The full title of this book by Robert Kiyosaki is
“Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!“.
In my review at Amazon.co.uk, I gave the book a Four Stars rating. This means I consider it to be good to very good.
Here is my book review.
An important book to read even if you can’t change the inequalities in the system
This book is a revelation and many people have raved about it to me but I read the follow-up, Rich Dad’s Cashflow Quadrant first and that summarises the key messages in this book and goes further.
I love the way this book teaches the fundamentals about money in a very compelling way. Finance and investing should not be thought of as a boring subject and something to leave to others.
I’m amazed that many people find the topic of finance boring. They have no interest in learning how to read a set of accounts and they are often repelled by the financial services industry.
The first key lesson of Rich Dad Poor Dad is that what they teach you in school is wrong. Working hard and getting a good job is not the route to financial freedom. In the 21st century world there is little job security and with the changing demographics the state becomes increasingly unable to support people in retirement.
The simple message is “You are on your own!”
The problem starts early in school. Too many leave school with inadequate reading and writing skills and next to no financial education. The system teaches people to be good employees. Just as Robert Kiyosaki’s Poor (and real) Dad tried to teach Robert. Go to school, work hard, get good grades in your exams, go to university, get a degree, get a job.
That’s what my parents told me. It was an opportunity denied to both my father and mother. I was the first of my extended family to go to University. This book makes it clear that good employees are trapped in the rat race.
The rat race goes something like this:
– Leave university, get a job (if you’re lucky).
– Work hard, get promoted, get a pay rise.
– Buy a house if you can save the deposit.
– Struggle to afford to pay for the house, deny yourself those little luxuries that make life a little bit more bearable or go into debt because “life is for living”.
– Work harder – you need another salary increase.
– Get promoted and get paid more.
– Buy a bigger house and mortgage yourself up to the hilt. “It’s still a great investment…”
– Continue to struggle for spending money and lie awake worrying about how you are going to keep all these wheels spinning as you worry about paying off your debts and whether or not your job is safe.
Does that sound familiar?
This book argues that your home is a liability because all you do is spend, spend, spend! You spend cash to put down the deposit, to pay the mortgage interest and repayments, you pay the utilities, the property taxes, the repairs and maintenance. It’s almost a never-ending list of money going out and how much comes back – nothing. Or at least not until you sell it.
But what happens most of the time when you sell it? You make a nice profit but none of the cash goes into your bank account and stays there. Instead you reinvest it. You buy a bigger house and borrow even more because you can.
I like Robert Kiyosaki’s definition of assets and liabilities because it very clearly links back to cash flow.
– An asset generates cash for you on a regular basis.
– A liability consumes cash for you on a regular basis.
The old saying says “Only Two Things In Life Are Certain – Death And Taxes”
This book tears that myth to shreds about taxes and I’ve seen it for myself. The rich shelter their wealth from taxes, the poor don’t earn enough to be too concerned as they get far more back from the state than they give.
It is the successful working people and the middle classes that pay the taxes and carry the burden of state financing.
The poor earn their money and their taxes are automatically deducted before they get it. People with their own businesses earn their money, they get their cash, decide how much they want to spend and then pay taxes.
It’s interesting to read the story of the source of the wisdom. His real Dad was the Poor Dad. An employee, with a good job but a hard life. His best friend’s Dad was one of the richest men on Hawaii and an entrepreneur and investor. He had a great life and he was the Rich Dad of the story.
Kiyosaki saw the difference and had the foresight and awareness to see that it was the system that was grinding his own Poor Dad down and swore to make sure that his Rich Dad taught him the secrets of wealth creation and wealth management.
This book has great advice for everyone – both in terms of running their own lives and also for encouraging their children down the right career path so that they avoid the rat race. It’s lost a star because, when I read it, I felt I’d already read the highlights in the Cashflow Quadrant and was disappointed with what this added.
It is available to buy from Amazon.co.uk and Amazon.com.
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