RICH DAD AND POOR DAD IN SUMMARY !

RICH DAD POOR DAD IN SUMMARY !

Rich Dad Poor Dad is a 1997 book written by Robert Kiyosaki and Sharon Lechter. It advocates the importance of financial literacy (financial education).

                 Here in this book "Robert Kiyosaki" tells about the difference in mindsets ,thinking process between 2 men,his own father and his friend's father.Their whole approach towards earning money and weath definition totally different.

               Robert's dad here in this book referred as poor dad and friend's dad referred as rich dad.

Robert when one day, asked his dad about ,how to get rich .Dad said,"use your brain ,be best at studies,earn good grades at school,get degree in a college ,get a safe and secure ,good paying job at a company". (Poor people think having smart brain only  ,can help in becoming rich, which is not true .poor people always try to stay on the safer and secure side and take 0 risk) .

On the other hand when Robert asked the same question "how to get rich" to his friend's dad ,he replied differently. He said,"get academic education and have strong foundation in financial education,it will help you becoming rich".

            The most fundamental lesson on financial education is to know the difference between assets and liabilities

Rich poeople acquire assets ,poor people acquire liabilities.But poor people sometimes think they are acquiring assets.

Difference between Asset and Liability

  1. Asset- Asset is something that flows money into your pocket

  2.Liability is something that flows the money out of your pocket.

cash flow diagram of a normal person:

A normal person solely depends upon his job as his only source of income.Buys food,clothes,party,car as  expenses.Normal person doesn't have asset but sure has liabilities like taxes,bills,credit card bills that keeps constantly flow the money out of his pocket..So the liability gets greater with time.

Cash flow diagram of rich people

Rich people on the other hand dont solely depend on the job as their income source.They add assets like owning bussiness ,that doesn't require constant presence,investing in stocks,bons,mutual funds, that flows money into their pocket as a form of passive income. Passive income is something doesn't require you to constantly earns money,without even your presence.

if you want to be rich never let

 income = expenses

 assets < liabilities

The poor dad (Robert's dad) , his income were equal to expenses and he didn't had any assets ,so finally he sucked into debts and sadly passed out .

The rich dad (Friend Sam's dad) he kept investing in assets and his expenses were not grater than income. So finally he become richest man of Hawaii .

  

For the above reason rich getting much richer.

Robert learned from his rich dad that life of general population run by 2 emotions 

1) Fear

2) Greed

• Fear keeps them in the infinite pattern of earning money and pay the bills ,hoping fear of not having money will go away. Instead of confronting they stuck in the fear forever.        
• Greed or desire on the other hand keeps some group of people in the constant loop. They desire money for the joy it brings .But joy,the money brings short lives and they again need more money for more joy.,comfort 

But most of the schools don't teach this in their syllabus. Ignorance about money can cause much fear and greed ,that lead you to constant trap of continuous working.