Rich Dad, Poor Dad - Summary, Notes and Highlights

Rich Dad, Poor Dad - Summary, Notes and Highlights

by | 45 min read

Schools teach people to work for money but not how to get money to work for you. Robert covers the lessons he learnt from his rich dad vs his poor dad.

These are my notes and highlights from the book Rich Dad, Poor Dad by Robert T. Kiyosaki.

🤔 What Is This Book About?

This book is about the lessons Robert learnt about money, growing up with a Rich Dad (his best friend’s father) and a Poor Dad (his university educated father). It goes into why the poor are poor and how the rich handle their money differently.

👤 Who Should Read It?

If you grew up with parents whose only income was from salaried employment and their only “asset” is their house, then it’s time to relearn a few things about money.

Financial literacy isn’t taught in schools, but this book gives a good overview on how the rich can live without traditional employment.

🎓 The One Takeaway From This Book

The rich spend their money on income producing assets, which then fund their expenses.

📒 Summary & Notes

The book is broken down into 6 lessons that you need to know to start having your money working for you.

  1. The Rich Don’t Work for Money
  2. Why Teach Financial Literacy
  3. Mind Your Own Business
  4. The History of Taxes and the Power of Corporations
  5. The Rich Invent Money
  6. Work to Learn, Don’t Work for Money


Robert had two Dads, one highly educated but poor and the other not highly educated but rich. His Rich Dad was actually his best friend’s Dad, who him and his friend convinced him to teach them about money.

Robert got conflicting advice from both Dads which gave him the opportunity to decide who he should listen to. He decided to listen to his Rich Dad, and that made all the difference.

Money isn’t taught in schools, it is generally up to the parents to teach their children about money.

One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is that the subject of money is taught at home, not in school.

People often stop themselves from getting rich by their mindset. Attitudes such as “money is the root of all evil” stop people from getting rich.

Both his Dads had 2 different mindsets.

For example, one dad had a habit of saying, “I can’t afford it.” The other dad forbade those words to be used. He insisted I ask, “How can I afford it?”

Proper physical exercise increases your chances for health, and proper mental exercise increases your chances for wealth.

There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.

Robert chose not to listen to his highly educated Dad when it came to money. He decided to listen to his Rich Dad, which changed the rest of his life. How his life would have been different if he took the other road.

It is important to gain power over money and understand how money works. The alternative is you end up spending your life working for money instead of having money work for you.

The Rich Don’t Work for Money

The poor and the middle class work for money. The rich have money work for them.

Most people stay poor due to fear and greed. Their emotions are ruling their decisions.

Life has a habit of pushing you around, but often people think it is other people to blame rather than themselves.

To teach the boys a lesson, the Rich Dad had the boys work in his grocery store for 10c an hour (which even then wasn’t much). They did this for 3 weeks before Robert got sick of it and went to ask for a pay rise. The Rich Dad made him wait half an hour before he got to talk to him.

If you learn life’s lessons, you will do well. If not, life will just continue to push you around. People do two things. Some just let life push them around. Others get angry and push back. But they push back against their boss, or their job, or their husband or wife. They do not know it’s life that’s pushing.

If you learn this lesson, you will grow into a wise, wealthy, and happy young man. If you don’t, you will spend your life blaming a job, low pay, or your boss for your problems. You’ll live life always hoping for that big break that will solve all your money problems.

Or if you’re the kind of person who has no guts, you just give up every time life pushes you. If you’re that kind of person, you’ll live all your life playing it safe, doing the right things, saving yourself for some event that never happens. Then you die a boring old man.

The Rich Dad said he sounded like a lot of his employees who thought the only way to get paid more was to ask for a pay rise. Instead of giving Robert a raise, he made him work for free.

So most will spend the best years of their lives working for money, not really understanding what it is they are working for.

Most people want everyone else in the world to change but themselves. Let me tell you, it’s easier to change yourself than everyone else.

The poor and the middle class work for money. The rich have money work for them.

If you want to learn to work for money, then stay in school. That is a great place to learn to do that. But if you want to learn how to have money work for you, then I will teach you that. But only if you want to learn.

It seems to be the norm that people hate their jobs, yet they carry on working there. The reason is down to fear.

Don’t worry about that for now. Just know that it’s fear that keeps most people working at a job: the fear of not paying their bills, the fear of being fired, the fear of not having enough money, and the fear of starting over.

They work very hard for little money, clinging to the illusion of job security and looking forward to a three-week vacation each year and maybe a skimpy pension after forty-five years of service. If that excites you, I’ll give you a raise to 25 cents an hour.

Rich Dad kept suggesting higher and higher hourly wages to see if they would bite. All the way up to $5 an hour, which in 1956 was more than most adults earned.

He understood that every person has a weak and needy part of their soul that can be bought, and he knew that every individual also had a part of their soul that was resilient and could never be bought.

The pattern of get up, go to work, pay bills; get up, go to work, pay bills. People’s lives are forever controlled by two emotions: fear and greed. Offer them more money and they continue the cycle by increasing their spending. This is what I call the Rat Race.

Instead of acknowledging their fears and finding a way to earn more money, they ignore their fears and just stay at their job.

Money is running their lives, and they refuse to tell the truth about that. Money is in control of their emotions and their souls.

