What The Rich Teach Their Kids About Money— That The Poor And Middle Class Do Not!

About the Author

Robert Kiyosaki, the author of Rich Dad Poor Dad, is an investor, entrepreneur specializing in mining and real estate, as well as an educator.

With perspectives on money and investing that often contradict conventional wisdom, Robert has earned an international reputation for straight talk, irreverence, and courage.

Introduction:-

Rich Dad Poor Dad is Robert Kiyosaki's story of growing up with two dads — his real father and the father of his best friend, his rich dad — and how both men shaped his thoughts about money and investing. The book explodes the myth that you need to earn a high income to be rich and explains the difference between working for money and having your money work for you. It reveals importance about financial literacy and building wealth through investing in assets, owning businesses. 

Lesson's of Rich Dad Poor Dad

1. Lesson 1: The Rich Don’t Work for Money
2. Lesson 2: Why Teach Financial Literacy?
3. Lesson 3: Mind Your Own Business
4. Lesson 4: The History of Taxes and The Power of Corporations
5. Lesson 5: The Rich Invent Money
6. Lesson 6: Work to Learn—Don’t Work for Money

Important Topics:-

1. The Poor and middle-class work for money, the rich have money work for them.

Talk to just about anyone about how to make money, and the conversation will inevitably gravitate toward jobs. That's not wrong thinking either, at least not early in your life. The first step toward building wealth is generating a basic income. If you have no assets, then a job is certainly the most convenient way to produce a cash flow.

        But the difference between rich people and everyone else is that the rich don't stay in the job phase for very long. They realize early that to become rich, they need to become the people who hire others into jobs, and not a job holder. By contrast, the rest of us typically spend our lives in the job phase. That locks you into working for money for the rest of your life.

There is a difference between being poor and being broke. Broke is 

temporary, the poor is eternal.

People life is forever controlled by two emotions: fear and greed.

2. It's not how much money you make, it's how much money you keep

Rich people acquire assets and the poor and middle-class people acquire liabilities- that they think as assets. An asset is something that puts money in your pocket, a liability takes money out of your pocket. Wait first, you know about what is the income statement, financial statement, cashflow.

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

Middle-class people struggle because people can be highly educated, professionally successful, and financially illiterate. The asset column of the poor didn't generate any income but their expenses growing. So, even they make more money they are in the same financial position. 

On the other side, The asset column of the rich generates more than enough income to cover expenses, with the balance reinvested into the asset column. The assets column continues to grow and therefore the income it produces grows with it. The result is that the rich get richer.

3.Mind your own Business

This is the secret of rich people. Financial struggle is often directly the result of people working all their lives for someone else. Many people  simply have nothing at the end of working days show their

efforts.

To become financially secure, a person needs to mind their own business,.Your business revolves around your assets column, 

not income column.

Minding your own business means, to build and keep your asset column strong. Once a dollar goes into it, never let it come out. Think of this way:- Once a dollar goes into your asset column, it becomes your employee. The best thing about money is that it works 24 hours a day and can work for generations.

Start minding your own business, keep your daytime job, but start buying real assets, not liabilities.

According to the author, the real assets fall into the following categories:

• 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

4.The History of Taxes and the power of the Corporation

A corporation can do many things that an employee cannot, like pay expenses before paying taxes. That is a whole area of expertise that is very exciting. Employees earn and get taxed, and they try to live on what is left. A corporation earns, spends everything it can, and is taxed on anything that is left. It’s one of the biggest legal tax loopholes that the rich use. They’re easy to set up and are

not expensive if you own investments that are producing good cashflow. For example, by owning your own corporation, your vacations can be board meetings in Hawaii. Car payments, insurance, repairs, and health-club memberships are company expenses. Most restaurant meals are partial expenses, and on and on. But it’s done legally with pre-tax dollars. 

Financial IQ is made up of knowledge from four broad areas of expertise: 

1. Accounting:-Accounting is financial literacy or the ability to read numbers. This is a vital skill if you want to build an empire. The more money you are responsible for, the more accuracy is required, or the house comes tumbling down. This is the left-brain side or the details. Financial literacy is the ability to read and understand financial statements that allow you to identify the strengths and weaknesses of any business. 

2. Investing:- Investing is the science of “money making money.” This involves strategies and formulas which use the creative right-brain side. 

