Rich Dad Poor Dad. The story of two fathers.

One has a wall full of degrees and

diplomas. One, a high school dropout. One, after death, will leave next to
nothing behind except debt. The other will have died one of the richest men in
Hawaii and will pass on his empire to his children. Rich Dad guides two boys on
a journey to best use their minds in finite time to create wealth from
investments and business

This story shows the difference between I can't afford that to how can I afford
that? His poor dad would say things like I'll never be rich and his prophecies
became true. His rich dad however, even after going bankrupt and having zero
dollars would say I'm a rich man. There's a difference between being poor and
being broke. Broke is temporary. Poor is eternal

lesson 1 : The Rich Don't Work For Money

Lesson 1 The rich don't work for money. The poor and the middle class work
for money.The rich have money work for them. When Robert Kiyosaki, the
author of this book, was 9 years old, his best friend Mike and he asked Rich
Dad, Mike's father,how to make money. Before long they were both working
within Rich Dad's companies. The only problem Robert had was his salary.10
cents a week. A poverty wage He seriously thought about quitting every week
that passed by. Who was this guy to be exploiting us for ten cents a week, he
would ask himself. It was at this moment in time that Rich Dad gave them their
first lesson on the topic of money Life pushes all of us around. Some people
give up, and others fight. If you learn the lesson to move on, they welcome life
pushing them around. Most people leave their jobs because they aren't
receiving enough money. They would have already quit. But the wealthy see it
as an opportunity to learn

one of life's biggest traps

They work very hard for little money, clinging to the illusion of job security,
three weeks vacation, and a skimpy pension. People's lives are forever
controlled by two emotions, fear and greed. Here's how the pattern goes. Your
fear of not having money motivates you to work harder. Then the pay checks
begin, and your desire and greed for new cars, new products, new shoes and
clothes begins. You want more things, so you work harder for that promotion.
Then the pattern is set and you're stuck in it. You get up, you go to work, you
come home and you pay your bills. Your increased earning leads to increased
spending. And this is the Rat Race. To break the boys out of the nine to five
mentality driven by fear and greed, eventually Rich Dad cut down the two boys'
wages to zero. Robert didn't dare tell his poor dad that he was working for
nothing.They began working solely for the knowledge, and Rich Dad forced
them to think of ways to start generating their own income One day, two older
comics were left lying around one of Rich Dad's stores. And this was the
inspiration for them to open their first business. They recovered the outdated
comics, opened a library in their basement, classmates paid 10 cents for entry,
they paid the sister a wage of one dollar a week, and before they knew it, they
were earning nine dollars and fifty cents a week without even needing to work.
This was the beginning of their journey of not working to earn money, but
making money work for them

Key Lesson Getting a job is really just a short -term solution getting enough to
pay expenses to the long -term challenge of building your net worth. The more
you get paid, the higher your expenses become. This is human nature, and it's
driven by fear and desire. Once you get stuck in this cycle, you are forced to
work for someone else the rest of your life

Lesson 2 Why teach financial literacy?

It's not how much money you make, it's how much money you keep. If you're
looking to school to make you rich, then you're looking in the wrong place. The
education system's primary objective is to train you on how to become a good
employee, but it does a poor job of making you a good employer. Things like
managing your own personal finances and building wealth aren't taught to you
by the education system in its current state. You can only rely on yourself to
use this knowledge and acquire assets that allow you to generate an income.
The first pillar of financial literacy and escaping the rat race is understanding
the difference between an asset and a liability An asset puts money in my
pocket. A liability takes money out of my pocket. Let's quickly look at the
income statement. Your income statement is money going into your pocket.
Expenses is money going out of your pocket. Things like rent, food, electricity
and clothing go here An asset is something that allows its owner to generate an
income. On the other hand, a liability generates expenditure. This is the cash
flow of an asset. This is the cash flow of a liability.
Rich people acquire assets. Poor and the middle class acquire liabilities that
they think are assets. Cash Flow patterns Cash Flow tells the story of how
someone handles money.

This is the cash flow of a poor person. They have a job, they get a salary, they
use all their salary on expenses, and they usually live from paycheck to
paycheck

This is the cash flow of the middle class. They have jobs, they get a salary, but
most of their money is tied up in liabilities and expenses. Home loans, car
debt, card debt, mortgaged repayments and taxes. They think that their home
is an asset, but they wake up one day with a liability column full of mortgage
debt and credit card debt.

This is the cash flow of a rich person. The rich are always thinking of ways to
grow their asset columns. Their main source of income is from assets that they
have acquired over time.

