I know last week I sent you a reminder of our immortality and this gift we call life but I’ve just finished another book and this one happens to be the #1 personal finance book of all time! –Rich Dad Poor Dad, by Robert Kiyosaki. Now I know money doesn’t create happiness – happiness must be created within first – BUT in this modern world, money can create opportunity, give us a sense of freedom and allow us to do the things that make us happy. Plus, the more money you have the more money you can give back and help others! And that’s all I want- my purpose here is to help others become holistically happy and healthy in all areas of life and I know if I also financially educate myself, I can touch more lives and help more people and do what I was put here to do.
So let’s get into the Rich Dad Poor Dad summary! There’s a lot of golden nuggets in here and tonnes of valuable info, so I will be breaking this into parts. You ready?…
The book is about Robert Kiyosaki and his two dads – his real dad (poor dad) and the father of his best friend (rich dad) – and the way both of them have shaped his views on money and investing. The first edition came out in 1997, now over 20 years later I’m listening to the updated edition of this best seller. This book is great for setting your mindset up for financial success and it also teaches through experience with some exercises at the end of each chapter. Kiyosaki also encourages you to find a ‘study buddy’ / someone you can discuss these ideas with. I think having an accountability partner is always a good in anything you wish to endeavour!
Let’s look at some of the main ideas investing legend- Robert Kiyosaki, talks about in the book….
Kiyosaki describes wealth as “a person’s ability to survive so many numbers of days forward”. Meaning, if you stopped working today, how long could you survive for?
I’ll elaborate on The Five Big Ideas addressed in the book now and in the coming newsletters. Let’s look at a couple of those big ideas today…
1. Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets. An asset puts money in your pocket. A liability takes money out of your pocket. You must know the difference between an asset and a liability, and buy assets. Once you understand the difference between assets and liabilities, concentrate your efforts on buying income-generating assets. According to Kiyosaki, real assets fall into the following categories: Stocks, Bonds, Income-generating real estate, Notes (IOUs), Royalties from intellectual property such as music, scripts, and patents and anything else that has value, produces income or appreciates, and has a ready market. He says that “many financial problems are caused by trying to keep up with the Joneses”. “The rich buy assets. The poor only have expenses. The middle class buy liabilities they think are assets.” For example, a new car loses nearly 25 percent of the price you pay for it the moment you drive it off the lot. Keep expenses low, reduce liabilities, and diligently build a base of solid assets. He also states that “the rich focus on their asset columns while everyone else focuses on their income statements” and that another “important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.” – A true luxury is a reward for investing in and developing a real asset. He suggests to “start minding your own business. Keep your daytime job, but start buying real assets, not liabilities.”
You know I’m all about mindset, so I was thrilled to hear Robert talk about mindset and the philosophy behind making money. So, the second idea I’ll summarise today is:
2. The single most powerful asset we all have is our mind. Rich dad, in the book, believed that the words ‘I can’t afford it’ shut down your brain. ‘How can I afford it?’ opens up possibilities, excitement, and dreams, so changing the linguistics of your thoughts and the words that come out of your mouth alone can set you up for success! (NLP 101!) Kiyosaki also stresses the importance of educating yourself (you know, on the stuff they don’t teach you in school). He says “most people simply buy investments rather than first investing in learning about investing” and that “money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth.” Kiyosaki reminds us that financial IQ is made up of knowledge from four broad areas of expertise: Accounting, investing, understanding markets and the law. “Illiteracy, both in words and numbers, is the foundation of financial struggle and the single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.” Kiyosaki says that people’s lives are forever controlled by two emotions: fear and greed and the reason why most people don’t win financially is because the pain of losing money is far greater than the joy of being rich. The fear of being different prevents most people from seeking new ways to solve their problems. “Failure inspires winners. Failure defeats losers.”
Wow, incredible stuff so far huh! What if we all learnt from the lessons in this book? Of course, this is just a fraction of what’s in there and I highly recommend you go out and buy it in whatever form you prefer – hard copy or audio – and if you’ve never heard of Robert Kiyosaki, type him into YouTube and watch a talk or two, he offers so much value in everything he does and just wants to give back! A truly inspiring man and a legend in his field.