Introduction
“The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left.” This quote is taken from one of the greatest book on finance “RICH DAD POOR DAD” by Robert Kiyosaki. Rich Dad and Poor Dad is a personal finance and self-help book that contrasts the philosophies and life lessons of the Author’s Biological father (called “Poor Dad”) and his childhood friend’s father (called “Rich Dad”).
Key Points from the book
1) Mindset shift
Robert Kiyosaki emphasizes the importance of adopting a mindset that is focused on finance and wants to grow in life. The traditional way of education is not in-off for financial literacy as it does not teach anything regarding managing finances and how to create wealth.
"The poor and the middle class work for money. The rich have money work for them."
2) Assets vs. Liabilities
Kiyosaki introduces us to the Assets and Liabilities and emphasizes the importance of Assets in creating wealth. For creating wealth one needs to have assets that generate income not liabilities that drain resources. He encourages readers to have long-term investment plans.
"The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant."
3) Importance of Financial Education
To be Financially independent is important and it can be achieved only through financial literacy and education. One must know where to invest and how much to invest to get future returns. For this Kiyosaki, stresses the significance of money and finance for investment, management, and entrepreneurship.
"The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left."
4) Entrepreneurship
The book also promotes the idea of entrepreneurship and creating multiple streams of income. One must have multiple sources of income so that one can meet uncertainties very easily. Kiyosaki also argues that relying only on a Job is no so a good idea as it limits one’s financial potential. A person should explore multiple ways of generating income.
"The moment you make passive income and portfolio income a part of your life, your life will change. Those words will become flesh."
5) Taking Risk
Taking calculated risk is important as risk is directly proportionate to returns. By taking risks one can open growth opportunities. Kiyosaki argues that readers to overcome the fear of failure and view mistakes as valuable lessons.