I just knew that I often wondered why grown-ups hurried off to work. It did not seem like much fun, and they never looked that happy, but something kept them going.

They desire money for the joy they think it can buy. But the joy that money brings is often short-lived, and they soon need more money for more joy, more pleasure, more comfort, and more security. So, they keep working, thinking money will soothe their souls that are troubled by fear and desire. But money can’t do that.

Even rich people have a fear of losing money. They amass giant fortunes to avoid being poor, but then they fear losing it all.

People make up excuses for why they work, such as because they “love their job”. Then go on to say that “money is the root of all evil”.

So many people say, “Oh, I’m not interested in money.” Yet they’ll work at a job for eight hours a day.

If they were to acknowledge their fear of money and try to think of solutions to it, they would realise that getting a job isn’t the best way to make money eventually.

A job is really a short-term solution to a long-term problem.

Even people who earn a lot of money can fall into the trap of fear and desire. It is common for lottery winners to waste all their money as soon as they get it.

If you don’t first handle fear and desire, and you get rich, you’ll only be a highly paid slave.

The main cause of poverty or financial struggle is fear and ignorance, not the economy or the government or the rich.

Most people live their lives chasing pay checks, pay raises and job security because of the emotions of desire and fear, not really questioning where those emotion-driven thoughts are leading them.

What intensifies fear and desire is ignorance. That is why rich people with lots of money often have more fear the richer they get. Money is the carrot, the illusion. If the donkey could see the whole picture, it might rethink its choice to chase the carrot.

People keep earning higher and higher salaries, and they end up trapping themselves. They might not enjoy their job, but they are too afraid to leave it.

Thinking that a job makes you secure is lying to yourself.

Choosing what we think rather than reacting to our emotions. Instead of just getting up and going to work because not having the money to pay your bills is scaring you, ask yourself, Is working harder at this the best solution to the problem.

The poor, the middle class, and the ignorant will have their lives ruined simply because they will continue to believe that money is real and that the company they work for, or the government, will look after them.

Keep using your brain, work for free, and soon your mind will show you ways of making money far beyond what I could ever pay you.

By not working for money, they were open to new opportunities to earn a living. They did this by getting the used comic books from the store they were working at and then opening a library and charging 10 cents for a 2-hour reading session. Comics cost 10 cents each in those days, so it was a bargain. Kids could read 5 comics in that time.

They got Mike’s sister (Rich Dad’s daughter) to work at the library for $1 a week, so they were earning money without them physically needing to be there. They’re learnt how to make money work for them.

We learned to make money work for us. By not getting paid for our work at the store, we were forced to use our imaginations to identify an opportunity to make money.

Why Teach Financial Literacy

It’s not how much money you make. It’s how much money you keep.

Robert retired in 1994 at 47.

Retirement does not mean not working. For us, it means that, barring unforeseen cataclysmic changes, we can work or not work, and our wealth grows automatically, staying ahead of inflation.

You need to grow your assets so they are large enough to grow by themselves, as well as provide an income to cover your expenses and more.

Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.

This is why lottery winners tend to lose all their winnings. They haven’t built up the financial intelligence they need to manage their finances.

Most people fail to realize that in life, it’s not how much money you make. It’s how much money you keep.

Often those that do manage to keep their money find that it is lost when they pass it down to the next generation, as they didn’t learn to be financially literate.

If you want to be rich, you need to be financially literate.

Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.

Rule #1, learn the difference between an asset and a liability.

Most people struggle financially because they do not know the difference between an asset and a liability.

The middle class tend to think that their house is their biggest asset. An asset is something that puts money in your pocket. Unless you are renting out your property, your house will be costing you money.

An asset puts money in my pocket. A liability takes money out of my pocket.

This is the cash-flow pattern of an asset:

Cashflow of an asset

Many financial novices do not know the relationship between the Income Statement and the Balance Sheet, and it is vital to understand that relationship.

This is the cash-flow pattern of a liability:

Cashflow of a liability

An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.

If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities.

The rich are rich because they are more literate in different areas than people who struggle financially.

This is the cash-flow pattern of a poor person:

Cashflow of the poor

This is the cash-flow pattern of a middle-class person:

Cashflow of the Middle Class

This is the cash-flow pattern of a rich person:

Cashflow of the Rich

These are oversimplified but it shows how the flow of money is different between the poor, middle class and rich.

Money only accentuates the cash-flow pattern running in your head. If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spending. Thus, the saying, “A fool and his money is one big party.”

Schools teach you to get good grades and get a well respected job like a doctor. However, doctors rarely earn that much having to pay hundreds of thousands in school loans as well as expensive malpractice lawsuits.

That is the reason it is so hard to motivate kids in school today. They know that professional success is no longer solely linked to academic success, as it once was.

Those that do well at school and go on to do well academically and professionally can still lack financial literacy.

These people often work harder than they need to because they learned how to work hard, but not how to have their money work hard for them.

People tend to upscale their life as their salary increases. Whether it be a bigger house or a new car. They are constantly trying to keep up with the Joneses. The problem is how they choose to spend their money.

More money seldom solves someone’s money problems. Intelligence solves problems.

The fear of being different prevents most people from seeking new ways to solve their problems.

