Rich Dad poor Dad Summary

If you were to stop working, imagine the following. How long can you live on your remaining savings? What I just asked you was a definition of wealth. Here is a man named Robert Kiyosaki, an American investor, businessman, author, motivational speaker and financial commentator who has become famous in recent years and has an estimated net worth of $80 million! Want to know something interesting? “Oh?” He didn’t grow up in a wealthy environment. In fact, his family was like most people who work but didn’t have the best financial education and often struggled with money. So how did Robert get rich today? Let’s take a look at Rich Dad Poor Dad Summary.

Robert Kiyosaki Background

Robert Kiyosaki was born in April 1947 in Hilo Hawaii. When he was nine years old, little Robert attended the same public school that rich people sent their children to, because his town was full of doctors, business owners, and bankers. Robert saw that the rich kids set themselves apart from him because his family couldn’t afford the latest toy collections and bicycles like they could.


One day Robert asked his father, who had a doctorate and graduated from several universities with excellent degrees, “Dad, can you tell me how to get rich?” Unfortunately, his father didn’t know the right answer because he was rich himself, so he replied, “Well, use your head, son.” “Stay in school, get good grades so you can get a secure job.” His real father is what will be called a “poor father“. He wasn’t poor at the time, in fact he was making a lot of money, but in the end this man’s financial life takes a turn for the worse.

Now little Robert has a friend named Mike, whose father would be labeled a “Rich Dad“. The latter begins to teach Robert and his son Mike about how to become truly rich. At this point, Rich Dad was not really rich, but soon became one of the richest men in Hawaii. So what did rich dad teach Robert? Rich Dad poured a strong financial foundation into the minds of these children that included many important principles. 

Robert learned from Rich Dad that the truth about the general population is that their lives are forever defined by two emotions, fear and greed, which keeps you stuck in a pattern of get up, go to work, pay the bills. Get up, go to work, pay the bills. Fear keeps them in this trap of work, make money, work, make money and hope that the fear will go away, no money.

Robert shared, Instead of facing the fear, they react emotionally instead of using their head in the book rich dad poor dad summary. The other emotion, desire, some call it greed, is a second reason why people also work for money. They desire money for the pleasure they think it might buy. But the pleasure that money brings is often short-lived and soon they need more money for more pleasure, more joy, more comfort, and more security.

You see that same fear and desire is what makes many people so fanatical about going to school for a better chance at a good paying job, but don’t be discouraged, an education and a job are important, but it won’t address that very fear.

To deal with that fear you need to learn the power of money, not be afraid of it. Unfortunately, this is not taught in most schools, and if you don’t learn it, you will become a slave to money. Ignorance about money can cause so much greed and so much fear that can lead you into the biggest trap in life, working all the time. Now, let’s learn the principals from the rich dad poor dad summary of the book.

Principles From The Book Rich Dad Poor Dad Summary

Principle 1: Buy assets Not Liabilities

Know the difference between an asset and a liability and know that you need to buy assets. If you want to be rich. This is all you really need to know and understand the most! You see, the rich acquire assets and the poor and middle class acquire liabilities, but sometimes they think they are assets. The main cause of financial struggle is simply not knowing the difference between an asset and a liability. “?” OH! Right. You don’t even know what an asset or liability is, do you? An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket. For example, let’s try the cash flow pattern of a normal person.

Cash Flow of a Normal Person

This person here earns his income through a job and as expenses he has things like food, clothing, entertainment and transportation. Unfortunately, he has no assets, but certainly he has liabilities that are constantly taking money out of his pocket because of things like mortgages, taxes, credit cards, loans, and believe it or not, the house. Now let’s take a look at how the cash flow pattern really works for the rich.

Cash Flow of The Rich Men

Instead of trying to make more money with their regular job as their only source of income, they buy and own assets that put money in their pockets as a form of passive income. Passive income is something that makes money without you having to trade your time for it, in other words, you would even make money while you sleep.

Examples of Assets

Businesses that do not require your presence, such as.

