5 lessons from Rich Dad Poor Dad ( HIGHLY RECOMMENDED)


🌼5 lessons from Rich Dad Poor Dad ( HIGHLY RECOMMENDED)

People always like to talk about Rich Dad Poor Dad when they give financial advice — at least once in their life, they will have said that everyone should read this book.

Well, I am not going to tell you anything different. Sorry.


This book is actually good and it changed my perspective on how I view money. Add this book with Psychology of Money and I believe that it is a decent start for anyone who is just getting started to learn about this.

Read also:  7 money lessons I wish I knew when I was 18 (highly recommended)

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So, today, I wanted to talk about the book and share my top learnings from the book. As I said, it is a good book and everyone SHOULD read it. As I already mentioned in my previous article when I talked about Psychology of Money, this book is just like that but it talks more about how to grow that.


Disclaimer: I am going to refrain from talking about ideas that I already talked about in my previous article. This is a good book and cutting the entire book to 5 ideas is a bit difficult. So, cut me some slack.

Photo by Mathieu Stern on Unsplash

A little intro

This book is written by the American businessman, Robert Kiyosaki. It was first published in 1997 and till now have sold more than 30 million copies. I believe that the reason it is so popular is because it teaches the middle class about money which they usually don’t have in abundance and shows them how to reach it. And, since middle class is a majority of the population, it’s a good demographic to market the book towards.

Too analytical early in the morning?

Anyway, Robert talks about how he had two fathers when he was growing up. One is his own who had a PhD. Robert calls him “poor dad”. The other is his best friend’s father who is a businessman and he calls him the “rich dad”.

1. Rich people buy assets; poor people buy liabilities that they think are assets

The thing is, no one wants to be poor, now, do they? However, they still buy stuff that is not adding more worth to them.

“Why?” you might ask. That’s simple. Because poor people don’t know what assets are.

Let’s put this to a test. Is your recently bought phone an asset? — No. Is your car an asset? — No. Is owning a part of a company an asset? — Yes. Is owning a house an asset? — No.

The last one trips me as well but think about it. It isn’t an asset. An asset is something that puts money into your pocket. A liability is something that takes money out of your pocket.

However, even when people know the differences, they are afraid to put money in stocks and bonds because they think another stock market crash and everything will come falling down.


I will give you something to think about. You buy a car. The car is a piece of machinery that even a young adult will be able to tell that it depreciates. So, you are okay spending money on something that is guaranteed to lose money but not on something that you think might lose money?

2. Don’t ask yourself whether you can afford something or not; ask HOW you can afford it

If there’s something that you want, you need to find ways to ensure that you can afford it. This might look like a small thing but this little change brings about an avalanche of personality shift.

Instead of thinking you are poor and you can’t afford something, you will start thinking how you can buy that thing that you want. Suddenly, everything will seem achievable and affordable to you. Money will be just a tool that you need to achieve that thing you want. Your life will stop depending solely on money and you will start focusing on things that you really want.

Small but powerful.

Read also: Top 6 bad habits that are ruining your chances of success

3. Stop focusing on your income — start focusing on your assets

Salary levels are taken personal while asset levels are not. This is a problem with poor people. Imagine you got a paycheck cut of 10%. You will flip. You will start cursing your bosses, the upper management, everyone involved, including God. You will start finding ways to make up that 10% be it a job shift, extra income, side hustles.

However, you lose 10% of your assets (for example, stocks) and you think just mope around. “It was meant to happen”. “The market crashed”. “Stock market is volatile”.

That’s what I mean by it. People attribute their asset loss to “luck” or “bad timing”. Next time, fire your asset manager first. 😛

Or, if you trade by yourself, research better, prepare for volatility more and invest better.

4. Don’t diversify with too little money

Don’t put too little eggs into too many baskets. Also, on the other side of the spectrum, don’t play it safe completely. There’s always a middle ground. Learn how to manage your risks.

Focus on putting your eggs into few baskets that you think and know will give you good returns. If your savings are small compared to your annual salary, then this is especially true. Aim to get a return that will have an impact on your life and go for diversification as soon you have acquired wealth that will be tough to earn back through your daily job.

Risk is nothing but a result of uncertainty which in turn is a result of a lack of knowledge. Stay focused and you will have time to gather more information about each of your investment and in turn, reduce your risk while keeping a high potential.

5. Educate in personal finance

Money without financial education is money soon gone. One of the major reasons why rich get richer, poor get poorer and middle class struggles in debt is because the subject of money is taught at home and not in schools. Many of us learn personal finance from our parents.

This means, if your parents aren’t rich already, you need to start getting your financial advice from someone else.

Read also: Four High-ROI Habits that take 2 minutes each

According to Kiyosaki, there are 4 parts of financial literacy that you should focus on:

a. Accounting — the ability to read numbers.

b. Investing — the science of money making money

c. Understanding markets — at least understand the basic rules of supply and demand

d. Understand law — tax advantages and personal protection provided to you

Don’t be afraid to spend money on educating yourself that will improve your knowledge and develop your skills necessary to beat your weakness.

See you soon!


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