Rich Dad, Poor Dad (1997) combines autobiography and personal advice to outline the steps you need to take to become financially independent and wealthy. The author says that the things he teaches in this New York Times bestseller are things we will never learn in society and are things the upper classes pass on to their children to maintain prosperity. The author's great success in his investment career and early retirement at the age of 47 are the best proof of what he said.
Who should read this book:
- Those who want to escape a life of poverty;
- Those interested in getting rich;
- Those who have a passion for the field of investment.
About the author:
Robert T.Kiyosaki is an investor and businessman with an estimated fortune of over $80 million. His book Rich Dad, Poor Dad has sold more than 26 million copies worldwide.
Fear of social disapproval prevents us from escaping poverty and getting rich.
Most of us have heard the term “rat race”, but if asked, how would we define them?
Some people will say it is "an unending habit of working but for others, not for myself". It means that you do all the work, while someone else — the government, the tax collectors, or your boss — gets more out of it than you.
We often talk about “rat race” as something we are all a part of. At the same time, we also see it as something we really hate. So why do we always have to keep racing?
That's because most people's lives carry a fear of social disapproval.
For example, people always have a "mantra" like this: "Go to school, study hard, get a job".
We still live by this view, even though it is very outdated. It looks like you'll get a job after graduation, work for a company for the rest of your career, and retire with a monthly pension. Today, that no longer guarantees you a rich and financially stable life.
The truth is that you can study hard, get into a good school and then graduate with a bachelor's degree and have a well-paying job. However, it is your boss who becomes rich from your hard work.
And yet, we still believe and follow the "mantra" above because of the fear of not meeting the expectations that are instilled in us from birth. Result? We can avoid poverty, but we cannot get richer at all.
It is the fear of not meeting that expectation that keeps us from getting out of the rat race and becoming rich.
Fear and greed can cause people to make bad decisions.
When it comes to money, everyone - rich or not - has two emotions: fear and desire. If you have money, you will be able to buy everything you want. If you don't have them, you carry the fear of never having enough of them.
People who don't care about financial management are especially susceptible to these emotions in decision making.
For example, you just got a promotion and a raise.
You can invest in stocks or bonds, which can make you more money, or you can buy a house or a car for yourself.
If you are a person who neglects financial management, this is when emotions will take over.
The fear of losing will keep you from investing in stocks or bonds, because they carry a fairly high risk, even though they can bring you wealth.
At the same time, greed will cause you to pour money into improving your lifestyle, like buying a bigger house – perhaps a much safer choice than buying stocks.
That's why fear and greed keep us from becoming richer.
So how can we get rid of these emotions?
It's about building a better understanding of finance, about things like investments or risks. Knowing these things will definitely help you make more informed decisions.
Personal and social well-being are both important, but we are not sufficiently educated in finance.
A lot of people think that to become rich just having talent is enough. But in reality, the world is full of very talented people who are still poor. What they lack is financial knowledge, including concepts like accounting, investing, etc.
It is unfortunate that we grow up without this education. Our school system is built to teach people a lot of knowledge in various fields, but among them there is no finance.
Children are not taught about things like saving or investing, and as a result are ignorant about topics like compound interest.
Ignorance about financial matters is not only a problem for young people but also for adults, many of whom have made bad decisions about their money.
For example, politicians are always considered to be the best educated people in society, but there is a reason why the country has always been saddled with public debts: many government politicians do not have qualified and knowledgeable about finance.
Ordinary people too, they can be very poor at dealing with financial problems, as evidenced by the imperfection of their retirement plans. For example, in the US 50% of the workforce works without a pension, while the rest, almost 80%, have inefficient pensions.
Obviously, society has not equipped us with enough financial knowledge, and each individual is forced to learn that knowledge on his own.
Equipping yourself with financial literacy and financial appraisal is the foundation of wealth.
You can start your path to riches at any point in your life, but the sooner the better – if you start at age 20 there is a good chance you will be successful by age 30.
Age aside, the best way to start is to assess your finances, set goals, and learn the knowledge and skills needed to achieve them.
As a first step, take an honest look at your current financial situation. With your job now, what kind of income do you want and expect in the future, and what kind of expenses you can afford. For example, you may find that a new Mercedes is something of a luxury beyond your reach.
Only then can you set specific financial goals. Say, for example, that you want that Mercedes within the next five years.
The next step is to learn and hone your financial literacy. Think of it as an investment – an investment in intelligence.
You can do this in a hundred different ways, but one of the best is: work to learn, not to earn.
For example, if you're afraid of rejection, try working briefly for a social media marketing agency. You may not get a satisfactory salary, but you will gain a lot of experience, sales skills and confidence that will be much needed and useful in the future.
You can also improve your financial literacy in your free time. Sign up for courses, read financial articles, or consult experts…
If you build your foundation well, you have a real chance to become rich.
To become rich, you must learn to take risks.
“Insanity” is seen as doing the same thing over and over and expecting different results. By this logic, if you are expecting to change your financial situation right now, you need to start managing your finances in different ways.
The biggest change you need to make is learning to take risks. All successful people have traded a lot of failures and risks to get where they are today, they succeed because they choose to face them rather than fear them.
Taking risks means you're not always stable and safe with your money – which you always do by depositing them in the bank.
Instead of keeping them that way, invest in stocks or bonds. They are much more risky and risky than depositing in the bank, but have the opportunity to bring you a lot of money.
Or if you don't like investing in stocks or bonds, there are plenty of other types of investments you can try. For example, real estate or tax registration certificate.
Of course, the higher the profitability, the greater the risk taking. With stocks, there is always the possibility that you could lose all of your assets. However, if you don't take the risk in the first place, there won't be any rewards you can reap.