We started to understand why our rich dad told us that schools were designed to produce good employees, instead of employers.

If you want a bigger house that isn’t a problem but you need to realise that you are buying a liability not an asset.

Houses do not always go up in value. I have friends who owe a million dollars for a home that today would sell for far less.

You should work on buying more cash-generating assets that then pay for the house.

Why the Rich Get Richer

Poor Dad vs Rich Dad

A review of my rich dad’s financial statement shows why the rich get richer. The asset column generates more than enough income to cover expenses, with the balance reinvested into the asset column. The asset column continues to grow and, therefore, the income it produces grows with it. The result is that the rich get richer!

Why the Middle Class Struggle

However, for the middle class treat their home as their biggest asset and rarely own any income producing assets.

This pattern of treating your home as an investment, and the philosophy that a pay raise means you can buy a larger home or spend more, is the foundation of today’s debt-ridden society.

The middle-class lack financial education, which is why they end up staying in the Rat Race.

The reason they have to play it safe is because their financial positions are tenuous at best. Their balance sheets are not balanced.

Typically, their only source of income is their pay check. Their livelihood becomes entirely dependent on their employer. So when genuine “deals of a lifetime” come along, these people can’t take advantage of them because they are working so hard, are taxed to the max, and are loaded with debt.

Once you understand the difference, concentrate your efforts on buying income-generating assets. That’s the best way to get started on a path to becoming rich.

When you work as an employee, you generally work for 3 people.

  1. You work for the company. Employees make their business owner or the shareholders rich, not themselves. Your efforts and success will help provide the owner’s success and retirement.
  2. You work for the government. The government takes its share from your pay check before you even see it. By working harder, you simply increase the amount of taxes taken by the government. Most people work from January to May just for the government.
  3. You work for the bank. After taxes, your next largest expense is usually your mortgage and credit-card debt.

R. Buckminster Fuller has a good definition for wealth:

Wealth is a person’s ability to survive so many number of days forward - or, if I stopped working today, how long could I survive?

Wealth is the measure of the cash flow from the asset column compared with the expense column.

Once your monthly cash flow from your assets match your monthly expenses you will be wealthy.

My next goal would be to have the excess cash flow from my assets reinvested into the asset column. The more money that goes into my asset column, the more my asset column grows.

Mind Your Own Business

Make sure you are always working on your own business, which is the business of building your asset column.

The rich focus on their asset columns while everyone else focuses on their income statements.

Everyone thinks that McDonald’s is in the hamburger business, when in fact they are in the real estate business.

Ray chuckled. “That’s what I thought you would say.” He paused and then quickly added, “Ladies and gentlemen, I’m not in the hamburger business. My business is real estate.”

Ray knew that the primary business focus was to sell hamburger franchises, but what he never lost sight of was the location of each franchise.

McDonald’s owns some of the most valuable intersections and street corners in America and around the globe.

It is secret number three of the rich. That secret is: Mind your own business.

The education system trains people to get a job, not to go into business. Everyone should be working on their own business, even if they have a job at the moment.

You need to work on building your asset column and reducing your liabilities’ column.

Many will study further to become engineers, scientists, cooks, police officers, artists, writers, and so on. These professional skills allow them to enter the workforce and work for money.

What is your business?” And they will say, “Oh, I’m a banker.” Then I ask them if they own the bank. And they usually respond, “No, I work there.” In that instance, they have confused their profession with their business. Their profession may be a banker, but they still need their own business.

The mistake in becoming what you study is that too many people forget to mind their own business. They spend their lives minding someone else’s business and making that person rich.

Your business revolves around your asset column, not your income column.

The rich focus on their asset columns, while everyone else focuses on their income statements.

These ideas all still focus on the income column and will only help a person become more financially secure if the additional money is used to purchase income-generating assets.

It is very difficult to get wealthy and escape the rat race if you are working for someone else.

Financial struggle is often the result of people working all their lives for someone else.

Keep expenses low, reduce liabilities, and diligently build a base of solid assets.

Get them to start building a solid asset column before they leave home, get married, buy a house, have kids, and get stuck in a risky financial position, clinging to a job, and buying everything on credit.

These are the assets that you should look to grow.

  • Businesses that do not require my presence I own them, but they are managed or run by other people. If I have to work there, it’s not a business. It becomes my job.
  • Stocks
  • Bonds
  • Income-generating real estate
  • Notes (IOUs)
  • Royalties from intellectual property such as music, scripts, and patents
  • Anything else that has value, produces income or appreciates, and has a ready market

You should only acquire assets that you have a personal interest in. There is no point in buying real estate if you don’t like it. This is also good advice when it comes to investing. You need to understand the business before you can invest in it. This is why Warren Buffet is so successful.

But my rich dad encouraged me to begin acquiring assets that I loved. “If you don’t love it, you won’t take care of it.”

Many people are afraid of small-cap companies and call them risky, and they are. But that risk is diminished if you love what the investment is, understand it, and know the game.

With small companies, my investment strategy is to be out of the stock in a year. On the other hand, my real estate strategy is to start small and keep trading up for bigger properties and, therefore, delay paying taxes on the gain. This allows the value to increase dramatically. I generally hold real estate less than seven years.

