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RICH DAD POOR DAD WHAT THE RICH TEACH THEIR KIDS ABOUT MONEY- THAT THE POOR AND MIDDLE CLASS DO NOT ! ROBERT T. KIYOSAKI
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Contents Introduction Rich Dad Poor Dad...................................................................4 Chapter One Lesson 1: The Rich Don’t Work for Money ..................................6 Chapter Two Lesson 2: Why Teach Financial Literacy......................................9 Chapter Three Lesson 3: Mind Your Own Business.............................................12 Final Thoughts .........................................................................15
4 Introduction RICH DAD POOR DAD Having two dads offered me the choice of contrasting points of view: one of a rich man and one of a poor man. I had two fathers: one rich and one poor. Both were intelligent, hardworking, successful men who earned substantial incomes, but they had very different views about money, education, and success. One father believed in getting a good education, finding a secure job, and work- ing hard for money. The other believed in learning how money works, taking calculated risks, and making money work for you. Having two fathers gave me the opportunity to compare their different ways of thinking instead of simply accepting one point of view. I began asking ques- tions, thinking deeply, and choosing what made sense to me. I noticed that their attitudes toward money shaped their financial lives. One often said, “I can’t afford it,” while the other asked, “How can I afford it?” One focused on job security and benefits, while the other focused on financial inde- pendence and creating opportunities. Both believed strongly in education, but they disagreed about what should be learned. One wanted me to study hard so I could get a good job. The other wanted me to study money and financial skills so I could build wealth. At the age of nine, I decided to learn from my “rich dad” about money—not simply because he was rich, but because his way of thinking made me curious. His lessons taught me to question what I was told, understand how money works, and ultimately think for myself.
5 A Lesson from Robert Frost Robert Frost is my favorite poet. Although I love many of his poems, my favorite is “The Road Not Taken.” I use its lesson almost daily. The Road Not Taken Two roads diverged in a yellow wood, And sorry I could not travel both And be one traveler, long I stood And looked down one as far as I could To where it bent in the undergrowth; Then took the other, as just as fair, And having perhaps the better claim, Because it was grassy and wanted wear Though as for that the passing there Had worn them really about the same, And both that morning equally lay In leaves no step had trodden black. Oh, I kept the first for another day! Yet knowing how way leads onto way, I doubted if I should ever come back. I shall be telling this with a sigh Somewhere ages and ages hence; Two roads diverged in a wood, and I— I took the one less traveled by, And that has made all the difference.
6 Chapter One LESSON 1: THE RICH DON’T WORK FOR MONEY The poor and the middle class work for money. The rich have money work for them. “Dad, can you tell me how to get rich?” At nine years old, Robert asked his father this question after he and his friend Mike were excluded from a beach trip because they were con sidered “poor kids.” Seeing other children enjoy things his family could not afford made Robert determined to understand how people became rich.His father told him, “If you want to be rich, you have to learn to make money.” When Robert asked how, his dad simply replied, “Use your head, Son.” This conversation became the beginning of Robert’s journey to understand money. Growing up in a town where wealthy families and working-class families lived side by side, he began noticing the differ ences in how people lived and thought about money. Instead of giving Robert an easy answer, his father’s response pushed him to think for himself and find a way to learn how money really worked. A Partnership Is Formed The next morning, Robert told his best friend Mike about his father’s advice: if they wanted to become rich, they needed to learn how to make money. The two boys felt poor compared with their class- mates, who had new bicycles, baseball gloves, and other things they could not afford.Mike and Robert decided to become business part- ners and started thinking of ways to earn money. Inspired by a science book, they came up with an unusual idea: collecting used toothpaste tubes and turning the lead inside them into coins.
