ALEJANDRO B. BITAMOR, JR.

MGT 205
Ten Things You Learned From Rich Dad Poor Dad

This is not my first time to read Kiyosaki’s Rich Dad Poor Dad. Back in 2009 when I was serving my tour of
duty as auditor in Southern Mindanao, a lawyer-friend shared with me this book. Since I would always
favour legal and medical thrillers and other fictional works over biographies and other non-fictions, I was
good until the 1st chapter only. I was bored by the way Kiyosaki presented his thoughts in the book. The
book was returned to my friend after two weeks in my custody pretending I had a pleasant reading
experience around that time. As fate would have it, our paths crossed once again. This time, it is more of
an obligation rather than a pleasure reading. In fact, I spent six hours listening to the audio version of the
book which is abundant on line.

The author compares two case cases of financial knowledge through his two “dads”. The first being his
Poor dad, his biological father who was a well-educated, highly paid government official and the other
being his Rich dad, biological father of his best friend Mike and a mentor who owned a successful business
despite only having an 8th grade education. On the first hand, the well-educated biological father had a
high paying job, he was constantly struggling with debt and paying off most of his expenses. On the other
hand, the business owner developed a fortune allowing him to live comfortably and not be concerned
with current expenses. This goes against common logic where job security and income are the key markers
to wealth. As Kiyosaki illustrates through his two dads, income isn’t everything, it’s the approach to money
and wealth that is life changing.

Here the top 10 lessons I learned from the book:

1. The Rich People Don’t Work for Money

Fear and desire are two main emotions which can prevent people from developing wealth. The fear of not
being able to pay monthly expenses or fear of losing money keep many entrenched in the day-to-day
work, preventing many from evaluating investments and other sources of income. The desire to keep up
appearances via buying expensive clothes or cars drives expenses so high that people have no choice but
to stay focused on their jobs to maintain their lifestyle. Lesson one is all about understanding those two
emotions and stopping them from hindering one’s success. The Rich Dad was more focused on ways of
creating residual money, money that increases even if you don’t work, rather than waiting for the next
job with a pay raise.

2. You Have to Mind The Own Business by Getting Out of the Rat Race

Often, the reason why you are struggling financially is because you are minding other people’s business.
You work for the company, the boss, the bank, and the government without first prioritizing the self above
all. Mind the own business because you only have one life to live. You need to get out of this so-called
“Rat Race” where you run in an endless loop of income and expenses, not really progressing forward. The
mission is to achieve financial freedom so that you can do whatever it is that you want in life.
3. Have a Keen Mind to See Opportunities

Robert and his best friend Mike once worked in a convenience store when they were nine years old and
was paid little to no money by rich dad. One day, they saw an opportunity when a pile of comic books was
about to be retrieved by the distributor. They requested for the books and set up their very own business
at a very young age. After three months, they earned lots of money because of that business. If you want
to get rich, you must be open to seeing opportunities such as these.

4. The Mind is The Most Powerful Asset

The mind is a giant powerhouse of ideas and resources. Once trained, it will see opportunities that are
invisible to an average person. I’ve said a while ago that the focus should be to work on improving the
financial literacy. That is true because as you learn more and more about the four key subjects
(accounting, investing, marketing, law), the mind will open up to all the possibilities and you will see more
and more opportunities as you go along. So whatever the job is right now, you should focus more on
learning and not on the money that you receive. The learnings will serve as the stepping stone to creating
the financial empire especially when combined with financial literacy. You will multiply the income by a
huge factor once you invest on the financial education.

5. The Need to Learn the Financial Literacy

In order to become rich, you need to first learn how to become financially literate by learning the subject
of financial education. Rich dad believed in the power of words and how it can affect the life in a huge
way, so learning words like assets, liabilities and cash flow help you change the way you think about
money. Financial education and literacy is divided into the four fundamental subjects: Accounting,
Investing, Marketing, and Law. These are the four key subjects in studying financial education. Although
there are other things to learn, these core subjects lay the foundation of the financial literacy and is
therefore important to achieving the financial success.

6. The Bottom line is That It’s not How Much Money You Make, It’s How Much You Keep

Now that you know the difference between assets and liabilities, I will discuss with you the concept of
cash flow. The formula for cash flow is simply “income minus expenses”, which is the money you have left
that goes into the pocket. Regardless of what profession you’re in, whether you’re in a low-paying or a
high-paying job, the money you’re making doesn’t matter. It’s about how much money you can keep.
You may have a job that earns P10,000 a month, but if you spend P9,999 in expenses, then you have a
poor person mentality with only P1 left to save. A person earning P2,000 a month with P1,500 expenses
is better off because he has a cash flow of P500, which he can then use to work on his asset column. It is
this concept of cash flow that really makes the difference between a poor/middle class person and a rich
person. Learn how to save money and create assets so that you can increase the cash flow.

7. Knowing the Difference of Asset and Liability

This is big and is perhaps the greatest reason why people never move forward with their finances. Knowing
the difference between assets and liabilities are very important and is the key to becoming rich according
to Kiyosaki. But first, let me make myself clear on what the definition of an asset and a liability is. Yes, it’s
an accounting term, but rich dad defined it in very simple terms. An asset is anything that puts money into
the pocket while a liability is anything that takes away money from the pocket. Assets can be in the form
of stocks, bonds, real estate or businesses. Liabilities include home mortgage, credit card bills, car
payments, or any other items that incur expenses. Please look at the diagram below to see the
representation of assets and liabilities.

8. Corporation is Best friend to the Rich

When employees get their paycheck, it usually is less than its original amount because of the deductions
that the salary is subject to, the #1 deduction being “taxes”. Aside from taxes, it is also subject to Social
Security, Philhealth, etc. After which, that’s the only time that you’ll be able to spend the hard-earned
money in the things that you want. Overall, it’s highly inefficient and is a big burden to us.

In order to take advantage of the tax benefits of the rich, the secret is in creating corporations. By having
a corporation, you are legally allowed to spend the earnings first before you are taxed on the remaining
money. That’s a great advantage because as an employee, you are taxed on the income first before you
can spend the money. While in a corporation, it’s the other way around. This is perhaps why the richest
people in the world often pay less in taxes than their employees. Corporation also serves as the first line
of defense against lawsuits.

9. The Value of Habit of Giving

Not only do we have to work on building our asset column, but also learn to give and share what we have.
Basically if you want something, the best way to have it is to give it to others. If you want more money,
give the money to others through a charity or foundation. If you want to become successful in business,
teach others how to run a business. Most likely, what you give to others will definitely return to you.
There’s a saying: “A simple act of caring creates an endless ripple that comes back to you”. So be generous
and develop the habit of giving.

10. Stop Procrastinating, Start Taking Action Now

The most important advice of all is to start taking action right now. Now it may sound easy and too
obvious, but the truth is: it isn’t. As you start taking action, you will come across a lot of obstacles along
the way, most of them are internal. You will face fear, doubt, procrastination and so much more. After all,
when you invest the money, there’s a good chance that you’ll lose it. When you start selling, you will face
objections and rejections. When you start a business, you’ll doubt the ability to run the business. And
when you fail, the urge to give up will be so strong that you’ll just plain quit.

While Kiyosaki’s investment options revolves mainly on real estate and stock market, the concepts on
growing the money is nevertheless vastly discussed. I wish Kiyosaki could have covered other industries
as well. That would change the entire landscape of Kiyosaki’s influence. For the most part, I was
entertained eliminating my boredom ten years back during my first encounter with this book. I am now a
certified Kiyosaki fan.