June 23, 2024

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Rich Dad, Poor Dad Principles by Robert Kiyosaki

Rich Dad Poor Dad is a book about the author Robert Kiyosaki’s path to accumulating wealth. The book is built upon the advice he received from his well educated natural father, whom he refers to as ‘poor dad’ and that of his friend’s father who had a much lower level of education but whom he terms as ‘rich dad.’ Both dads had very different perspectives on how one is to achieve success and the book contrasts the two approaches eventually making it clear to the reader the superiority of the rich dad’s money making principles.

His natural father’s approach looked at education as the key to success. Interestingly, his father is portrayed at being more concerned about education than money in the belief that more education will eventually lead to more money. He likens his natural dad’s approach to that held by many parents as the societal standard for financial security – send the children to school and college to get a good education and thereafter a decent job in a stable company. His natural father’s idea of financial success was built around what a job offered – stability, promotions and social security. Robert Kiyosaki calls this being confined to a Rat Trap – his natural dad seemed to work continuously and relentlessly but never moved forward financially.

His friend’s father (rich dad) was much less educated. However, he is the one who provided the practical answers on what it takes to make the transition from the Rat Trap to wealth. ‘Rich Dad’ held on to the tenet that education only produced people for employment and not people who could wisely manage their own finances. Robert Kiyosaki learnt from Rich Dad that the question in the mind of any person who wanted to be in control of his financial goals should always be how to make more money.

Robert quickly realized that ‘Rich Dad’ was very keen on investments. In the book Rich Dad Poor Dad, Robert Kiyosaki states that an investor’s emphasis is on accruing assets such as rental housing estates, bonds and stocks while staying clear of liabilities like cars, residences or boats. This is because assets create income while liabilities eat into this income. It is only once one clearly differentiates between their assets and liabilities that they will then be able to form a stable financial foundation.

Another key principle that runs throughout the book is on the need to be financially literate if one is to become rich. Rich Dad Poor Dad asserts that financial literacy will help you accelerate your financial growth by equipping you with the knowledge needed to make wise financial choices even before you get a hold of the money. If you are not smart in money matters, it will be difficult for you to make sound financial decisions even when presented with a huge amount of money thus causing you to lose it just as quickly as you earned it.