Robert T. Kiyosaki’s Rich Dad Poor Dad has been a leading figure among personal financial books since its release in 1997 and is one of the world’s best sellers with almost 40 million copies.
When I was still a budding entrepreneur, I first read the book back in 2000. I figured now that I have more experience under my belt, I would read it again. I just wanted to see whether it’s time-tested and if I want to do so, as I did when I first read Rich Dad, Poor Dad. In the last 23 years, much has changed politically, and I’m wondering if Kyosaki’s predictions have come true.
When I first read the book, I liked first of all how Kiyosaki saw the world from a different viewpoint. I had to think about my business and investment differently than I had before.
Kiyosaki tends to be a polarizing figure, either you love his work or you hate it. For example, the Simple Dollar analysis of the work of Kiyosaki adds a lot of personal preference, and I don’t think it’s fair.
I try to take a neutral view and will review the book on the basis of my business experience.
Rich dad, poor dad should be seen as a general starting point, rather than a list of specific entrepreneurship items–an investment/startup summary.
Robert Kiyosaki illustrates six key points in the novel. These points— which distinguish his poor father (his true father) from his “good” father who helped him understand business and grow wealthy— are:
- The rich don’t work for money.
- The importance of financial literacy.
- Minding your own business.
- Taxes and corporations.
- The rich invent money.
- The need to work to learn and not to work for money.
Important Take-Aways From The Book “Rich Dad, Poor Dad”
#1. Flaws In The Education System
As Robert often mentions in the book, our traditional system of education is defective. Our educational system is mainly designed to create workers and could affect an entrepreneur negatively. As Kiyosaki mentions, he does not propose people to skip higher education; he suggests that higher education does not contribute to “street smarts.” Financial literacy is rare in school and, if discussed, it only occurs at the basic level.
Education costs continue to grow much faster than the inflation rate. Our education system is becoming more clearly undermined. The comments of Robert on this subject are true.
#2. Being An Entrepreneur Is Less Risky
The common belief is that owning a company is riskier than working for someone else. In my opinion, owning a company gives you all kinds of skills you wouldn’t be able to get when you work for another person. If anything, we’re producing more dependent people with today’s “cradle to grave” mindset.
I have much more independence from a company and have much more valuable skills I can still use if I work for somebody else. On a weekly basis, I am doing things that I felt were dangerous or could never imagine until I own a business.
#3. Your Home Is Not Your Asset
Over the years, the primary residence has usually been recognized as an advantage. Robert flat-out states that your home is not an asset as it does not produce positive cash flow.
“Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets.”
Although rental properties have also dropped in value, you still bring money every month if you concentrate on positive cash flow. In his book, Robert also states that home values don’t always grow.
Almost all consumer goods are liabilities–something with which I have even been stubborn. Kiyosaki says you can purchase cash flow assets to help pay for your “doodads.” I think this is a great way of looking at how you can afford your toys.
#4. Difference Between An Asset And A Liability
“An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.”
A significant number of critics of Kiyosaki point out that this argument does not comply with general accounting standards. That’s real, and Robert knows that. The point that many misses is that you should focus on cash flow to become wealthy.
“Wealth is a person’s ability to survive so many numbers of days forward… or if I stopped working today, how long could I survive?”
Complaints About The Book “Rich Dad, Poor Dad”
There are many reports of the lack and make-up of Robert’s “Rich Dad.” This is more than likely true, but many personal finance books are fictional. The problem with Robert is that he introduces his book as non-fiction if not, so I agree with this argument.
Robert plays the risk role in the investment proposals. This is a little true, but it indicates that you grasp your investments fully before joining. Robert claims investing is risky only if you don’t understand fully what you invest in.
Although I still recommend this book, especially for starting entrepreneurs, there are certain flaws in the book. I assume that many of the subjects he addresses take the time test. But take with a grain of salt some of what Robert Kiyosaki says. If not for inspiration, it should be read simply to get you to think differently than an employee. I don’t love or hate it, that’s why I’m giving this book 3 out of 5 stars.
I recommend reading just Rich Dad, Poor Dad and Rich Dad’s Cashflow Quadrant if you decide to read Roberts books. Most other books are just a rehash of the two books.
For the principal reason, I will keep his book on my list of best personal finance books to make you think outside of the box.