  • Stocks
  • Bonds mutual funds income producing real estate
  • Royalties
  • Bonds
  • Anything else that has value and generates income

Examples of Liabilities

  • Mortgages
  • Credit cards

As mentioned earlier, Poor Dad made quite a bit of money from his job, but his expenses always seemed to keep up with his income, which never allowed him to invest in assets. As a result, his liabilities like his mortgages and credit card debt grew larger over time. And that’s the mistake when income equals expenses and assets are less than liabilities, and that’s unfortunately what drove poor Dad into debt, even after he died.

On the other hand, the rich father’s personal financial report reflects the result of a life devoted to investing and minimizing liabilities so that he has income greater than expenses because assets are greater than liabilities. That’s practically why the rich keep getting richer!

Their wealth generates more than enough income to cover expenses, with the balance being reinvested in the wealth column. The wealth column continues to grow and so does income.

You see, both fathers worked hard, but they had opposing attitudes and thoughts. One father recommended studying hard to find a good company to work for. The other recommended studying hard so you could find a good company to buy. One father said the reason I am not rich is because I have children. The other said the reason I must be rich is because I have you children. One said when it comes to money, play it safe and don’t take chances. The other said learn to manage your risk. One said, I can’t afford it. The other said, how can I afford it? Although both men had great respect for education and learning, they disagreed on what they thought was important to learn. Now let’s learn the second principal of the book in rich dad poor dad summary.

Principle 2: The Power of Corporations

The rich should pay more taxes to take care of the less fortunate. Taxes punish the productive and support the unproductive. I suspect you’ve all heard the story about Robin Hood, you know, the guy who takes from the rich and gives to the poor? Inspired by that story, the poor and middle class invented taxes. The purpose is to create a more equal society where everyone is included.

The problem is that the rich are too smart for that and in the long run, instead of taking from the rich and giving to the poor, the effect is more to take from the middle class and give to the poor. Rich people are too smart for the system and they find all kinds of ways and vehicles to protect their hard earned money. One such vehicle is corporations. Corporations are good for two main things. First, they allow you to pay less in taxes. The number one expense of the average household is taxes.

It’s not uncommon for people to work for the government between January and May. People often pay up to 40-50 percent in taxes. People pay taxes before they get their salary, when they buy things, and even when they die!

Warren Buffett, the third richest man on the planet, is known to pay less in taxes than his secretary. What a corporation allows you to do is pay expenses before you pay taxes. You are also allowed to deduct VAT from sales, in the same amount as your purchases. This effectively allows you to buy things for up to 50% of the original price. For example, an expensive dinner with your girlfriend could be purchased through your company and be half the price of those without a company. Naaah, just kidding, don’t do that, that would be illegal because the dinner has nothing to do with your company.

If you get caught, at least don’t blame it on me. I never advised you to do it. The second thing corporations are good for is protecting yourself from personal lawsuits that could be devastating to your personal finances. With an LLC or a “Aktiebolag” in Swedish, you are protected from such risks and the downside is limited to your business, not your personal wallet.

Imagine that you are a store owner selling boating supplies. A group of Swedish Vikings raids your store and steals everything. Your oars, your best wood, and your super hot secretary. The secretary’s family decides to sue you for acting irresponsibly. Who in the world would announce free mead in front of their store in times of Viking invasions? You lose in court because of your carelessness, which would force you to file for personal bankruptcy if you didn’t have a business. But in this case, you did have one, and the lawsuit is limited to the business. Now let’s check what is the third principal of the book says in rich dad poor dad summary.

Principle 3: Stop Focusing On Your Income

Focus on your merits, study hard so you can get a good job with a great company. No, study hard so you can find great companies to buy. Robert Kiyosaki ‘s poor father had a PhD, but always struggled with money. His rich dad didn’t even finish high school and yet he had an abundance. His PhD dad studied for so many years just to get a few hundred more in salary every month. On the other hand, his rich dad used those years to accumulate a fortune. The rich focus on their wealth column while everyone else focuses on their income column. I think this is an interesting topic. If the average person took a 2% pay cut, he would be furious.

