RICH DAD, POOR DAD

by Robert T. Kiyosaki

SYPNOSIS
The story is about the narrator and the author, Robert T. Kiyosaki having two fathers - his
biological father who is highly educated and intelligent but is considered the poor dad, and his
childhood bestfriend Mikes father who never finished eighth grade, but is the rich dad. Both of
them advices Robert on how to achieve success in life, but they have a different perspective.
The other says that going to school, getting good grades and finding a safe secure job is the
way to success in life, while the other one says that financial literacy is the key to have success
in life.
Throughout the story teaches the reader on the rich dads point of view, not on how to work for
money but how will money works for you. The book has its chapter and every chapter is a step
to know different kinds of things that are never taught in school, about financial literacies, assets
and liabilities, real estate investments, property taxes and many other more. The six major
lessons that are discussed throughout the book are:
1. The rich dont work for money
2. The importance of financial literacy
3. Minding Your own business
4. Taxes and corporations
5. The rich invent money
6. The need to work to learn and not to work for money

There are also many terms that are introduced in the book, like the Rat Race where a person
lacks financial literacy and is struggling on his life working for money to pay for his liabilities.
Thus, he just ends up on this cycle and never goes up even though his salary raises because
his tax payments raises too and expenses tend to become higher. This is furthermore discussed
in the book and tells us how to get out of the Rat Race.

This book is a good foundation that highlights the things specially about having financial literacy
to be able to know how money works and what will you do with money. It teaches us many kind
of ideas that will help us on what we will do when we are in the real life and to achieve greater
success by using the lessons that we learned from this book.

REVIEW
Rich Dad, Poor Dad revolves around three main characters: Poor Dad, Rich Dad (Kiyosakis
second father) and the son (the author himself as narrator of the book). The essence of each
character is:

Poor dad a highly educated man but lacks financial literacy

Rich dad very little education (never finished eighth grade) but is an expert in financial
literacy

Robert the spectator who learns lessons from both but internalizes only Rich Dads
traits

On the earlier part of the story, I was appealed in the part that one dad says The love of money
is the root of all evil, while the other dad says The lack of money is the root of all evil. Both
statements is true, but for me, the lack of money is stronger than the love of money. It is
because sometimes, this is the cause why thieves and other criminals make crimes just to strive
for money. Others do not love money, it is just that they need it because what will you do if you
have no money at all? How can you survive without being able to buy your primary needs in
life? Thats exactly why I emphasize more the lack of money than the love of money.
Also, the thing about the brain also grasped my attention. It teaches us to work our brains
instead of shutting it off. When you say I cant afford it means that you already shut off your
brain, stopping you to think and makes you become lazy mentally. But when you say How can I
afford it tells that you will put your brain to work, thinking possible ideas to achieve on what you
want. This is a good advice not just for me but also for everyone that is useful when making
decisions.

There are many things that is discussed in Chapter 1 of the book particularly differentiating the
two fathers. On how they teach things and what are the advantages and disadvantages of each
advice of the two fathers.

Lesson 1: The Rich dont Work for Money

The first thing that goes to my mind when I read the rich dont work for money is that, do rich
people really do not work to earn money? But when I think over about it, the phrase has two
different meanings. It depends on how you read it. When you emphasized the word work, then
you will think that rich people do not work. But on the other hand, when emphasized the work
money, then you will understand that they work not because of money. They work to learn
things, and the things they learn can easily be applied to make money over and over again.
In this part of the story, Robert and Mike were taught by the rich dad on how money works for
him. At first, they were employed at Mrs. Martin with a wage of 10 cents per hour. After a while,
Robert complained about the wage that he wants a raise or otherwise hell quit. This is the part
where the lesson starts because rich dad taught many things on how he make things work and
on how money works for him, thus getting out of the Rat Race. The lesson that I learned in this
part is that instead of spending your whole life working to put a little money in your pocket and a
bunch of money in someone elses pocket, have people work hard to put money in your pocket.

Lesson 2: Why Teach Financial Literacy?

