Summary
Written by Robert Kiyosaki, ‘Rich Dad, Poor Dad’ is a story that explores one man’s journey from ten cents an hour to financial independence. Unlike many of other children, Kiyosaki had two fathers- the biological poor father and the ‘financial icon’ father.
The author compares the approaches for success that each of the two fathers taught him. He compares their financial intelligence and business skills; qualities that his real father, the poor but highly educated man, lacked. In Chapter 1, Kiyosaki tells of his early life with his friend, Mike, as boys growing up in Hawaii. Fortunately, meeting mikes father changed Kiyosaki’s destiny for he learned of priceless money principles that he applies in life even today.
Mike’s father employed the author and Mike in a grocery store where they worked for peanuts. Unsatisfied with the pay, Kiyosaki asked for a pay rise but received a pay cut instead. As the two boys almost ran out of patience for a pay increase, they managed to meet their boss (Mike’s father) only to accept a moral lesson and forgo a pay increase. They both opted to learn the moral of the lesson despite the rich dad giving them a significant pay increase as an option. They learnt the important lesson that, the rich do not work for money; no, money works for them by employing other people to work for them
In Chapter 2, the author explains the importance of financial intelligence in achieving financial success. He argues that wealth lies in the ability to identify opportunities and utilize them. He compares the rich and the poor in terms of risk-taking, whereby the poor and the middle class prefer to play it safe and avoid risks.
He explains that investing in assets and minimizing one’s expenditure contributes to financial success. The poor on the other hand spend more than they can keep. In Chapter4, the author explains that for individuals to become financially sufficient, minding one’s own business is important. Focusing on nurturing one’s own businesses instead of the employer’s business contributes to financial independence.
Another important lesson described in the book is that taxation only affects the poor. The rich avoid heavy taxations through corporations, which offer tax exemptions and protection from litigation. This phenomenon offers an ideal way for the rich to protect their wealth.
The author also explains that self-confidence in business and financial literacy involving investments is more important than saving small sums of money monthly. The author also describes the importance of working to acquire skills instead of working for money.
Skills in accounting, market trends, and business laws enable the rich to achieve financial success. The author also describes the importance of education in business and describes the skills such as management skills that individuals need to achieve success. In addition, the author describes the obstacles including human traits that hinder financial success and offers the tips for expanding personal wealth.
Analysis
The author believes that for an individual to achieve financial success, he or she must strive to own his/her businesses instead of working for employers. He feels that the poor work hard for less while enriching the employers.
About financial literacy, the author stresses the importance of accounting and proper management of one’s expenditure as a way of achieving financial success. In addition, the author holds the opinions that individuals should invest more in solid assets and cut down liabilities to achieve financial prosperity.
Interestingly, the author depicts the poor dad as well-educated but lacking business skills showing that education is less important in achieving financial success. Later, in Chapter 6, he stresses the importance of education and training to enhance business and investment skills.
He also recommends that education make one a better investor coupled with increasing one’s financial intelligence. This contradicts the picture created by the author’s biological dad who was poor despite being highly educated. In addition, the author recommends that financial success can be achieved through employing intelligent and trained minds.
The idea that financial literacy leads to financial independence concurs with the story of the two dads. The poor dad is a highly educated professor who lacks financial literacy skills. As a result, he never makes it financially despite working hard while the rich dad, who was financially intelligent, invested in assets, undertook risks, and achieved great financial success. The poor dad emphasized on education as a way of achieving financial success. However, the rich dad groomed the author on business skills that turned out to be important in achieving financial success.
Reflection
In the story, the author explains that the rich do not work for money; instead, they hire intelligent minds to work for them. In my opinion, I think the rich also need to work to some extent particularly in managing workers and their investments.
However, I think the idea of minding one’s own business is a noble one. By investing in assets and businesses, I can become self-employed and avoid exploitative, unrewarding, unsatisfying jobs. In addition, financial literacy is an important lesson for professional individuals.
Understanding basic financial skills can help one create and grow wealth. However, the author did not come out clearly on how training or education helps an individual to develop financial intelligence.
Conclusion
Rich Dad Poor Dad provides vital lessons and tips to the reader on attaining financial success without much struggle. In addition, it outlines the necessity of financial literacy as a vital tool of success. However, it fails to accord importance to training or education. In a scale of 1-10, I would rate it eight.