Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

by Robert T. Kiyosaki

one dad had a habit of saying, “I can’t afford it.” The other dad forbade those words to be used. He insisted I ask, “How can I afford it?”

One dad recommended, “Study hard so you can find a good company to work for.” The other recommended, “Study hard so you can find a good company to buy.”

Both dads paid their bills on time, yet one paid his bills first while the other paid his bills last.

“There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.”

Money is one form of power. But what is more powerful is financial education.

Buying or building assets that deliver cash flow is putting your money to work for you.

People’s lives are forever controlled by two emotions: fear and greed.

“The avoidance of money is just as psychotic as being attached to money.”

A job is really a short-term solution to a long-term problem.”

Thinking that a job makes you secure is lying to yourself.

When emotion goes up, intelligence goes down.

It’s not how much money you make. It’s how much money you keep.

Retirement does not mean not working. For us, it means that, barring unforeseen cataclysmic changes, we can work or not work, and our wealth grows automatically, staying ahead of inflation. Our assets are large enough to grow by themselves.

Money without financial intelligence is money soon gone.

“If you want to be rich, you need to be financially literate.”

Accounting is possibly the most confusing, boring subject in the world, but if you want to be rich long-term, it could be the most important subject.

Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.

An asset puts money in my pocket. A liability takes money out of my pocket.

Cash flow tells the story of how a person handles money.

When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.

Wealth is a person’s ability to survive so many number of days forward—or, if I stopped working today, how long could I survive?

“If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spending.”

The rich focus on their asset columns while everyone else focuses on their income statements.

Start minding your own business. Keep your daytime job, but start buying real assets, not liabilities or personal effects that have no real value once you get them home.

An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.

A corporation is merely a file folder with some legal documents in it, sitting in some attorney’s office and registered with a state government agency. It’s not a big building or a factory or a group of people.

Each dollar in my asset column was a great employee, working hard to make more employees and buy the boss a new Porsche with before-tax dollars.

Smart tax consultants and attorneys are worth their cost, as it’s still cheaper than paying the government. It’s expensive to not know the law.

Financial IQ, or financial intelligence, is what makes that possible. It’s made up of four things: accounting (financial literacy, or the ability to read numbers and evaluate the strengths and weaknesses of any business), investing (the science and strategies of money making money), understanding markets (the science of supply and demand, and market conditions), and the law (tax advantages and protections).

Often in the real world, it’s not the smart who get ahead, but the bold.

If you are the kind of person who is waiting for the right thing to happen, you might wait for a long time. It’s like waiting for all the traffic lights to be green for five miles before you’ll start your trip.

“What is money if it is not real?” “What we agree it is,” was all rich dad would say.

It is not gambling if you know what you’re doing. It is gambling if you’re just throwing money into a deal and praying.

Great opportunities are not seen with your eyes. They are seen with your mind.

It is what you know that is your greatest wealth. It is what you do not know that is your greatest risk.

“It says best-selling author, not best-writing author,” I said quietly. Her eyes widened.

“You want to know a little about a lot” was rich dad’s suggestion.

Job is an acronym for “Just Over Broke.”

“So if most of you can cook a better hamburger, how come McDonald’s makes more money than you?” The answer is obvious: McDonald’s is excellent at business systems. The reason so many talented people are poor is because they focus on building a better hamburger and know little to nothing about business systems.

All too often, they’re poor or struggle financially or earn less than they are capable of, not because of what they know, but because of what they do not know. They focus on perfecting their skills at building a better hamburger rather than the skills of selling and delivering the hamburger.

He never understood that the more specialized you become, the more you are trapped and dependent on that specialty.

The main management skills needed for success are: 1) Management of cash flow, 2) Management of systems, and 3) Management of people. And the most important specialized skills are sales and marketing. Communication skills such as writing, speaking, and negotiating are crucial to a life of success.

Rather than, “Give, and you shall receive,” he believed in, “Receive, and then you give.”

So his solution to the phobia of losing money was this little rhyme: “If you hate risk and worry, start early.”

Fran Tarkenton, a one-time great NFL quarterback, says it still another way: “Winning means being unafraid to lose.”

For most people, the reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich.

Failure inspires winners. Failure defeats losers.

If you have little money and you want to be rich, you must first be focused, not balanced.

Do not do what poor and middle-class people do: put their few eggs in many baskets. Put a lot of your eggs in a few baskets and FOCUS: Follow One Course Until Successful.

Mistakes are good things, if we find the lesson in every failure.