This page includes my notes on the Rich Dad, Poor Dad book along with additional notes and comments that come from my work with clients on the subject.  This page is an ever evolving resource, so I suggest bookmarking this page and checking back periodically. 

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Rich Dad, Poor Dad
by Robert Kiyosaki

Rich Dad, Poor Dad by Robert KiyosakiI have read the three main books in this series.  While they are not the best-written works I have ever laid my eyes on, in the words of author Richard Kiyosaki, "I'm a best-selling author.  Not a best-writing author."

These books are full of basic, practical advice.  The knowledge is not specific how-to information, so much as it is a guide to thinking about your financial life.  I found the work truly eye-opening and I have been reading financial books since I was 19. 

I highly recommend each of these books to anyone interested in improving their financial well-being.  These books will not make you a millionare, but they will likely start you on the path to thinking like one.

Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money - That The Poor and Middle Class Do Not! - By Robert T. Kiyosaki
(Notes and comments by John Barker)

Lesson One - The Rich Don't Work for Money

Two years ago I read
Rich Dad, Poor Dad : What the Rich Teach Their Kids About Money That the Poor & Middle Class Do Not! By Robert Kiyosaki.  The book really changed how I think about money and how I “spend/invest” my time.  The book has had a big influence on some of the getSynergized philosophy, not just financially related either.

75 percent or more of the people who take our free self-assessment rate finances as the area of their life they are least satisfied with.  If this is true for you too, I think you will enjoy this series – and I highly recommend looking into the Rich Dad products.

Lesson One/Part One - The Rich Don't Work for Money

What do the rich work for then?  They work for the knowledge that will help them learn to leverage their money.  In other words, they work to learn how to make their money work for them. 

When we go to a job, we are paid for an hour of work.  When that hour of work is complete, so is its ability to produce income.  The rich learn to leverage that same hour of work by creating assets; an asset is defined by Kiyosaki as anything that puts money in our pocket.  So the rich use that same hour of work to produce ongoing income.  That same hour of work may produce an income stream for life.

Kiyosaki points out that for most people a job is a temporary solution to a long-term problem.  If you find yourself living from paycheck to paycheck, you probably understand what he means.  The average person works for money instead of learning how to make their money work for them (we’ll discuss later in this series how to get your money to work for you).

If you find yourself in the position of working for an hourly wage – whether you are in business for yourself or working for another, then you may want to ask yourself how what you are doing is or could be creating a life-time asset.   Aside from money, what are you working towards?  What skill are you learning or could you be learning that will allow you to create leverage?

Rich Dad, Poor Dad offers some really great educational products.   The Cashflow 101 game is a ton of fun – and educational too.  A friend purchased the game (it is expensive, and for a reason) and invited other friends to come by a play for $5 per person.  It was well worth the money for everyone – and she not only paid for the game, but turned it into a money making asset.

Fear and Desire

Clever marketing knows these are the motivating factors in the financial decisions of the average person.  Publishers Clearing House uses the slogan, “You May Already Be a Winner”.  Why?  Because most of us have the desire to win millions and the fear we may be throwing away a winning ticket.   Simply changing that slogan from “Enter to Win” significantly boosted their business.

Fear and Desire.

Fear of being without money motivates people to work harder.   We want to work smarter, not harder.  Fear is the driving force that puts people in jobs they don’t like and keeps them there.  Most financial decisions are made to avoid risk, however, these decisions often put is in greater risk.   Anyone who has experienced the recent rash of layoffs knows what I mean.

Desire causes us to make impulsive decisions.  These decisions often result in the removal of choice.  When high levels of bad debt (good debt puts money in our pocket, bad debt drains money from us) are accumulated, we essentially forfeit at least a portion of our freedom to choose.

Today, when you reach for your wallet, ask yourself whether you are purchasing out of a fear or desire motivation.  If the answer is yes, you may want to reconsider your purchase.  Seek to make all purchases investments – in yourself or the accumulation of assets.

Some questions to ponder:

1.       If I don’t drive a nice car, what do I believe that to mean about me?

2.       Do I envy people with “more” than I have and if so, what do I think they have that I don’t (other than financial resources)?

3.       Are the majority of my purchases assets or liabilities?  If a purchase provides ongoing income, it is an asset.  If a purchase depreciates in value or requires upkeep, it is a liability.

Your Greatest Asset

Financial success does not require an Ivy League education, financial resources or a huge network of connections.  (See Bill Gates)

We are all just an idea away.  Yes, your greatest asset is your imagination and your eye for opportunity.

Opportunity doesn’t exist.  You cannot buy a pound of it at the grocery store.  Opportunity is ever present, depending on one’s point of view.  Opportunity is a function of attitude and outlook.  One person’s junk may be another person’s treasure as the say.  The difference?   Imagination.