Your home is not an asset. By focusing on a home, you are building a liability
rather than an asset. When it comes to houses, most people work all their
lives paying for a home they might never own, incurring 30 -year loans that
they are tied to. You need to pay property tax, and the rates of these taxes are
completely out of your control. You need to pay other home expenses. And the
value of your home over time does not always go up. And most important of
all, The biggest cost of a house are all the lost opportunities. If all your money
is tied up in a house and going out through the expense column in mortgage
payments, it's not being used to grow your asset column. Furthermore, think of
all the other investment experience that you're missing out on when you only
focus on local residential real estate. Here are some examples of real assets. An
apartment which generates monthly payments from a tenant and the
repayments allow you to repay the loan repayments on that property business
that doesn't require you to be present within it .For poor dad, a home was an
asset. For rich dad, a home was a liability. This is how poor dad's income
statement looks. Take note of the inflated liabilities. And this is rich dad's
income statement. Over time, he has grown his asset column. Most people fall
into this trap all the time because they are financially illiterate. They don't
understand the relationship and differences between the balance sheet and
the income statement.
the main ways to get out of the rat race.
Fully understand the difference between an asset and a liability. Focus all your
efforts on obtaining assets that generate a cash flow.
Keep your expenses and debts to the bare minimum.
And finally, which leads us to the next lesson, mind your own busine

Key Lesson Life is not about how much money you make. It is about how much
money you keep and for how many generations. The key to achieving this
resides in having financial literacy. Understand the difference between an asset
and a liability. the rich build and acquire assets. The poor and the middle class
acquire liabilities that they mistakenly think are assets

Lesson 3, mind your own business

The rich focus on their asset columns, while everyone else focuses on their
income statements. Robert Kiyosaki's first professional job was far from
glamorous. He was a photocopier salesman for Xerox. Using the wages he
earned, he invested into apartments. And after just three years, the revenue
he was generating from his investments outpaced his salary. It was then time
for him to leave Xerox and look after his business full time.
So what are some real assets you can begin focusing your attention on? • One,
businesses that do not require your presence to operate. • Two, stocks. •
Three, bonds. • Four, income generating real estate. • Five, notes or IOUs. • Six,
royalties from intellectual properties like music, scripts or patents. • Seven,
anything else that produces an income or appreciates in value. Things like
cryptocurrencies, websites, YouTube channels, etc.. the best thing about
money is it can work for you 24 hours a day and it can work for generations.

Key Lesson
Don't confuse your profession with your business. The middle class focus on
their profession, and as a result, they spend their entire lives building someone
else's business. The rich, on the other hand, focus on building their own
businesses. Your profession focuses only on the income section of your
personal income statement. Your business revolves solely around the asset
column on your balance sheet.

Lesson 4 The history of taxes and the power of corporations

rich dad just played the game smart, and he did it through corporations, the
biggest secret of the rich. A brief history of taxes. Every time people try to
punish the rich, the rich don't simply comply, they react. They have the money,
power, and intent to change things. They don't just sit there and voluntarily pay
more taxes. You may have heard the saying, nothing is certain except death and
taxes. But for most of human history Taxes were not a certainty at all and look
much different to the way people are taxed today. Occasionally kings, queens,
and presidents would collect taxes in an effort to support wars but there were
no permanent taxes levied against people on their income. Even in times of
war, the highest tax rate in the Roman Empire was only around 3%. Originally in
England and in the USA, there were no taxes. Only in 1874, income tax became
permanent in England and 39 years later, the US followed suit with the
adoption of the 16th Amendment that made income tax permanent. These
permanent taxes were passed into law under the guise that they were only to
be levied against the rich. This decision would end up backfiring and punishing
the people who voted for it the poor and the middle class.

The biggest secret of the rich The rich found a way to escape and seek the
protection of a corporation. For most people, when they hear the word
corporation they may imagine something tangible like a large building with
hundreds of employees. In reality, a corporation is just a piece of paper that
creates a legal body. The rich protect their wealth through corporations
because it gives them tax advantages over the poor and the middle class.
Corporate tax rates are lower than personal income rates and it also protects
them from lawsuits. But how? It comes down to the flow of income. Take a
close look at the order. An employee earns money, pays taxes, and then
spends. A business owner earns money, spends, and then pays taxes. The
corporation can do many things that an employee cannot such as paying
expenses before taxes. The business owner's income flows through the
corporation and pays him or her a salary as an expense. If you pay yourself a
small enough salary, you can also avoid the higher tax brackets that higher -
earning employees need to pay. The pre -tax dollars here are where the rich
find ways to minimize their tax burden as much as possible through deductions
and other legal loopholes

Lesson 5 The Rich Invent Money

The Mind and Your Financial Operating System Most people's operating system
for creating money is get a good job, work hard, and save your way to financial
freedom. The rich don't trade their time for an hourly salary. They find ways to
build assets. To build your asset base, you need financial intelligence. The
single most powerful asset we have is our mind. If it is trained well, it can
create enormous wealth. An untrained mind can also create extreme poverty
that can crush a family for generations. In today's information age, your
greatest asset is your mind. The old ways of making money and getting rich
don't work today. Developing financial intelligence is the key to finding and
creating profitable business opportunities. To gain financial intelligence, you
need to learn the following. Financial literacy. The ability to read and
understand financial statements