Once a dollar goes into it, never let it come out. Think of it this way: Once a dollar goes into your asset column, it becomes your employee.

You should be building your asset columns so that the money they generate can be used to live off and the excess goes to buying more assets. You shouldn’t be selling assets to pay for your lifestyle.

The poor and the middle class often buy luxury items like big houses, diamonds, furs, jewelry, or boats because they want to look rich. They look rich, but in reality they just get deeper in debt on credit. The old-money people, the long-term rich, build their asset column first. Then the income generated from the asset column buys their luxuries. The poor and middle class buy luxuries with their own sweat, blood, and children’s inheritance.

This line paragraph reminds me of a Harry Enfield sketch where a couple is always flaunting their wealth, saying “We are richer than you”. On one occasion, while staying in an expensive hotel, they ask a casually dressed man how big his house is. He replies, which one? The one you are in now or one of my other houses.

The rich don’t waste their money on expensive items to look rich. They spend their money on accumulating assets that make them richer.

Instead, most people impulsively go out and buy a new car, or some other luxury, on credit. They may feel bored and just want a new toy. Buying a luxury on credit often causes a person to eventually resent that luxury because the debt becomes a financial burden.

The History of Taxes and the Power of Corporations

My rich dad just played the game smart, and he did it through corporations - the biggest secret of the rich.

Corporations pay considerably less tax than salaried employees. As an added benefit, anything that is considered for the business can be classed as an expense and gets deducted from pre-tax income.

It is this Robin Hood fantasy, or taking from the rich to give to the poor, that has caused the most pain for the poor and the middle class.

It’s the middle class, especially the educated upper-income middle class, who pays for the poor.

Corporations have the means to avoid paying as much tax as individuals. For individuals, tax is deducted before they get paid, there isn’t much they can do about it. Corporations, however, have plenty of options to use that money before it can get taxed.

Rich dad explained to Mike and me that originally, in England and America, there were no taxes. Occasionally, there were temporary taxes levied in order to pay for wars.

He explained that the idea of taxes was made popular, and accepted by the majority, by telling the poor and the middle class that taxes were created only to punish the rich.

Corporation Money Flow

It was popular because the income-tax rate of a corporation is less than the individual income-tax rates. In addition, certain expenses could be paid by a corporation with pre-tax dollars.

The problem is that the people who lose are the uninformed: the ones who get up every day and diligently go to work and pay taxes.

Average Americans today work four to five months for the government just to cover their taxes.

If you work for money, you give the power to your employer. If money works for you, you keep the power and control it.

That is why he paid so much for smart tax accountants and attorneys. It was less expensive to pay them than to pay the government.

He spoke of the virtues of working your way up the corporate ladder. He didn’t understand that, by relying solely on a paycheck from a corporate employer, I would be a docile cow ready for milking. When I told my rich dad of my father’s advice, he only chuckled. “Why not own the ladder?” was all he said.

And the money I was making in my asset column in my own corporation was money working for me, not me pounding on doors selling copiers.

My fellow Xerox salespeople thought I was spending my commissions. I wasn’t. I was investing my commissions in assets.

People often spend their income rather than use it to buy money-producing assets such as stocks. Once you have gained enough assets that the income covers your expenses you are financially independent.

Without this financial knowledge, which I call financial intelligence or financial IQ, my road to financial independence would have been much more difficult.

Financial IQ is made up of knowledge from 4 areas:

  1. Accounting - you need to have an understanding of numbers and money especially once your wealth grows.
  2. Investing - this is the science of “money making money”
  3. Understanding markets - you need to understand supply and demand as well as the emotion-driven aspects of the market.
  4. The law - you can get rich a lot faster if you understand the tax advantages you get from wrapping your business in a corporation. There is also a lot of legal protection from having a corporation. If your company gets sued then you won’t lose your personal assets.

The Rich Invent Money

Often in the real world, it’s not the smart who get ahead, but the bold.

We all have tremendous potential, and we all are blessed with gifts. Yet the one thing that holds all of us back is some degree of self-doubt. It is not so much the lack of technical information that holds us back, but more the lack of self-confidence.

This is true for so many things. Many people have ideas of creating a blog or starting a YouTube channel but never get around to it. Then times passes and they wish they had started it months ago.

So why bother developing your financial IQ? Because if you do, you will prosper greatly. And if you don’t, this period of time will be a frightening one.

At the time of writing (November 2022) many countries are going into a recession and in tech many are losing their jobs.

Today, wealth is in information. And the person who has the most timely information owns the wealth.

I find so many people struggling today, often working harder, simply because they cling to old ideas.

Robert created a game to teach people financial IQ. It is called CASHFLOW. It is quite expensive for a game but if you consider it a financial education it is actually quite cheap.

Some people playing CASHFLOW gain lots of money in the game, but they don’t know what to do with it. Even though they have money, everyone else seems to be getting ahead of them. And that is true in real life. There are a lot of people who have a lot of money and do not get ahead financially.

And I have seen people pull a great opportunity card, read it out loud, and have no idea that it is a great opportunity. They have the money, the time is right, they have the card, but they can’t see the opportunity staring them in the face.

If the opportunities aren’t coming your way, what else can you do to improve your financial position? If an opportunity lands in your lap and you have no money and the bank won’t talk to you, what else can you do to get the opportunity to work in your favor?

