Hello readers, welcome to Deep dive in finance once again. Today we are going to present to you the most famous book “RICH DAD POOR DAD” to understand your finances better.
You can purchase this book here.
Let’s be honest to ourselves are you really happy with your finances right now! Do you feel the need of an extra source of income?
Well you need to go through this blog post and you will be more than clear what is going wrong with your finances.
In the realm of personal finance books, “Rich Dad Poor Dad” by Robert Kiyosaki stands out as a guide that’s changed the way many people think about money. In this blog post, we’ll break down the key ideas in the book and show you how they can make a real difference in how you manage your finances.
At the end I will tell you my honest experience, how it changed my life.
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Key lessons
Two Dads, Two Approaches
The book tells a story about two influential figures in Kiyosaki’s life: “Rich Dad” and “Poor Dad.” These two represent very different ways of handling money. Rich Dad embodies the path to financial success, emphasizing financial knowledge, investing, and entrepreneurship. On the other hand, Poor Dad represents the traditional approach of job security, formal education, and working for a paycheck.
The Value of Learning About Money
“Rich Dad Poor Dad” emphasizes the importance of understanding money and finances. It points out that our regular school education doesn’t teach us much about managing our money effectively. To fill this gap, the book encourages readers to actively seek financial education, which can involve reading books, attending workshops, or learning from those who have succeeded financially.
1. Inadequacy of Traditional Education
The book highlights that the education system tends to focus on academic subjects but provides limited guidance on practical financial matters. Most people go through years of schooling without acquiring the necessary knowledge to manage their finances effectively. This leaves them ill-prepared for the real-world challenges of budgeting, investing, and building wealth.
2. The Role of Financial Education
“Rich Dad Poor Dad” stresses that financial education is a prerequisite for making informed financial decisions. It encompasses understanding concepts like budgeting, saving, investing, taxes, and debt management. With financial education, individuals can take control of their money, make wise investments, and avoid common financial pitfalls.
3. The Act of Active Learning
The book encourages readers to be proactive in their pursuit of financial education. This might involve reading books and articles on personal finance, attending workshops or seminars, or taking online courses. The idea is to actively seek out resources and information that can help improve financial literacy.
Assets and Liabilities
The book introduces the concept of distinguishing between two financial terms: assets and liabilities. Assets are things that bring money into your pocket, like investments or properties that generate income. Liabilities, in contrast, are things that take money out of your pocket, like mortgages or credit card debt. The book stresses the importance of acquiring income-generating assets while reducing liabilities to gain financial independence.
Embracing Entrepreneurship and Investment
“Rich Dad Poor Dad” promotes a shift in mindset towards entrepreneurship and investment. Rich Dad encourages taking calculated risks, like starting a business or investing in real estate, as ways to achieve financial growth. These endeavors often provide financial freedom because they can generate income without requiring you to work a 9-to-5 job.
The Freedom of Financial Independence
The ultimate goal of the book is to help readers achieve financial independence. This means you’re not dependent on a job or paycheck to support your lifestyle, which is also the goal of this blog channel. Financial independence offers you more personal freedom and the ability to pursue your passions and interests.
Critiques and Controversies
While “Rich Dad Poor Dad” has inspired many, it has also faced criticism.
In general, the book left me feeling incredibly enthusiastic, and I genuinely enjoyed reading it!
However, there were segments of the book that didn’t resonate with me. Occasionally, I felt a bit out of sync with the author (maybe I still have a more conservative mindset? Haha).
One of the aspects I found a bit biased was the author’s strong inclination towards real estate investing and small-cap stocks. Additionally, he didn’t seem particularly fond of investing in blue-chip stocks or funds (although he didn’t explicitly label them as bad choices).
Now, I’m not against real estate investments or small-cap stocks at all (in fact, I’m quite interested in both). However, the author portrayed them as almost effortless, and I couldn’t help but feel like he made it all seem too easy!
Throughout the book, Kiyosaki shared numerous examples of his experiences with real estate investing. For instance, he mentioned a real estate deal where he made $50,000 in just five hours with minimal effort. Realistically, though, you and I both know that most people aren’t “sophisticated” investors and can’t easily relate to such examples.
My lingering question was: How can I replicate your level of success? Where should I even begin?
Kiyosaki also stressed the importance of having the right mindset to spot opportunities, asserting that it’s not just about what your eyes see, but how your mind perceives things. I understand the significance of mindset, but again, I felt he oversimplified it.
5 key take away lessons from “RICH DAD POOR DAD”
- Financial Education Is Crucial: Takeaway: Traditional education often overlooks financial literacy, so it’s essential to educate yourself about money matters. Explanation: The book stresses that schools don’t usually teach us how to manage our finances. To succeed financially, it’s vital to actively learn about money, whether through books, courses, or mentors.
- Distinguish Between Assets and Liabilities: Takeaway: Understand the difference between what makes you money (assets) and what costs you money (liabilities). Explanation: To build wealth, focus on acquiring assets like investments or income-generating properties while minimizing liabilities like high-interest debt.
- Embrace Entrepreneurship and Investment: Takeaway: Consider starting a business or investing in assets like real estate or stocks to create income streams and financial freedom. Explanation: The book encourages you to think beyond a traditional job and explore opportunities in entrepreneurship and investments. These can lead to financial independence.
- Seek Passive Income: Takeaway: Aim for income that comes in without you actively working for it, such as rental income or dividends. Explanation: Passive income allows you to earn money even when you’re not directly working. This can provide financial security and free up your time for other pursuits.
- Develop a Financial Mindset: Takeaway: Train your mind to see opportunities and take calculated financial risks. Explanation: Success in money matters often depends on how you perceive and seize opportunities. Cultivating a mindset that recognizes financial possibilities can be the key to wealth.
Personal experience
First of all I want to make it clear that this is a subjective topic about how someone feel about something, similarly I will honestly talk about the impact of this book on me.
Most importantly it changed the way I used to see the word “Finance”.
Earlier I was unaware of the fact that upbringing could make such a huge impact on success of someone.
This book taught me that managing our finances is not that difficult if we are alert about our expenses and income. Basically this book teach us to maintain a balance between assets and liabilites.
At the end I want to say that this book is a must try for everyone no matter what your age is.
Conclusion
“Rich Dad Poor Dad” is more than just a book; it’s a guide to changing how you think about money. By understanding the lessons of Rich Dad and Poor Dad, you can start reshaping your financial life. It may not have all the answers, but it encourages you to think differently about money, assets, and financial education. Whether you’re just starting on your financial journey or looking to fine-tune your strategy, this book offers a valuable perspective that can set you on the path to financial success and independence. So, why not give it a read and see how it might transform your approach to money and wealth?
As we come to the end of this article, I hope that you found the information helpful and informative. However, if you still have questions or concerns about the topic, please do not hesitate to reach out. I welcome any and all inquiries and would be more than happy to assist you in any-way that I can.
So, if there’s something that you’d like me to clarify or if you have a different perspective that you’d like to share, please leave a comment below. I will make sure to read and respond to each and every one of your comments as soon as possible.
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