The financial statement of a business can show you its strengths and
weaknesses. Investment Strategies Investing is the science of money making
money. An understanding of supply and demand. An understanding of the law.
Be aware of all state and federal regulations and always play by the rules.
Gaining financial intelligence will allow you to see opportunities outside of the
get a job, work hard and save model of making money. Often in the real world,
it's not the smart who get ahead, but the bold. Financially intelligent people
always have more options for creating wealth because they are constantly
seeking and inventing new ways to invest or build their assets. You can't be the
one sitting on the sidelines waiting for the perfect timing or perfect idea to
arrive. You need to take action. Courage alongside a willingness to take
calculated risk can make the difference

Lesson 6 Work to learn, don't work for money

Job is an acronym for just over broke Unfortunately, I would say that applies to
millions of people. The Long View Are people looking to where they're headed,
or just until their next paycheck? If you need to get a job and work for
someone, work to learn new skills. Most people only focus on short -term
benefits and will take a better -paying job that teaches them nothing over a job
that will give them the skills to become successful in the long run. When you're
first getting started, value learning new skills over money and job security

Specialization vs. Knowing a little about a lot Job security meant everything to
my educated dad. Learning meant everything to my rich dad. Poor dad wanted
Robert to become highly specialized and focus on job security. Rich dad wanted
Robert to know a little about a lot. The main skills you need to focus on
learning are management of cash flow and how to deploy capital, management
of systems, how to plan and allocate your time efficiently, and management of
people. Learn how to hire and motivate a team. The main specialty skills Robert
recommends are sales, copywriting, and marketing, and the main
communication skills are writing, speaking, and negotiating. Most people will
tell you it isn't a good idea to jump from one company to another, but in
general, most jobs will not expose you to all of these relevant skills. Robert
considers working for different companies a wise decision. You will learn more,
and from the long view perspective, this will pay dividends.

Talent vs. Financial Intelligence

The world is full of talented, poor people. Talent isn't enough to become
successful. Many talented people are poor or working at low -paying jobs. This
is because they haven't learnt the skills to leverage their talent into financial
rewards.

Lesson 7 Overcoming Obstacles

The primary difference between a rich person and a poor person is how they
handle fear. Here are five of the reasons people fail to achieve financial success.
1. Fear They fear losing money more than making it
2. Cynicism. They are cynical and do not believe it is even possible to become
wealthy
3. Laziness. They are too lazy to change their habits
4. Bad habits. Their behaviour towards money is dictated by their habits
5. Arrogance. They are arrogant, ignorant and ego -driven

Overcoming the fear of losing money. Rich and poor people have fear, but how
they deal with fear is different. The rich are able to handle the fear of losing
money, whereas the poor become paralysed by it. Poor people often avoid the
topic of fear or money altogether . The poor look at losses as permanent and
irreversible. The rich look at losses along the journey as inevitable and only
temporary. The key is to take inspiration from your failures along the way,
knowing that they're a valuable lesson to learn from and only temporary
setbacks

Overcoming Cynicism Cynics criticise, winners analyse. Cynicism and doubts

are what keep most people poor.
When you don't even believe it is possible to become rich and you have self -
doubt you let opportunities slip past you and you prefer to play it safe. Cynics
will tell you all the reasons why something won't work but have never actually
tried it themselves. Rich people are always analysing and thinking about how
things can work. Poor people are always criticising and thinking about why
things won't work

Overcoming laziness. Too many people lazily accept the status quo and don't
strive for something better. Rather than saying, I can't afford it...Try to change
your mindset to, how can I afford it? This opens up the brain and forces it to
think of solutions. I can't afford it immediately shuts down your ambition. A
little greed but not too much. Too much greed is a bad thing, but Kiyosaki tells
us that a little bit of greed will help you overcome this laziness. Overcoming
Bad Habits To develop good financial habits, start by paying yourself firs

Overcoming Bad Habits To develop good financial habits, start by paying

yourself first. The majority of people pay everyone else before paying
themselves. It should be the other way around. Pay yourself first when you get
paid, then everyone else. If you don't have enough to pay the government or
creditors, this will force you to creatively think of ways to make more money to
repay them. If you pay yourself last, you won't have this incentive.
Overcoming Arrogance Many people use arrogance to hide their own
ignorance. Robert found that people who didn't know what they were talking
about would often bluff their way through a discussion with arrogance. Try not
to be that person. When it comes to investing in wealth creation, always be
open to other people's perspectives and never assume that you have all the
answers.