So you can see that taking risks is an important thing you need to learn in order to be successful.
The road to wealth is long, so you need to stay motivated.
The road to wealth is long and arduous. Along the way, it's easy to lose motivation and enthusiasm. For example, when you see a stock that you invest in has dropped dramatically in price. To achieve your financial goals, you need to find a way to stay motivated.
One method is to build a list of "wants" and "don'ts".
Example: “I don't want to end up like my parents.” Or “I want to pay off all my debt within the next 3 years.”
Make a list of the things you want or don't want to make a list and it will help you remind yourself why you entered this path to riches.
Another good way is to use the money on yourself before you pay the bills.
While this may sound implausible, this will help you see exactly how much you need each month to satisfy both of your goals: filling your desires as buy a guitar you like but still have enough money to pay the bills in life.
This doesn't mean you have to spend a lot of money, but just spend money on your hobbies and interests first; Because the pressures of paying your bills in full will push you to find other ways to make more money.
This method also helps you to practice and develop financial discipline, an essential element of successful and wealthy people.
Regarding extrinsic motivations, do your research and learn about the lives of rich people like Warren Buffett or Donald Trump. Learning how they weathered the storms of life is a valuable lesson that will help you maintain your aspirations.
Practice the methods above. Remember, the road is long and you need to stay motivated.
Laziness and arrogance are the enemies of prosperity.
Even if you've equipped yourself with the best financial literacy, personal pitfalls can still keep you from achieving success.
Laziness and pride are two of them. They can ruin all your efforts and efforts.
We often think of laziness as sitting around doing nothing, but in reality laziness doesn't really manifest itself in actions; It also means not doing what needs to be done.
For example, imagine a CEO works 60 hours a week. To outsiders, he wasn't lazy at all. However, by working late every night, he was separated from his family. Maybe he already knows there are some things to do at home, but chooses to bury himself in his work at the company. Since then he has suddenly become a lazy person, he avoids what he should do, and such people have a high tendency to divorce and break up family happiness.
Likewise, arrogance is also a fatal weakness. Contrary to common definitions, in the financial field it can be seen as “uneducated with a large ego”.
Arrogance is actually a huge danger when it comes to making investment decisions. For example, some stockbrokers will try to take advantage of your arrogance to sell more shares to maximize their profits.
So, keep your ego to a certain extent. Thus, you will avoid the risks of getting rich.
Invest in assets and avoid liabilities.
Distinguishing assets and liabilities will help you make the most accurate investment decisions.
Quite simply, assets will bring you money while liabilities will take your money away.
So, it is clear that investing in assets will give you more returns.
Assets include businesses, stocks, bonds, mutual funds, real estate income, etc., and things with value that actually add to your wealth, and can be sold on any property. any time.
When you invest in property, your money becomes your income engine. The more "tools" you have, the better. The goal is to make a profit that exceeds your costs as much as possible.
Unfortunately, many investors confuse assets with liabilities.
For example, a home is often thought of as an asset, but it's actually one of your biggest liabilities. Buying a house means you have to work your whole life to pay your mortgage or living expenses…
This has two disadvantages for you: first, you are bound to incur a large monthly expense for 360 months. Second, that money you can completely invest in more potential things like stocks or real estate.
So, clearly distinguishing between assets and liabilities will help you clearly define what should and shouldn't be invested.
Your career will help you pay the bills, and your business will make you rich.
Most people consider profession and business as one. When it comes to finances, there are the following differences:
A career is what you do during the 40 hours a week that you pay your bills, shop, and pay other living expenses.
Business is different, it is what you invest money and time to help you increase your wealth.
Your career just barely covers your expenses, so to get rich you need to build your business while you're working.
For example, a chef has studied at culinary school and knows all the tricks of the trade. Although her main occupation – chef – is enough for her to live well, with her knowledge she can still become even richer.
So she invests in real estate. Whatever money she has left over each month, she invests in real estate, like buying a house and then renting it out.
Another way, consider a car salesman who spends his extra money each month investing in the stock market.
In both cases, their occupation is enough for them to have a good life. However, investing their extra monthly income has made them richer and more prosperous.
Your income is the basis for investment. Get a stable job, enough for you to live, and then think about investing.
Understanding your tax code can help you minimize your taxes.
Everyone understands that taxes reduce personal wealth, yet many people don't understand how to minimize the amount of tax they pay. There are plenty of ways to do this and still be completely legal.
One way to reduce taxes is to invest money through corporation insurance. If you invest your money through a corporation, the money you earn is much less taxable than investing in your own name.
In the United States, the corporation also brings many other benefits. Debts, for example, would become collective rather than individual liabilities, insuring against loss of investment.
When you're an employee, you work, then pay your taxes, and live on what's left. But when you're covered by an institution, you earn, invest and use as much of your money as you can, and then tax what's left.
So it's not surprising that establishing organizations to invest together will help people get rich quickly.
There are plenty of other ways to keep your taxes down as well; it's just a matter of arming yourself with knowledge of the loopholes of the tax system.
For example, under section 1031 of the Internal Revenue Code of the US tax system, if you sell your current real estate to buy a higher value property, the government will defer taxing you until you Pay off the new property.
That means your capital will grow, while the government will collect your taxes later.
By being aware of how financial systems work, you will know how to reduce the amount of money you have to pay to the government.
Summary
The gist of this book is this: We are not taught about finance in schools, so it depends on the individual's ability to learn to develop this quality. We are only capable of becoming rich if we have financial literacy and a great desire. After all, investing in intelligence is the most important thing, because intelligence is the biggest asset you own.