Most people only know one solution: Work hard, save, and borrow. So why would you want to increase your financial intelligence? Because you want to be the kind of person who creates your own luck.

Few people realize that luck is created, just as money is. And if you want to be luckier and create money instead of working hard, then your financial intelligence is important.

If it is trained well, it can create enormous wealth seemingly instantaneously. An untrained mind can also create extreme poverty that can crush a family for generations.

Well, putting money away every month is a sound idea. It is one option - the option most people subscribe to. The problem is this: It blinds the person to what is really going on. It causes them to miss major opportunities for much more significant growth of their money. The world is passing them by.

The rich use their business to buy things from pre-tax income. By the time the government gets to tax the profits there is less to tax. It takes a lot longer to save money when the government is taking 50% in taxes.

Saving Money After Tax

Which one sounds harder to you?

  1. Work hard. Pay 50% in taxes. Save what is left. Your savings then earn 5%, which is also taxed.


  1. Take the time to develop your financial intelligence. Harness the power of your brain and the asset column.

Time is one of your greatest assets.

I want to continually develop my financial intelligence because, at each market change, some people will be on their knees begging for their jobs.

Personally, I use two main vehicles to achieve financial growth: real estate and small-cap stocks. I use real estate as my foundation. Day in and day out, my properties provide cash flow and occasional spurts of growth in value. The small-cap stocks are used for fast growth.

The rich also get the opportunity to invest in things that general people can’t. These investments aren’t open to the public because they are expensive and risky. However, for the rich it isn’t much to pay considering the potential gain.

An example of how fast gains can be made are 100,000 shares purchased for 25 cents each before the company goes public. Six months later, the company is listed, and the 100,000 shares now are worth $2 each. If the company is well managed, the price keeps going up, and the stock may go to $20 or more per share. There are years when our $25,000 has gone to a million in less than a year.

It is not gambling if you know what you’re doing. It is gambling if you’re just throwing money into a deal and praying.

Great opportunities are not seen with your eyes. They are seen with your mind. Most people never get wealthy simply because they are not trained financially to recognize opportunities right in front of them.

Most people never win because they are too afraid to fail. When we are in school we learn that mistakes are bad. If you fail an exam once it can screw you up for the rest of your academic life.

Yet if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk. The same is true for learning to ride a bike. I still have scars on my knees, but today I can ride a bike without thinking. The same is true for getting rich. Unfortunately, the main reason most people are not rich is because they are terrified of losing. Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.

There are two different kinds of investor:

  1. Buys packaged investments such as a mutual fund, REIT, a stock or bond.
  2. Assembles their own investments

To be the second type of investor you need these 3 skills.

  1. Find an opportunity that everyone else missed - such as buying a rundown house that other people would avoid.
  2. Raise money - there are other ways of raising capital without having to go to a bank.
  3. Organize smart people - hire people more intelligent than you are. At least better at a particular skill than you are.

Work to Learn Don’t Work for Money

Job security meant everything to my educated dad. Learning meant everything to my rich dad.

I am constantly shocked at how little talented people earn. I have met brilliant, highly educated people who earn less than $20,000 a year.

School and the traditional advice is always to specialise. It reminds me of this quote:

“You learn more and more about less and less until you know absolutely everything about nothing.” - Nicholas Butler

Warren Buffet and Charlie Munger always say it is good to know a little about a lot of different subjects. They are constantly reading and building up different mental models in their heads.

He often admitted that schools reward people who study more and more about less and less. Rich dad encouraged me to do exactly the opposite. “You want to know a little about a lot” was his suggestion.

Job is an acronym for “Just Over Broke.”

There are very few salaried jobs in the world that can make you wealthy. A company is only going to pay you enough to keep you working there.

Workers work hard enough to not be fired, and owners pay just enough so that workers won’t quit.

I know my educated dad looked forward to his pay raise every year, and every year he was disappointed.

Over my career I have made my employers millions, however my pay rises and bonuses were always disappointing.

The question I often ask people is, “Where is this daily activity taking you?” Just like the little hamster, I wonder if people look at where their hard work is taking them. What does the future hold?

If you continue doing your current job for another 5 years is it going to get you closer to where you want to be in life?

Unions exist to protect employees that have very specialised skills. Pilots and train drivers need unions because they have very specialised skillset that is useless outside of those areas.

The world is filled with talented poor people. All too often, they’re poor or struggle financially or earn less than they are capable of, not because of what they know, but because of what they do not know.

We argued often, but I know he never agreed that overspecialization is what caused the need for union protection. He never understood that the more specialized you become, the more you are trapped and dependent on that specialty.

Today, it is considered smart. Since people will skip from company to company rather than seek greater specialization in skills, why not seek to learn more than to earn? In the short term, it may earn you less, but it will pay dividends in the long term.

If you have to work for someone else because you haven’t built up your asset column yet then work somewhere to learn rather than to earn.

The most important specialized skills are sales and marketing.

It is like professional athletes who suddenly are injured or are too old to play. Their once high-paying position is gone, and they have limited skills to fall back on.

Rich dad encouraged Mike and me to know a little about a lot.