3. Understanding markets:-Understanding markets is the science of supply and demand. You need to know the technical aspects of the market, which are emotion-driven, in addition to the fundamental or economic aspects of an investment. Does an investment make sense or does it not make sense based on current market conditions? 

4. The law:- A corporation wrapped around the technical skills of accounting, investing, and markets can contribute to explosive growth. A person who understands the tax advantages and protections provided by a corporation can get rich so much faster than someone who is an employee or a small-business sole proprietor. It’s like the difference between someone walking and someone flying. The difference is profound when it comes to long-term wealth. 

Financial IQ is actually the synergy of many skills and talents. 

5. The rich invent money

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

The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.

In the Information Age, money is increasing exponentially. A few individuals are getting ridiculously rich from nothing, just ideas, and agreements. So, Why develop your financial genius? The answer is to make money fast and move boldly forward.

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

Financial genius requires both technical bits of knowledge as well as courage. It is gambling if you know what you're doing. It is gambling if you're just throwing money into the deal and praying.

There are two kinds of investors: 

1. The first and most common type is a person who buys a packaged investment. They call a retail outlet, such as a real estate company, a stockbroker, or a financial planner, and they buy something. It could be a mutual fund, a REIT, a stock, or a bond. It is a clean and simple way of investing. An analogy would be a shopper who goes to a computer store and buys a computer right off the shelf. 

2. The second type is an investor who creates investments.  This investor usually assembles a deal in the same way a person who buys components builds a computer. I do not know the first thing about putting components of a computer together, but I do know how to put pieces of opportunities together or know people who know-how.

It is this second type of investor who is the more professional and rich investor. It is important to learn how to put the pieces together because that is where the huge wins reside, and sometimes some huge losses if the tide goes against you. 

If you want to be the second type of investor, you need to develop three main skills. 

1. Find an opportunity that everyone else missed. 
2. Raise money.  
3. Organize smart people.

6. Work To Learn - Don't work for money

A little talented people earn a lot of money and many doctors, dentists, and other highly educated people struggle financially. Because They are one skill away from great wealth. This means that most people need only to learn and master one more skill and their income would jump exponentially. i.e Financial intelligence

Financial intelligence is a synergy of accounting, investing, marketing, and law.

you want to know a little about a lot.

In school and in the workplace, the popular opinion is the idea of specialization: that is, to make more money or get promoted, you need to specialize. But if want to be rich you only need to know a little about every sector.

Job is an acronym for " Just Over Broke".

Unfortunately, I would say that applies to millions of people. There is a horrible management theory that goes." Workers work hard enough to not be fired and owners pay just enough so that workers won't quit. Instead, the author recommends to young people to seek work for what they will learn, more than what they will earn. Look down the road at what skills they want to acquire before choosing a specific profession and before getting trapped in the Rat Race. 

The main management skills needed for success are: 

1. Management of cash flow 

2. Management of systems 

3. Management of people

The most important specialized skills are sales and marketing.  The ability to sell—to communicate with another human being, be it a customer, employee, boss, spouse, or child—is the base skill of personal success. Communication skills such as writing, speaking, and negotiating are crucial to a life of success. 

Once people have studied and become financially literate, they may still face roadblocks to becoming financially independent. There are five main reasons why financially literate people may still not develop abundant asset columns that could produce a large cash flow.

 

The five reasons are:

 1. Fear 

 2. Cynicism

 3. Laziness

 4. Bad habits

 5. Arrogance

• For most people, the reason they don’t win financially is that the pain of losing money is far greater than the joy of being rich.
• Failure inspires winners. Failure defeats losers.
• Rich dad believed that the words  “I can’t afford it”  shut down your brain. “How can I afford it?” opens up possibilities, excitement, and dreams.
• There is gold everywhere.  Most people are not trained to see it. 

Who Is This Book For? 

This book is for people who are ready to move beyond job security and begin to achieve financial security. It’s not an easy life path, but the prize at the end of the road, financial freedom, is worth the journey.

Conclusion -

Rich Dad, Poor Dad is an extraordinary book, in the literal sense. I cannot fully express how much this book transformed my vision of money and most especially my perception of wealth.

Nowadays, I am firmly convinced that you can learn how to become rich and that financial freedom is a realistic goal if you move towards it methodically and patiently.