intelligence is a combination of knowledge in 4 major fields. These are:
Financial intelligence starts by understanding the difference between an asset and a liability. An asset is anything that puts money in your pocket. A liability is anything that takes money out of your pocket.
If you can develop thorough financial intelligence, you can never die poor.
4. Buy income-generating assets
As we have pointed out, assets put money in your pocket. If you want to be rich, spend your life acquiring assets.
According to Kiyosaki, the poor buy liabilities. The middle class buys liabilities thinking that they are assets. The rich buy assets.
Liabilities should never be purchased before assets. They should be purchased from the profits generated by assets. This is because they diminish your economic value.
Your house is not an asset because it takes money from your pocket. Therefore, never say that your house is your biggest investment. It is a big liability.
5. Pay yourself first
This is a topic we have discussed in depth in this article (How to pay yourself first). It is one of the most important lessons from Rich Dad Poor Dad.
To pay yourself first means putting away money meant for investments first before you pay any bills. When you pay bills, you pay the landlord, the service operators, the banks, etc. Before you pay all these people, pay yourself first.
Decide to save at least 20% of your income for investment purposes. Rich people can save even 70-90% of their income. This is the money they will use to make more money.
If you do not pay yourself first, you will have nothing left after paying bills. Pay yourself first and figure out a way of clearing your bills. You are your priority.
6. Become an investor
According to Robert Kiyosaki, no one can afford to become an employee or self- employed. If you want financial abundance, you must become a business owner or an investor.
An investor has money work hard for him. Investors identify great money-making opportunities and then put in their money. That money will work hard on their behalf.
There are 3 types of income:
- Earned income– Money gotten from working 9-5
- Portfolio income– Income from investment portfolios. Such portfolios still need some effort and time to grow.
- Passive income– Income that you do not have to work for. You get money at the end of the day by doing nothing.
To become super-rich, you have to focus on building multiple streams of passive income. This is where money and freedom is.
7. Work to learn
This is also one of the most important Rich Dad Poor Dad lessons. Never work for money, work to learn.
Even if you take a job before starting your business, take a job for learning purposes. Learn as much as you can in that role and implement it when you start your business.
Take jobs that are relevant to what you want to do in the future. Do not waste time learning what is not relevant to your life. The job may be paying less but if you are learning valuable lessons, it is the best option.
Robert advises that it is not good to specialize if you want to become a better business owner. Rotate in many departments in your area of employment so that you get to know more in every area.
This is called knowing less of more and not more of less.
8. Get management skills
In life, you have to manage people and resources. This is a necessity if you will create a vast business empire.
The following management skills are important:
- Management of cash flow.
- The Management of systems.
- Management of people.
If you are skilled at all three, you will become rich.
Management aims to bring an increase. Cash flow management aims to bring a financial increase. Systems are managed to bring efficiency. Management of people aims to bring the best of people; helping them achieve a predetermined goal.
If you are a great manager, you will grow. If not, you will shrink financially.
9. Overcome obstacles
On the way to financial abundance, there are numerous obstacles. You will need to overcome all of them to get to your goal.
Robert lists the following obstacles:
- Bad habits
If you allow any of them into your life, you will never get financial freedom.
10. Invent money
Robert teaches the art of inventing money. We have covered this in How to get a free asset.
You have to invest money in an income-generating or appreciating project. After your investment has increased in value, withdraw the investment capital. Leave the rest.
You have just gotten a free asset; an asset that you got from nothing. This is because you have already taken the capital you invested out.
11. Develop your God-given power
Robert offers the following 10 step process in doing this:
- Find a reason greater than reality.
- Make daily choices.
- Choose your friends carefully.
- Master a formula and then learn a new one.
- Pay yourself first (Get disciplined).
- Get good advice.
- Get something from nothing.
- Choose heroes.
- Teach and you shall receive.
If you follow the ten steps process, you will develop the hidden power within you.
Bonus Rich Dad Poor Dad lessons
- Pay less tax legally.
- Take a break and assess what you are doing.
- Look for new ideas.
- Find someone who has done what you want to do.
- Take classes, read, and attend seminars.
- Make lots of offers.
- Find good deals, businesses, and people.
- Shop for bargains in all markets.
- You make a profit when buying, not selling.
- Think big.
- Learn from history.
- Actions always beat inaction.
- Raise money.
- Organize smart people.
Final thoughts on Rich Dad Poor Dad lessons on wealth
Let’s recap: 11 Rich Dad Poor Dad lessons
- The rich don’t work for money.
- Own a corporation.
- Get financial intelligence.
- Buy income-generating assets.
- Pay yourself first.
- Become an investor.
- Work to learn.
- Get management skills.
- Overcome obstacles.
- Invent money.
- Develop your God-given power
You must read the book if you have not done so. It will open your eyes to know more, do more, and become more. Here is the link, follow it and grab your copy on Amazon.
There you go. All the best.
Get the book on Amazon: Rich dad poor dad
Founder/ C.E.O- Wealthy Wolves Consulting & Giimark Ltd/ Best-selling Author/ Speaker.