In addition to being good learners, sellers, and marketers, we need to be good teachers as well as good students. To be truly rich, we need to be able to give as well as to receive.

Teaching was one of their ways of giving. The more they gave, the more they received. One glaring difference was in the giving of money. My rich dad gave lots of money away. He gave to his church, to charities, and to his foundation. He knew that to receive money, you had to give money. Giving money is the secret to most great wealthy families.

Overcoming Obstacles

You need to overcome these obstacles in order to get rich.

  1. Fear
  2. Cynicism
  3. Laziness
  4. Bad habits
  5. Arrogance

Overcoming Fear

The primary difference between a rich person and a poor person is how they manage fear.

If you hate risk and worry, start early.

It is easier to get rich if you start investing in your 20s than it is in your 30s. That is the power of compound interest.

He constantly told Mike and me that the greatest reason for lack of financial success was because most people played it too safe. “People are so afraid of losing that they lose” were his words.

“Winning means being unafraid to lose.” - Fran Tarkenton (NFL quarterback)

So for most people, the reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich.

Most people dream of being rich, but are terrified of losing money. So they never get to heaven.

Texans don’t bury their failures. They get inspired by them. They take their failures and turn them into rallying cries. Failure inspires Texans to become winners. But that formula is not just the formula for Texans. It is the formula for all winners.

Failure inspires winners. Failure defeats losers.

I like to quote John D. Rockefeller, who said, “I always tried to turn every disaster into an opportunity.”

Financially, they play life too safe and too small. They buy big houses and big cars, but not big investments. The main reason that over 90 percent of the American public struggles financially is because they play not to lose. They don’t play to win.

Most have lots of cash in CDs, low-yield bonds, mutual funds that can be traded within a mutual-fund family, and a few individual stocks. It is a safe and sensible portfolio. But it is not a winning portfolio. It is a portfolio of someone playing not to lose.

The rich take bigger bets but win big as a result.

Overcoming Cynicism

As I stated earlier, the cynic is really a little chicken. We all get a little chicken when fear and doubt cloud our thoughts.

These words of doubt often get so loud that we fail to act.

Most people are poor because, when it comes to investing, the world is filled with Chicken Littles running around yelling, “The sky is falling! The sky is falling!”

But a savvy investor knows that the seemingly worst of times is actually the best of times to make money.

When everyone else is selling and the market is seemingly at rock bottom this is the best time to buy. If you still believe in the companies you are investing in then everything is suddenly on sale.

The real world is simply waiting for you to get rich. Only a person’s doubts keep them poor.

That is the thought pattern that keeps most people poor. They criticize instead of analyze.

Overcoming Laziness

Today, I often meet people who are too busy to take care of their wealth. And there are people too busy to take care of their health. The cause is the same. They’re busy, and they stay busy as a way of avoiding something they do not want to face.

That’s the most common form of laziness: laziness by staying busy.

People are busy at their day job and use it as an excuse not try and build their wealth.

Rich dad believed that the words “I can’t afford it” shut down your brain. “How can I afford it?” opens up possibilities, excitement, and dreams.

When I decided to exit the Rat Race, it was simply a question of “How can I afford to never work again?” And my mind began to kick out answers and solutions.

Do what you feel in your heart to be right - for you’ll be criticized anyway. You’ll be damned if you do, and damned if you don’t.

Overcoming Bad Habits

Our lives are a reflection of our habits more than our education.

Robert would pay himself first by investing his money in buying assets before he paid people he owed. He still paid his taxes and creditors but he did it by finding ways to earn more money.

So you see, after paying myself, the pressure to pay my taxes and the other creditors is so great that it forces me to seek other forms of income. The pressure to pay becomes my motivation. I’ve worked extra jobs, started other companies, traded in the stock market, anything just to make sure those guys don’t start yelling at me.

I liked what rich dad was saying. “So if I pay myself first, I get financially stronger, mentally and fiscally.” Rich dad nodded. “And if I pay myself last, or not at all, I get weaker. So people like bosses, managers, tax collectors, bill collectors, and landlords push me around all my life - just because I don’t have good money habits.”

Overcoming Arrogance

What I know makes me money. What I don’t know loses me money.

There are many people in the world of money, finances, and investments who have absolutely no idea what they’re talking about.

When you know you are ignorant in a subject, start educating yourself by finding an expert in the field or a book on the subject.

Getting Started

There is gold everywhere. Most people are not trained to see it.

Our culture has educated us to believe that the love of money is the root of all evil. Education has told us how to learn a professions so we can work for money but not how to make money work for us.

The message is still to work hard, earn money, and spend it, and when we run short, we can always borrow more. Unfortunately, 90 percent of the Western world subscribes to the above dogma, simply because it’s easier to find a job and work for money.

1. Find a reason greater than reality: the power of spirit

A reason or a purpose is a combination of “wants” and “don’t wants.” When people ask me what my reason for wanting to be rich is, I tell them that it is a combination of deep emotional “wants” and “don’t wants.”

I don’t want to work all my life. I don’t want what my parents aspired for, which was job security and a house in the suburbs. I don’t like being an employee. I hated that my dad always missed my football games because he was so busy working on his career. I hated it when my dad worked hard all his life and the government took most of what he worked for at his death. He could not even pass on what he worked so hard for when he died. The rich don’t do that. They work hard and pass it on to their children.

