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Rich Dad, Poor Dad was Robert Kiyosaki's first best-selling book. In it, he advocates financial independence by means of investing, real estate, owning businesses, and the use of finance protection tactics.

Rich Dad, Poor Dad is written in what is meant to be an entertaining anecdotal manner to make finances interesting. The most central element stressed by Kiyosaki is the advocacy of owning the system or means of production, rather than being an employee of someone else.

Summary

The book takes the form of a story. It is largely based on Kiyosaki's own upbringing and education in Hawaii, although the degree of fictionalization is disputed. Because of the heavy use of allegory, some readers believe that Kiyosaki created Rich Dad as an author surrogate (a literary device), discussed further in the criticism section below.

The Poor Dad in the story is based on Kiyosaki's real father, a PhD holder and graduate of Stanford, Chicago, and Northwestern Universities, all on full scholarship, who was the head of the Education department of the state of Hawaii. In the book, he is greatly respected until he decides, late in his career, to take a stand on principle against the governor of Hawaii. This leads directly to Poor Dad losing his job, and his inability to find comparable work ever again. Because he has never learned to handle money, instead depending on the government (an employer) for support, he dies in severe debt.

In contrast to this character is Rich Dad, his best friend Michael's father. Rich Dad dropped out in 8th grade, but became a self-made multi-millionaire regardless. He teaches Kiyosaki and Michael a variety of financial lessons, and insists that the boys learn to make money work for them to avoid spending their whole lives working for money, like Rich Dad's employees, as well as Poor Dad, and indeed most of the people in the world.

The book highlights the different attitudes to money, work and life of these two men, and how they in turn influenced key decisions in Kiyosaki's life.

Topics

Among some of the book's topics are:
  • the value of financial intelligence
  • that corporations spend first, then pay taxes, while individuals must pay taxes first
  • that corporations are artificial entities that anyone can use, but the poor usually don't know how

Kiyosaki says the rich think differently in how they define simple words like assets and wealth, and how they fund their luxuries. He explains that he defines an asset as any item which produces income (such as rental property, stocks or bonds), and a liability as anything which produces expense (such as one's own home and car).

No one disputes that the rich buy "income-producing assets". Kiyosaki argues that the poor buy worthless items that they think are assets, which clearly do not earn anything, and may have no market value.

According to Kiyosaki, wealth is measured as the number of days the income from your assets will sustain you, and financial independence is achieved when your monthly income from assets exceeds your monthly expenses.

Quotations

  • "A true luxury is a reward for investing in and developing a real asset."
  • "The only way to get out of the "Rat Race" is to prove your proficiency at both accounting and investing, arguably two of the most difficult subjects to master."
  • "I have mentioned before that financial intelligence is a synergy of accounting, investing, marketing and law. Combine those four technical skills and making money with money is easier."
  • “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.’”
  • “Many of today's youth have credit cards before they leave high school, yet they have never had a course in money or how to invest it, let alone understand how compound interest works on credit cards.”

Author's description of his fathers

Kiyosaki writes in the introduction to the book:

"I had two fathers, a rich one and a poor one. One was highly educated and intelligent; he had a Ph.D and completed four years of undergraduate work in less than two years. He then went on to Stanford University, the University of Chicago, and Northwestern University to do his advance studies, all on full financial scholarships. The other father never finished eighth grade.

Both men were successful in their careers, working hard all their lives. Yet one struggled financially all his life. The other would become one of the richest men in Hawaii. One died leaving tens of millions of dollars to his family, charities and his church. The other left bills to be paid."

Reviews

Criticism

Rich Dad, Poor Dad has been criticized for having almost no concrete advice and too many anecdotal lessons. There are readers who have reported finishing the book feeling motivated and ready to begin "escaping the rat race," only to realize soon after that they have been given no idea how to proceed. It has also been said that discerning fact from fiction or anecdote is difficult in the book.

Some advice given in the book is thought to be poor or even dangerous by other investors. For example, Kiyosaki advocates focusing on a few "good investments" rather than diversifying, and "going for broke". He also downplays the importance of traditional education, and claims that there is no correlation between increased specialization and increased income. He advocates continual learning in a variety of fields. Some consider this "jack-of-all-trades" strategy to be unreliable.

Some of the claims Kiyosaki makes in Rich Dad, Poor Dad about his accomplishments appear to be exaggerations, fabrications or misdirection.

People have speculated on the identity of his "rich dad" and whether this individual even existed, reasoning that such a man, whom Kiyosaki describes as "one of the richest men in the Islands", and his family who carry on his tradition, would have been very well known in as small a state as Hawaii. In the February 2003 issue of SmartMoney magazine, Kiyosaki backed off his claim that his "rich dad" was a real person, instead stating “Is Harry Potter real? Why don’t you let Rich Dad be a myth, like Harry Potter?”

Chapters

  • There is a Need
  • Chapter One - Rich Dad, Poor Dad
  • Chapter Two - The Rich Don't Work for Money
  • Chapter Three - Why Teach Financial Literacy?
  • Chapter Four - Mind Your Own Business
  • Chapter Five - The History of Taxes and the Power of Corporations
  • Chapter Six - The Rich Invent Money
  • Chapter Seven - Work to Learn - Don't Work for Money
  • Chapter Eight - Overcoming Obstacles
  • Chapter Nine - Getting Started
  • Chapter Ten - Still Want More?

Reference

External links

Self help books

 

This article is licensed under the GNU Free Documentation License. It uses material from the "Rich Dad, Poor Dad".

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