Today, look at your world in a different way.  When you pick up a pen, ask yourself, “How is this pen an asset?”  Or, “How could this book become an asset for me?” 

No object is more significant than any other.  You never know where inspiration is going to come from and by staying open to the potential of all things in your life you expand your possibilities.

Other Notes on Lesson One

Life pushes all of us around.  Some give up.  Some fight.  A few learn the lesson and move forward.

If you think I’m the problem, then you have to change me.  If you realize you’re the problem, then you can change yourself, learn something and grow wiser.

The rich have money work for them.

Fear of being without money motivates people to work harder.

Desire starts us thinking about all the things we can buy.

Most people are motivated by their emotions – specifically fear and desire (pain and pleasure).  Emotions take over and we react rather than think.

How can we limit emotions?

How can we create an environment that reduces reaction and encourages proaction?

If fear and desire occupy our thoughts, is there room to create?

Emotion = energy in motion

Look for opportunities

Lesson Two - Why Teach Financial Literacy
Rule One (The only rule)
Know the difference between assets and liabilities.

An asset is anything that puts money in my pocket.
A liability is anything that takes money out.

Wealth is the measure of the cash flow from the asset column compared to the liability column.  How many days could you survive if you stopped working? 

Income does not equal wealth.

Lesson Three - Mind Your Own Business
You must manage your own accounts, create your own business, have your own investments.  Seek the advice of others, but know your business.

Investment vehicles

  1. Business
  2. Stocks
  3. Bonds
  4. Mutual Funds
  5. Income producing real estate
  6. Notes (IOU’s)
  7. Royalties
  8. Anything else that produces income or appreciates in value.

    “Excessive fear and self-doubt are the greatest detractors of personal genius.”(See The Abundance Course / Release Technique )

    Lesson Four - The History of Taxes and Corporations
    Own corporation

    1. Earn
    2. Spend
    3. Pay taxes

    Work for corporation

    1. Earn
    2. Pay taxes
    3. Spend

    Corporate spending is tax deductible (business spending is tax deductible)

    This game is awesome fun - and highly educational.  A friend of mine purchased it and turned it into a real money-maker by inviting friends to play for a small fee.  We were only too happy to pay to play!

    Lesson Five - The Rich Invent Money
    Money is not real.  It is an idea and an agreement.  Value is an agreement. 

    Self-doubt holds us back; it limits our options due to reluctance to take risks.

    Be creative and “invent” ways to make money.  See potential; not “reality”.  Leaders have vision.  Followers must be shown.

    Lesson Six - Work to Learn -- Don't Work For Money
    Take jobs that will only support you in developing the skills to become a business owner or investor.  Learn to sell.  That is the bottom-line of business success.  (SPIN Selling is highly recommended reading)

    “I am a best selling author, not a best-writing author.”

    We are only one idea or one skill away from great wealth.

    Editorial Reviews
    The rich are different from the rest of us, if for no other reason than U.S. tax and securities laws allow them to invest in ways that keep us from catching up to them. That's why 90 percent of all corporate shares of stock are owned by 10 percent of the people. Kiyosaki believes it's possible for anyone to move up into that 10 percent, but it takes a different view of investing than most people have: it takes a plan to be a successful investor. And a plan is more than simply buying and selling, or collecting "assets" that bring in no cash and are thus more akin to liabilities. The way most people invest, "they might as well be pushing a wheelbarrow in a circle," he writes. A plan is "mechanical, automatic, and boring," a formula for success that has worked historically for most of those who've used it. Kiyosaki's "rich dad" (actually, the father of his best friend) tells him the simplest analogy is the game Monopoly: buy four green houses, trade them for one red hotel, and repeat until you become rich.

    The overall message of Rich Dad's Guide to Investing is that this is an abundant world, full of opportunity for the sophisticated investor. However, it sometimes takes a while to find this point. Much of the book is told in dialogues between young Kiyosaki and his rich dad, and these conversations can ramble. There are rewards for the careful reader--for example, in the middle of a section on the basic rules of investing, Kiyosaki's rich dad compares investor education to toilet training: difficult at first but eventually automatic. But getting to these inspired metaphors means wading through a lot of repetitive dialogue. It's a bit ironic that someone who advocates investor discipline should show so little as a writer. But by the end of the book, even the rambling starts to make sense. By the hundredth time you read that the rich don't work for money, and that you don't need money to make money, both concepts start to make sense. It still looks difficult to apply these ideas, but Rich Dad's Guide to Investing certainly makes the case that they'll work for anyone bold and smart enough to practice them. --Lou Schuler

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