Make Your Money Work For You - Rich Dad Poor Dad by Robert Kiyosaki

 

Rich Dad Poor Dad by Robert Kiyosaki, which was initially published in 1997, immediately gained popularity among those who are interested in investment, money, and the world economy. The book has become the best-selling personal finance book of all time and has been translated into several languages.

The author’s father, a highly educated but struggling man, was nothing compared to the rich dad (the father of his childhood best friend). The independent-wealthy level of society is represented by the rich dad, who deliberately exploits corporate power and taps into their wealth via tax and accounting skills.

The Rich Don’t Work for Money

The majority of the rich do work very hard, but they approach it differently than other people. People who are wealthy or who aspire to be wealthy work hard and continue to learn how to make their money work for them. . As according to Rich Dad, “The poor and middle-class work for money. The rich have money to work for them.”

According to the author, fear and greed lead to ignorance and poverty, the poor and middle-class work for money, and it’s important to use one’s emotions rather than reasoning with them. He also emphasizes how opportunities in life come and go, but the rich are able to transform them into gold bars by being quick to identify them.

Others miss out on these chances because they are preoccupied with their pursuit of money and safety. A regular job is only a temporary fix for the long-term issue of creating wealth and financial freedom.

Why Teach Money Management?

An asset is something that has value, generates revenue or increases in value, and has a market where it is simple to buy and sell the asset:

• Assets generate revenue
• Assets gain in value
• Assets do both.

Ken Kiyosaki claims in his book Rich Dad Poor Dad that liabilities cost you money because of the expenses related to them. A residential dwelling isn’t by definition an asset until its value increases sufficiently to cover the costs of ownership. Renting out real estate is considered an asset since it may produce enough passive income to cover the costs of maintaining and funding the property.

Mind Your Own Business

Immediately after paying off your obligations, begin purchasing assets that will provide revenue. Spend your time rather than your money and put as much of it as you can into assets to maintain a solid financial position. People work all their lives in someone else’s business while making other people wealthy.

This chapter also exposes the author’s preferred investment types: stocks and real estate. He claims that when investing in real estate, he starts small, trades his minor properties for larger ones, and then delays paying taxes on capital gains through one IRS mechanism.

The History of Taxes and the Power of Corporations

The author of Rich Dad Poor Dad explains how the rich use company structures and the tax system to reduce their burden.

Business owners with a corporate structure:

1. Earn
2. Spend
3. Pay taxes

Employees who work for corporations:

1. Earn
2. Pay taxes
3. Spend

Notice that employees who work for somebody else spend their money post-tax, while business owners earn and spend before paying tax.

The Rich Invent Money

Inventing money means finding opportunities or deals that other people don’t have the skill, knowledge, resources, or contacts for.

Each person is born with talent, but that talent is suppressed due to self-doubt and fear. He claims that those who are daring and adventurous are more likely to succeed than those who are intelligent and educated. Even with plenty of money, some never advance financially because they are missing out on possibilities.

According to the author, there are two main types of investors: those who opt for packaged investments and those who customize investments to meet their goals. The author encourages readers to employ smarter individuals than them since smart people expand their own knowledge bases by drawing on the expertise of others.

Work to Learn — Don’t Work for Money

Poor Dad was intelligent, educated, and worked for money because he valued job security highly. Rich Dad became a millionaire by working to learn.

Kiyosaki joined the Marines after graduating from college and learned the essential business skills of leading and managing people. After serving, he overcame his fear of rejection to become one of Xerox’s top five salespeople. Then he left the corporate world to start his own business.

The author discusses management skills. According to him, employees must be able to handle cash flow, systems, and people. He adds selling and marketing expertise to that. He values verbal and written communication equally.

Overcoming Obstacles

The fear of losing money is one of the biggest obstacles people face on the path to becoming financially independent.

Fear

The fear of losing money is one of the biggest obstacles people face on the path to becoming financially independent.

According to Kiyosaki, he has never seen a wealthy person who has never lost money, but he has encountered many poor individuals who have never lost a dime because they’ve never invested.

Cynicism

When making an investment in real estate, it is simple to become caught up in the game of “What if?” Don’t let other people’s cynicism take hold of you. If not, you fear becoming inflexible and missing out on possibilities.

Laziness

It’s simple to mistake being busy with really getting things done that matter done. According to Rich Dad Poor Dad, those who are most busy tend to be the laziest. Successful real estate investors are proactive and prioritize their own needs before noticing the pull of the rat race.

Bad habits

It’s a type of reverse psychology, but taking care of yourself first makes you stronger financially, psychologically, and fiscally. You become driven by the fear of not being able to pay creditors when you develop the practice of paying yourself first. In turn, you begin looking for other forms of income like investment real estate.

Arrogance

Investors understand how to make money. However, the things they don’t know — and don’t even aware they don’t know — are what cost them money. When someone is extremely arrogant, they actually believe that what they don’t know doesn’t important.

Develop the habit of listening to other people, particularly when it comes to money and investment. When you learn you don’t know something, either educate yourself or seek out a specialist.

It takes a combination of effort and balance to overcome these five major obstacles to real estate success.

The author concludes by saying that it is healthy to be greedy, thus when presented with a choice, one should constantly think about what is best for them.

Getting Started

The environment in which we live contributes to some of this loss of vision and clarity. We learn early on to work hard for others, spend our earnings, and take out further loans if we run out of money.

Sadly, those who opt to fit in with the crowd never make the effort to cultivate their financial ability.

The ideal example is investing in real estate. The trained investor might easily identify four or five offers that make sense in a single day, whereas the average person may spend a week searching the market and come up empty-handed.

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