Notes from

Rich Dad Poor Dad

by Robert Kiyosaki

Chapter 1: The Rich Don’t Work For Money

  • Most people work for money because their emotions of fear and greed control them into taking offers of money for long, arduous work, while deluding themselves into thinking that they aren’t interested in earning money.
  • Instead of working for money, find ways to make money work for you. Switch from work -> money to money -> more money.

Chapter 2: Why Teach Financial Literacy?

  • “Rule #1: You must know the difference between an asset and a liability, and buy assets.”
    • An asset puts money into your pocket while a liability takes money out. It’s that simple.
  • Track your cash flow. Where money is going in and out with a table of assets vs. liabilities and income vs. expenditures. This will show you whether something is an asset or liability.
  • Don’t think that more money makes you richer because often, more money results in more expenditures and taxes. Think: higher income, bigger house, nicer car, etc.
    • Don’t fall into the rat race of one-up-manship.
  • To get richer, increase your assets to increase your income while decreasing your liabilities and expenditures.
  • Without assets, your only income comes from your job, which is dependent on others and liable to loss. Lack of freedom prevents you from taking the risky investments that have the chance of paying off.
    • When working for a paycheck, you work to get your bosses richer, the government richer, and your creditor (usually banks).
  • Use Fuller’s definition of wealth: “if you stopped working today, how many days could you survive?”

Chapter 3: Mind Your Own Business (or how to get create a business to become independent)

  • “That secret is: Mind your own business. Financial struggle is often directly the result of people working all their lives for someone else.”
  • Your profession is the industry you work in; your business is what you personally own (assets) and profit off of.
    • More jobs or income won’t help get out of the rat race.
  • Net worth is misleading because it doesn’t take into taxes with liquidating assets.
  • “Keep expenses low, reduce liabilities, and diligently build a base of solid assets.”

Real Assets:

  • Businesses that do not require my presence I own them, but they are managed or run by other people. If I have to work there, it’s not a business. It becomes my job.
  • Stocks
  • Bonds
  • Income-generating real estate
  • Notes (IOUs)
  • Royalties from intellectual property such as music, scripts, and patents
  • Anything else that has value, produces income or appreciates, and has a ready market
  • Buy luxuries last, after filling your asset column.

Chapter 4: The Power of Taxes and Corporations

The Composition of Financial IQ:

  1. Accounting - the ability to read numbers and identify the strengths and weaknesses of a business
  2. Investing - money -> more money
  3. Understanding markets - supply and demand
  4. The Law - understand the legal and tax benefit to having an incorporated business

Chapter 5: The Rich Invent Money

  • Figure out how to use your ideas, and not just your work, to make money.
  • To become the type of investor that really makes money:
    • Find opportunities that everyone else has missed.
    • Raise money (doesn’t have to be from a bank!).
    • Organize smart(er) people around you.

Chapter 6: Work to Learn, Not for Money

  • Most people think they need to specialize to make more money in any profession.
  • But this logic is counterintuitive: study more about less?
  • Instead, develop a variety of skills to expand your abilities into new markets.
  • “Most people need only to learn and master one more skill and their income would jump exponentially. I have mentioned before that financial intelligence is a synergy of accounting, investing, marketing, and law. Combine those four technical skills and making money with money is easier than most people would believe. When it comes to money, the only skill most people know is to work hard.”

The main management skills needed for success are:

  1. Management of cash flow
  2. Management of systems
  3. Management of people”

Chapter 7: Overcoming Obstacles

  • Use loss and defeat as motivating factors, rather than seeing them as setbacks.
  • Don’t let your pain of losing money (loss) be greater than the joy of being rich (gain).
  • If you want to grow rich, you can’t play it safe. You must be focused (following one course until successful), not balanced.
  • Don’t be a cynic. Use your negativity to find solutions!
    • The “I-don’t-wants” hold the key to your success, as if you instead of giving up, find a solution to your problems, then you will succeed.
  • Don’t think that you can’t do something. Think, how can I do this?
  • To cure laziness, always ask yourself why you are/should/want to accomplish this task to motivate you.
  • Educate yourself on your weaknesses.

Chapter 8: Getting Started

Tejas Gupta

New York City, USA
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Tejas Gupta is a Princeton University student in the Department of Computer Science. He is currently studying at ETH Zürich.