Now the “wants.” I want to be free to travel the world and live in the lifestyle I love. I want to be young when I do this. I want to simply be free. I want control over my time and my life. I want money to work for me.


2. Make daily choices: the power of choice

Financially, with every dollar we get in our hands, we hold the power to choose our future: to be rich, poor, or middle class. Our spending habits reflect who we are. Poor people simply have poor spending habits.

“I make some money, then I’ll think about my future.” “My husband/wife handles the finances.” The problem with those statements is that they rob the person who chooses to think such thoughts of two things: One is time, which is your most precious asset. The second is learning. Having no money should not be an excuse to not learn. But that is a choice we all make daily: the choice of what we do with our time, our money, and what we put in our heads. That is the power of choice. All of us have choice. I just choose to be rich, and I make that choice every day.

Invest first in education. In reality, the only real asset you have is your mind, the most powerful tool we have dominion over.

Most people simply buy investments rather than first investing in learning about investing.

There is nothing wrong with buying index funds but it isn’t going to give you the returns to make you rich. Warren Buffet goes deeply into any company he invests in and doesn’t invest in anything he doesn’t understand.

The only way I can access their vast mental power is to be humble enough to read or listen to what they have to say. Arrogant or critical people are often people with low self-esteem who are afraid of taking risks. That’s because, if you learn something new, you are then required to make mistakes in order to fully understand what you have learned.

There are so many “intelligent” people who argue or defend when a new idea clashes with the way they think. In this case, their so-called intelligence combined with arrogance equals ignorance.

Listening is more important than talking. If that were not true, God would not have given us two ears and only one mouth. Too many people think with their mouth instead of listening in order to absorb new ideas and possibilities. They argue instead of asking questions.

3. Choose friends carefully: the power of association

I’ve noticed that my friends with money talk about money. They don’t do it to brag. They’re interested in the subject. So I learn from them, and they learn from me.

The three of them report the same phenomenon: Their friends who have no money have never come to them to ask them how they did it. But they do come asking for one of two things, or both: a loan, or a job.

One expert will say the market is going to crash, and the other will say it’s going to boom. If you’re smart, you listen to both. Keep your mind open, because both have valid points.

I would say that one of the hardest things about wealth-building is to be true to yourself and to be willing to not go along with the crowd.

If a great deal is on the front page, it’s too late in most instances.

If everyone is talking about it, it is already too late. Bitcoin didn’t make the news until it was at its height just before it dropped.

Smart investors don’t time the markets. If they miss a wave, they search for the next one and get themselves in position.

This is why dollar cost averaging (investing periodically) is usually better than trying to time the markets.

4. Master a formula and then learn a new one: the power of learning quickly

If you’re tired of what you’re doing, or you’re not making enough, it’s simply a case of changing the formula via which you make money.

In today’s fast-changing world, it’s not so much what you know anymore that counts, because often what you know is old. It is how fast you learn. That skill is priceless.

Working hard for money is an old formula born in the day of cavemen.

5. Pay yourself first: the power of self-discipline

It is the lack of self-discipline that causes most lottery winners to go broke soon after winning millions.

I would venture to say that personal self-discipline is the number-one delineating factor between the rich, the poor, and the middle class.

People who lack internal fortitude often become victims of those who have self-discipline.

The three most important management skills necessary to start your own business are management of:

  1. Cash flow
  2. People
  3. Personal time

People who pay themselves first: Pays themselves first

The individuals who pay themselves first. Each month, they allocate money to their asset column before they pay their monthly expenses.

People who pay everyone else first: Pays everyone else first

I don’t like consumer debt. I actually have liabilities that are higher than 99 percent of the population, but I don’t pay for them. Other people pay for my liabilities. They’re called tenants.

When I occasionally come up short, I still pay myself first. I let the creditors and even the government scream. I like it when they get tough. Why? Because those guys do me a favor. They inspire me to go out and create more money. So I pay myself first, invest the money, and let the creditors yell. I generally pay them right away anyway.

To successfully pay yourself first, keep the following in mind:

  1. Don’t get into large debt positions that you have to pay for. Keep your expenses low. Build up assets first. Then buy the big house or nice car. Being stuck in the Rat Race is not intelligent.
  2. When you come up short, let the pressure build and don’t dip into your savings or investments. Use the pressure to inspire your financial genius to come up with new ways of making more money, and then pay your bills. You will have increased your ability to make more money as well as your financial intelligence.

Poor people have poor habits. A common bad habit is innocently called “dipping into savings.” The rich know that savings are only used to create more money, not to pay bills.

6. Pay your brokers well: the power of good advice

Today, I have expensive attorneys, accountants, real estate brokers, and stockbrokers. Why? Because if, and I do mean if, the people are professionals, their services should make you money. And the more money they make, the more money I make.

People who sell their house on their own must not value their time much.

Naval Ravikant, said he set an aspirational hourly wage of $5,000 an hour. Anything less than that then he would get someone else to do it as his time was worth too much.

My aspirational hourly wage is not that high but I won’t go out of my way to return something that only cost me a few dollars.

What I find funny is that so many poor and middle-class people insist on tipping restaurant help 15 to 20 percent, even for bad service, but complain about paying a broker three to seven percent.