It continues in later life of Robert and Mike in 1990s. They both have outstanding achievements
and socio economic status that even if they work or not, their wealth grows automatically. There
is also an example that is being discussed in this part where there are the richest businessmen
who held a meeting and many later years, others go to jail, someone died, broke and penniless.
This was demonstrated to us because as the title says, why teach financial literacy means that
these people lacks financial literacy and that they ended up like that. It tells us that having
financial literacy is an important thing that we must learn because one day we will need it when
we are ready in the real life. Making investments, establishing business etc.

It is also said in this lesson that Intelligence solves problems and produces money. Money
without financial intelligence is money soon gone. In this particular quote tells us that financial
intelligence is an essential aspect to be able to manipulate money and on how will you do with
money. It gives us the essence of the authors advocacy for financial independence.
There are also diagrams that differentiate the cash flow of an asset and cash flow of a liability
that are showed to us in this chapter. Even for me as an accounting student, I can easily
understand what is an asset and a liability for it is taught to us before in our earlier college
years. But in this part, there was another definition of an asset and a liability. Asset is
something that puts money in my pocket. Liability is something that takes money out of my
pocket. There are also many cash flow patterns that at demonstrated in this part. And for my
overall learning, It seems that in this part tells us that asset is valuable and the greater asset
you have, you will generate more income and thus will cover your expenses and if there is
something left behind, you can invest it more to your assets.

Lesson 3: Mind Your Own Business

In this part of the story, I noticed that the author emphasizes to become an investing person
rather than to become an employed person. Example of these is about Ray Kroc who is the
founder of McDonalds. He makes a diagram where it is stated that most people use their
professions as their source of income, while the rich people uses their own assets to generate
income. The author discussed on building assets, real estate investments and stock
investments etc. For me, this is a good lesson and I agree with it because this is practical in real
life and you can use it when there is the time that you made your own assets and how you will
generate income by investing out of it. The title really fits, as is says that mind your own
business, stating that make income out of your own asset and build your own business rather
than being employed in anothers business.

Lesson 4: The History of Taxes and the Power of Corporations

The advantage of a corporation versus that of the individual lies in how corporations pay taxes,
according to the author. He makes this point clearly: individuals earn money, pay taxes on that
money, and live with whats left. The corporation, on the other hand, earns money, spends
everything it can, and is taxed on anything thats left.

It is also mentioned in this chapter about the difference between working for money and money
working for you. If you work for money, you give up to your employer. If money works for you,
you keep and control of the power. In this quote, it is implied that when you are an employed
person, you dont have the full authority and power as you are only limited on things that you are
going to do as ordered by your employer. Unlike when you are the owner and employer of a
business, you have the power and authority to order your employees and there are no limits to
the extent of what you can do.
The author also taught to us the financial knowledge that he acquired through his rich dad. He
otherwise call it financial IQ, which is made up of knowledge from four broad areas of expertise.
This is accomplished by gaining knowledge of accounting, investing, understanding the
markets, and the law. He says being ignorant gets you bullied whereas being informed
translates into you have a fighting chance.
I also learned that rich people with corporations makes expenses first before paying taxes than
people who work for corporations paying taxes first before making expenses.

Lesson 5: The Rich Invent Money

According to this lesson, one thing that holds back all of us is some degree of self-doubt. We
have tremendous potentials, we are blessed with gifts, and we have talents, yet the one thing
that we lacks is our self-confidence. I agree with this since I can experience this sometimes too.
When I perform something that is of my expertise, there is something that is troubling me, and
that is my self-confidence. Also, when it says that when we face the real world outside of
academics, having balls or guts is more important because it decides ones future rather than
school grades. Its not the smart one that get ahead, but the one. I think this is true also
because it is good to have better knowledge but the best one is how you will communicate it,
how you approach others and share them your ideas.
The author encourages people to hire people more intelligent than they because by capitalizing
on the knowledge of others, an intelligent individual builds his own knowledge base and
therefore has more power over those who dont know.

