Rich Dad poor dad book summary and three keys of financial success
by Russell Scott
let's try to understand why the rich are richer and the poor are poor and the middle class where middle class as explained by Robert Kiyosaki in his book Rich Dad Poor Dad.
now this book is the story of Robert Kiyosaki's life in some ways because he talks about the two most influential figures in his life his poor dad who is his biological father a highly intelligent educated man who has a PhD and has a well-paying job but struggled financially throughout his life on the other hand was his rich dad who was his friend's father and he had only eighth grade education but he went on to become one of the richest men in Hawaii.
Rich dad, poor Dad
so let's try to understand how did these two dads how did these two guys do what they did and we'll dive into the three most important lessons learned from his poor dad Anna's from mr. H tan but before we do that let's talk a little bit about financial statements because most peopleunderstand the difference between income and expense it's very straightforward but they do not understand the difference between assets and liabilities.
Assets
now assets are something that works for you and generate income for you even when you are not working for example a cash flow positive real estate investment that produces $1,000 a month of income is assets a business that produces income for you is an asset on the other hand a liability is always taking money out of your pocket even when it is sitting idle when you're not using it so for example a large house apart for personal use for which you're paying a lot of mortgage every day but it's not really putting any money in your pocket.
Liabilities
now that is a liability a big luxury car you bought for your personal use again that's liability it's losing value every day.
so now that we understand what assets and liabilities are let's understand.
Poor dad mindset ( jobs seekers).


what we teach most kids when we start off what kind of education to get and the poor dad always told Robert. well go ahead and get the best possible education so that you can get a great job and he believed in conventional education his Poor Dad was constantly educating himself teacher himself but he never really learned about money and finances. he was an educated intelligent man. he had a PhD but he was ignorant when it came to finances and how money worked.
Rich dad mindset ( business mindset).

on the other hand his rich dad who had an eighth grade education he always said go and get the best possible education so that you can start your own business or buy a business and give other people jobs a huge difference in mindset his Poor Dad was saying go get a job go get an education so you can get a job while as rich dad was saying go get the best education so you can start a business or buy a business and give other people jobs.
so his rich dad believed in the kind of education where he was constantly feeding his mind about business about finances and there were four keys areas of financial education that he always emphasized on which were accounting investing markets and the laws that surround financing and money.
Difference between Rich dad and poor dad.

Rich dad= money work for him.

Rich dad= money work for him.
Poor Dad= work for money.
Poor Dad


the first person they work for is their employer then they work for the government because the government takes taxes as soon as they receive an income and then they work for the bank because they buy a big house they have a big car.
So they're paying mortgage they're paying interest to the bank and so only after they have paid they have worked for the employer and the government and the bank do they really start to work for themself and then they wonder why they're not rich and here's the challenge for poor and middle-class people.
it's fear and greed that run their lives because they're stuck in a trés they have this fear of not having enough money. So they keep on working hard on their job and keep on trying to make more and more money and then they have this greed.
So they're paying mortgage they're paying interest to the bank and so only after they have paid they have worked for the employer and the government and the bank do they really start to work for themself and then they wonder why they're not rich and here's the challenge for poor and middle-class people.
it's fear and greed that run their lives because they're stuck in a trés they have this fear of not having enough money. So they keep on working hard on their job and keep on trying to make more and more money and then they have this greed.
Rich dad


on the other hand of the next paycheck of a higher paycheck so they're constantly stuck between fear and greed that's what runs their lives they're fearful of starting their own business their own venture and that's where the rich differ Rich Dad said the rich don't work for money. money works for us.
so his mantra his rich dad's mantra was the rich worked to acquire and improve on their assets and these assets produce income.
so rich dad was always acquiring and growing his assets like businesses and cashflow positive real estate and stock and all that stuff and that's what rich people do rich people own their businesses and then they leverage business structures corporation structures and taxation to their advantage.
so rich dad was always acquiring and growing his assets like businesses and cashflow positive real estate and stock and all that stuff and that's what rich people do rich people own their businesses and then they leverage business structures corporation structures and taxation to their advantage.
the 3 keys most important lessons that we've learned from this book.
there we have it the three most important lessons from rich dad poor dad book.
1) lesson (financial education).


Lesson one is so really important lesson to understand that instead of focusing our education on the conventional education. we need to think about educating ourself financially. educating ourself with accounting investing, markets ,laws and everything else that goes around to building a financial portfolio to building a business.
2) lesson( don't work for Money)
the second lesson one of the most important lesson is once let's say you've gone to college and you graduate from college. what do you do next what kind of work should you do and here's the key. the rich don't work for money what do poor and middle-class people do
.
this is what his poor dad said go get a degree and get a job his mantra was go work for money for the rest of your life and that's what poor and middle-class people do. they learn how to work for money they work for others all their lights.
.
this is what his poor dad said go get a degree and get a job his mantra was go work for money for the rest of your life and that's what poor and middle-class people do. they learn how to work for money they work for others all their lights.
3) Lesson
(pay your self first).
(pay your self first).
the third key lesson really important lesson is once let's say you have your education and you are doing something you have a job or a business.how do you invest or spend your money and the key the really important key is to pay yourself first.
now let me ask you a question.
you probably know a lot of people who are making a lot of money but are still broke in the sense.they have almost no real tangible assets. what happened what is the key to these people going broke while some people who are not even making as much money on them they are rich well here is the key.
you probably know a lot of people who are making a lot of money but are still broke in the sense.they have almost no real tangible assets. what happened what is the key to these people going broke while some people who are not even making as much money on them they are rich well here is the key.
the key is when do people pay themself when are you paying yourself now here's what the poor people do.
they have income coming in and then as soon as income comes in it goes out into expenses. they never put the income into an asset they never pay themself they're ignorant about how money works. so the income comes in and goes out as an expense and they never get around to paying themself at all.
they have income coming in and then as soon as income comes in it goes out into expenses. they never put the income into an asset they never pay themself they're ignorant about how money works. so the income comes in and goes out as an expense and they never get around to paying themself at all.
on the other hand the middle class they start with a certain amount of income they spend up that income on liabilities and the liabilities are just become expenses and the money goes out of their expense column and they have very limited assets. they have maybe retirement savings or banks savings or some sort of housing but that's about it they might have higher-income but then they also have higher liabilities which in the end keep taking money out of their pockets. so these middle-class people are paying themself last.
the first thing to do is pay their liabilities and expenses and then they pay themself then they acquire limited assets and they almost get no income from these assets because these assets are very limited or they are in retirement savings or stuff like that however the rich pay themselves first now what that means is that as soon as any income comes in the first invest a portion of it into their assets their money is employed right way the remainder of their income is then used for expenses and liabilities.
so while the poor and the middle class prioritize expenses and liabilities.
the rich prioritize assets the rich ensure that their expenses are much lower than their income and that their liabilities are much lower than their assets and paying themselves first by investing in assets is a big step in that direction.
the rich prioritize assets the rich ensure that their expenses are much lower than their income and that their liabilities are much lower than their assets and paying themselves first by investing in assets is a big step in that direction.
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