Book review: 'Rich Dad Poor Dad'

The book starts with an introduction about his two dads-Rich one and Poor one. Rich dad did not pass his 8^th standard. On the other hand, Poor dad was highly qualified & intelligent. Even though,Poor dad struggled financially throughout his life. Rich dad enjoyed his life fullest. Rich dad left a lot for their descendants. But Poor dad left a lot of debt for the family.

 The author also wrote about his favorite poem by Robert Frost "The Road not Taken". The author said that he follows his favorite poem in his daily life. Last three lines of the poem are as follows:

Two roads diverged in a wood, and I-

I took the one less traveled by,

And that has made all the difference

“The Rich Don’t work for money”- is the topic of the first lesson of the book. It is the middle class and poor who work for money; Money works for Rich. As a human being, we all are controlled by two strong emotions of ‘Fear’ & ‘Greed’ and it is the biggest trap as per the author.

“Why we should learn/teach about financial literacy”, the second topic from lesson 2. The author answered that to know the difference between an Asset and a Liability and how to buy assets rather than Liability. An Asset is anything that helps in fattening our purse/wallet and Liability is anything that makes thin our purse/wallet.

Using diagrams author explaining various cash-flow patterns:

 Middle class and Poor focuses on income statements but Rich people focus on their Asset Columns. It is of utmost importance of acquiring Financial IQ. The further author talked about acquiring four main financial intelligence, Knowledge of accounting, Knowledge of Investing, knowledge of understanding markets, and knowledge about laws.

Gambling is like putting money into a deal and praying for the best. If you are putting money by doing research/analysis/deep study about the deal or market, it is not a Gambling.

Work to learn, do not work for money. The author also talked about the importance of three management skills which we should acquire –management of cash-flow, management of systems, and management of people. The author also discusses five reasons why so many financially literate people unable to grow their assets column. The reasons are Fear, Cynicism, Laziness, Bad habits, and Arrogance.

In the last lesson, the author talked about powers residing within all of us. Like the power of spirit (determination, perseverance ), the power of Choices, the power of association(choosing our friends),  the power of learning quickly, the power of self-discipline(pay yourself first), the power of Good Advice(invest in good advisers), the power of getting something for nothing(“How fast do I get my money back?”), the power of focus(use assets to fulfill your dreams), the power of choosing your heroes & the power of giving(If you want something, then start giving it first to others and then you will realize that you are getting more of it ).

I extremely enjoyed reading this book and recommend everyone to read this book for a better understanding of their personal finance. Thank you very much.

All the views & diagrams mentioned here are taken from the book Rich Dad Poor Dad, by Robert T.Kiyosaki .Reference: Rich Dad Poor Dad, Robert T.Kiyosaki