Lesson 6: Work to Learn, Dont Work for Money

This is the chapter where the author talks about the skills individuals need to develop for
financial success.
The reader is given an example of a young woman who had a Masters Degree in English
Literature and who was offended when it was suggested that she learn to sell and do direct
marketing. After all the hard work for her degree, she didnt think she would have to stoop so
low to learn how to be a salesperson, a profession she didnt think very highly of. The author
uses this example to emphasize that there are other skills people need to cultivate to help them
on the road towards financial freedom.
The author mentions management skills. He says individuals need to know how to manage
cash flow, systems, and people. To that he throws in selling and marketing skills. He puts equal
emphasis on communication skills. He says there are many people who have the scientific bent
and hence have a powerhouse of knowledge, but they fail miserably in communications. These
are the people who are one skill away from great wealth.
The author calls attention to one outstanding trait of great wealthy families: they give money
away plenty of it unlike the poor who feel that charity begins at home.

Overcoming Obstacles
The opinion of the author is that five personality traits hamper human beings: fear, cynicism,
laziness, bad habits, arrogance. He explains that while its normal to have fear, what matters is
how one handles it. The author shares his sentiment about his particular fondness for Texas and
Texans: When they win, they win big and when they lose, its spectacular.
The author maintains that its not merely a question of balance but also FOCUS. He
recommends that the Chicken Littles of the world be ignored. Theyre only concerned about the
sky falling, spending the rest of their lives in pessimism. He says he constantly hears people
saying they want to be rich, but when its suggested that money can be made from real estate,
their initial reaction is but I dont want to fix toilets. The author believes its ironic that theyre
more concerned about trivia like fixing toilets rather than what lies ahead in real estate. As a
final point, the author states that it is healthy to be greedy, so when faced with a decision, a
person must always ask, Whats in it for me?

Getting Started
This chapter serves as a section on tips to create and build personal wealth. His first tip is, find
a reason greater than reality to motivate you. What he means by this is to wake up the financial
genius in oneself by empowering the mind. He says that people must have a strong /purpose for
living.
The next tip is to feed the mind. By feeding the mind, the author contends that people acquire
power of choice.
The author also advises people to choose friends carefully. He says to avoid people who
proclaim incessantly that the sky is falling and instead encourages readers to spend time with
people who enjoy talking about money because they may have valuable lessons to share. The
author also believes that people should study one field, and then go out and learn a new one,
although it is important to choose what one studies.
Here is another tip that the author observes most people dont practice: pay yourself first. Even
if short of cash, people must pay themselves first. This goes in tandem with managing three
things efficiently: cash flow, people and personal time.
Another tip the author gives is being generous. He thinks it makes a lot of sense to pay ones
broker well as hes an ally, and your eyes and ears to the market.
The author suggests having heroes. They are indispensable in life because they not only
inspire, they also make it seem so easy. They stimulate the human mind into thinking, If they
can do it, why cant I?
Teach and you shall receive is another tip that the author shares. His words are eloquent
concerning this idea: There are powers in this world that are much smarter than we are. You
can get there on your own, but its easier with the help of the powers that be. All you need to be
is generous with what you have, and the powers will be generous with you.

Still Want More? Here are Some To Dos

This chapter is sort of a supplement to the previous chapter. It gives readers additional tips to
help them reach for financial rewards. One tip is to stop doing what youre doing that is, if its
no longer working or viable. The author encourages readers to look for new ideas, to pick the
brains of individuals who have the experience and who have already done what one aspires to
do. He advises on keeping the learning curve alive, taking courses, buying tapes, attending
seminars.
In looking for real estate investment opportunities, the author recommends looking in the right
places. One way of doing this is to jog around the neighborhood one is interested in. People can
acquire real estate even if they dont have sufficient funds for the down payment. In fact, with a
bit of cleverness, the author says people can even make money with no capital.

ROAD TO SUCCESS
As I have learned many lessons throughout the story, the one thing that for me, makes a road to
success is that never stop your brain from getting to work. This is said from the earlier part of
the story. That when you stop making you brain work, you will get mentally lazy. For me, getting
your brain to work is very important because it leads you to think many different ideas and
solutions and to able to learn about financial literacies to identify the strengths and weaknesses
about a business and how you will run it to generate income. Also, another thing that is a road to
success is that to learn and manage risks rather than to play it safe. It is alright to take risks and
grab opportunities rather than ignore them and just play it safe because you will be stuck like
before in the Rat Race if you do not learn how to manage risks.

Prepared by:

Gerome I. Echano
BSA 4