On the other hand, if he loses 2% in the stock market (which is his wealth), he shrugs and blames it on bad luck or bad money managers. But for some people, losing 2% of their wealth is a worse situation than losing 2% of their salary. The amount of salary is taken personally, but the amount of assets is not. This is a common problem for poor people. Start taking responsibility for your investment decisions!

Principle 4: Don’t Diversify With Too Little Money

When it comes to money, play it safe. No, learn to manage your risks. There is no reason to diversify your portfolio if you only have a small fortune. If you want to get rich, you need to be focused first.

Take a look at the top 6 richest people in the world. These are rankings from 2018 .

  • Jeff Bezos, net worth: 112 billion- Owner of Amazon.
  • Bill Gates, net worth: 90 billion- Owner of Microsoft.
  • Warren Buffett, net worth: 84 billion- Owner of Berkshire Hathaway.
  • Bernard Arnault, net worth: 72 billion- Owner of LVMH.
  • Mark Zuckerberg, net worth: 71 billion- Owner of Facebook.
  • Stefan Persson, net worth: 17 billion- Owner of H&M.

These people got rich not because they are diversified, but because they are focused. Don’t do what the poor and middle class do, which is put their few eggs in too many baskets. Instead, focus and put them in a few baskets. If your savings are small compared to your annual salary, this is especially true. Aim for a return that will impact your life, and aim to diversify once you’ve acquired assets that will be difficult to earn back through your day job. Financial theory argues that diversification reduces risk, but I would argue that risk is a result of uncertainty, which in turn is a result of lack of knowledge. Stay focused and you will have time to gather more information about each of your investments, which in turn will reduce your risk while keeping a high potential.

Principle 5: Educate Yourself In Personal Finance.

The love of money is the root of all evil. Lack of money is the root of all evil. Money is a form of power. However, financial education is even more powerful. Money without financial intelligence is money that will soon be gone. That’s why famous people like 50 Cent and Mike Tyson have filed for bankruptcy even though they made a lot. One of the reasons the rich get richer, the poor get poorer, and the middle class struggles with debt is because money is taught at home, not in school. Many of us learn personal finance from our parents. That means if your parents aren’t already rich, you need to get advice from somewhere else on how to do it.

Parts of Financial Literacy

There are 4 parts of financial literacy that you should focus on, according to Robert Kiyosaki.

  1. Bookkeeping

Bookkeeping is the ability to read numbers – be it numbers from an annual report or from your personal bank account.

  1. Investing

This is the science of making money that makes money.

  1. Understanding the markets

At the very least, you should understand the basic rules of supply and demand.

  1. The law

Understand the tax advantages and personal protection provided by corporations.

Don’t be afraid to spend your money on education that will improve your knowledge and develop the skills necessary to overcome your weaknesses. The author has spent many thousands of dollars on seminars, books, etc. over his lifetime. And guess what? The return on those investments is incomparable! Arrogant people often have a hard time with this. They already know everything and would rather talk about what they know than try to learn something new. Listening is more important than talking. If that were not true, we would not listen. God would not have given us two ears and only one month.

Rich Dad said that you should learn to use your emotions to think and not think with your emotions. Examples of emotional thinking are: “I need to get another job! I deserve a raise! I want this job because it’s secure! Instead of thinking clearly, “Is there something I’m missing here? This is our reality for most people your job is your income. For the wealthy, your wealth is your income. Apply these lessons to your life because if I asked you the definition of your net worth, if you stopped working today, how long could you survive? You might laugh at me and say, I don’t work for money anymore, money works for me.


Does working long hours for little money, clinging to the illusion of job security, and looking forward to a three-week vacation a year and maybe a crappy pension after 45 years of hard work sound tempting to you? Yes? Then you don’t need this summary.

Takeaway number 1 is that you need to buy assets to generate passive income every month.

Takeaway number 2 is that a corporation is a useful vehicle to protect yourself from losses and to be able to pay yourself first, not the government.

Number 3 is that you should start taking responsibility for your own investment decisions – they’re even more important than your salary.

Advice number 4 is that you need to invest selectively in order to build a large fortune.

Finally, number 5 is the advice to educate yourself in personal finance. Focus on accounting, investing, and understanding the markets.