They enjoy tipping people in the expense column and stiffing people in the asset column.

Many middle managers remain middle managers, failing to get promoted, because they know how to work with people below them, but not with people above them.

The real skill is to manage and reward the people who are smarter than you in some technical area. That is why companies have a board of directors. You should have one too. That is financial intelligence.

7. Be an Indian giver: the power of getting something for nothing

The sophisticated investor’s first question is: “How fast do I get my money back?”

Frequently, my broker calls and recommends I move a sizable amount of money into the stock of a company that he feels is just about to make a move that will add value to the stock, like announcing a new product. I will move my money in for a week to a month while the stock moves up. Then I pull my initial dollar amount out, and stop worrying about the fluctuations of the market, because my initial money is back and ready to work on another asset.

So my money goes in, and then it comes out, and I own an asset that was technically free.

I did this when I first invested in crypto. I put money in and then took it out leaving the profits. The profits then went on to make me more money with no risk to my initial capital.

So wise investors must look at more than ROI. They look at the assets they get for free once they get their money back.

8. Use assets to buy luxuries: the power of focus

As I said earlier, if a person cannot master the power of self-discipline, it is best not to try to get rich. I say this because, although the process of developing cash flow from an asset column is easy in theory, what’s hard is the mental fortitude to direct money to the correct use.

As a habit, I use my desire to consume to inspire and motivate my financial genius to invest.

If your financial intelligence is low, money will run all over you. It will be smarter than you. If money is smarter than you, you will work for it all your life.

9. Choose heroes: the power of myth

By having heroes, we tap into a tremendous source of raw genius.

Find people who are doing what you want to do who make it look easy and learn from them.

10. Teach and you shall receive: the power of giving

If you want something, you first need to give,” he would always say.

Whenever you feel short or in need of something, give what you want first and it will come back in buckets.

My rich dad would often say, “Poor people are more greedy than rich people.”

“Teach, and you shall receive.” I have found that the more I teach those who want to learn, the more I learn.

In retrospect, it was their generosity with what they knew that made them smarter.

You only need to be generous with what you have.

Some To Do’s

Stop doing what you’re doing

The definition of insanity is doing the same thing over and over and expecting a different result.

You have got where you are from doing what you are currently doing. If you want to get wealthy and improve other areas of your life you are going to need to do something different.

Look for new ideas

The 16 Percent Solution by Joel Moskowitz. I bought the book and read it and the next Thursday, I did exactly as the book said. Most people do not take action, or they let someone talk them out of whatever new formula they are studying.

Find someone who has done what you want to do.

Find a mentor who has done what you want to do and if you can take them to lunch and learn from them. Failing that many of the greats have written books explaining how they do what they do. Learn from them.

Take classes, read, and attend seminars

I am wealthy and free from needing a job simply because of the courses I took.

Make lots of offers

The game of buying and selling is fun. Keep that in mind. It’s fun and only a game. Make offers. Someone might say yes.

Jog, walk, or drive a certain area once a month for 10 minutes

I will jog a certain neighborhood for a year and look for change. For there to be profit in a deal, there must be two elements: a bargain and change.

Shop for bargains in all markets

When the supermarket has a sale, say on toilet paper, the consumer runs in and stocks up. But when the housing or stock market has a sale, most often called a crash or correction, the same consumer often runs away from it.

Profits are made in the buying, not in the selling.

Look in the right places

My neighbor thought that the $500 for a real estate investment class was too expensive. He said he could not afford the money, or the time. So he waits for the price to go up.

Look for people who want to buy first. Then look for someone who wants to sell

Buy the pie, and cut it in pieces. Most people look for what they can afford, so they look too small. They buy only a piece of the pie, so they end up paying more for less. Small thinkers don’t get the big breaks. If you want to get richer, think big.

Think big

When my company was in the market for computers, I called several friends and asked them if they were ready to buy also. We then went to different dealers and negotiated a great deal because we wanted to buy so many. I have done the same with stocks. Small people remain small because they think small, act alone, or don’t act all.

Learn from history

All the big companies on the stock exchange started out as small companies.

Action always beats inaction

Most people stay poor because they are too afraid to take a chance.

Final Thoughts

Money is only an idea. If you want more money, simply change your thinking.

Passive income, in most cases, is income derived from real estate investments. Portfolio income is income derived from paper assets such as stocks and bonds.

The least-taxed income is passive income. That is another reason why you want your money working hard for you.

If you want to be rich, you must know what kind of income to work hard for, how to keep it, and how to protect it from loss. That is the key to great wealth.

If you do not understand the differences in those three incomes and do not learn the skills on how to acquire and protect those incomes, you will probably spend your life earning less than you could and working harder than you should.

Thich Naht Hahn: “The path is the goal.”

Your path is not your profession, how much money you make, your title, or your successes and failures.

To me, this is the shortcoming of traditional education. Millions of people leave school, only to be trapped in jobs they do not like. They know something is missing in life. Many people are also trapped financially, earning just enough to survive, wanting to earn more but not knowing what to do.

You can buy the book Rich Dad, Poor Dad on Amazon. Robert mentions his game CASHFLOW quite a bit in the book as way to learn how to get rich through playing a game.

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