7 For several weeks, they collected toothpaste tubes from their neighbors and finally built a small production line at Robert’s home. They melted the lead tubes and poured the liquid into plaster molds, creating what looked like nickels. Excitedly, they believed they had dis covered a way to make money. The Lessons Begin The next Saturday, Robert and Mike met Mike’s father to learn how to make money. Although his home was simple, Robert quick ly noticed that Mike’s father was a busy and successful businessman, managing warehouses, restaurants, construction projects, and stores. When the boys asked him to teach them how to become rich, he offered to teach them through real work instead of classroom lessons. His condition was simple: they had to work for him if they wanted to learn. He offered them a job at his store for 10 cents an hour, three hours every Saturday. Robert hesitated because he had a softball game that day, but Mike’s father reminded him that opportunities require decisions. Thirty Cents Later For three weeks, Mike and Robert worked every Saturday at Mrs. Martin’s grocery store, doing boring but necessary work for just 10 cents an hour. By noon, they earned only 30 cents each. Robert spent his money on comic books, but soon he began to feel frustrated. He had taken the job to learn how to make money from Mike’s dad, yet all he had learned so far was how to work for very little. Waiting in Line on Saturday On Saturday morning, Robert returned to meet Mike’s dad, de termined to ask for a raise. After waiting nearly an hour, he finally confronted him and angrily complained about the low pay and broken promise to teach him. Instead of apologizing, Mike’s dad explained that life teaches through experience, not lectures. The difficult job and low pay were designed to give Robert a real lesson about working for money. Lesson #1: The Rich Don’t Work for Money Robert and Mike continued working three hours every Saturday without pay. The work itself became easier, but missing baseball games and not being able to buy comic books made Robert frustrated.
8 After three weeks, Rich Dad visited the store and took the boys for a walk. Sitting at a picnic table, he asked them a simple question: “Learn anything yet?” The boys looked at each other, shrugged, and admitted they hadn’t. Avoiding One of Life’s Biggest Traps Rich Dad explained that one of the biggest traps in life is allowing fear and desire to control our decisions about money. Fear of not hav ing enough money pushes people to work harder and search for job security. Once they receive a paycheck, desire takes over, making them want better things, more comfort, and more money. This creates a re peating cycle: work, earn, pay bills, and then work again. He called this cycle the “Rat Race.” People often believe that earn ing more money will solve their problems, but without understanding how money works, they may simply spend more and remain trapped in the same cycle.
9 As adults, Mike and Robert chose different paths, but both benefit ed from the financial lessons Rich Dad taught them as children. Robert explains that true financial freedom is not simply about earning a lot of money—it is about building wealth that can continue to grow without depending entirely on your work. He also shares the story of successful businessmen who later lost their fortunes, showing that earning money does not guarantee lasting wealth. The important lesson is that financial intelligence matters more than income alone. People need to understand how to manage, protect, and grow their money. Rich Dad compared building wealth to constructing a skyscrap er: before building high, you must first create a strong foundation. For him, that foundation was financial literacy. He taught Robert and Mike the basics of accounting and money through simple pictures and examples, helping them understand the difference between assets and liabilities. The central lesson is simple: if you want to build lasting wealth, start with a strong financial foundation and learn how money works. Rule #1: Know the Difference Between Assets and Liabilities Rich Dad taught Robert and Mike a simple but powerful lesson: if you want to become rich, learn the difference between assets and lia bilities, and focus on acquiring assets. He explained that many people struggle financially because they misunderstand how money works. An asset puts money into your pocket, while a liability takes money out. Although the idea sounds simple, understanding it can change the way people manage their finances. Chapter Two LESSON2: WHY TEACH FINANCIAL LITERACY? It’s not how much money you make. It’s how much money you keep.
10 Rich Dad believed that financial success depends not only on how much money you earn, but also on how you use, save, and grow it. He taught the boys that earning a good income is not enough. Without financial knowledge, people may spend everything they earn, buy things that create more expenses, and continue struggling even when their income increases. True financial literacy means under standing where your money comes from, where it goes, and how to make it work for you. His message was clear: building wealth starts with understanding money. By learning to recognize assets and liabilities, people can make wiser financial decisions and build a stronger foundation for lasting wealth. How the Quest for a Financial Dream Turns into a Financial Night mare Many hardworking people follow the same financial path. A young couple gets married, starts with a small home, and works hard to increase their income. As their earnings grow, however, their ex penses often grow with them. They buy a bigger house, a new car, fur niture, and other things, gradually taking on more debt. Before long, they can find themselves caught in the “Rat Race”— working harder simply to keep up with higher expenses and payments. When financial problems appear, they often believe the solution is to earn more money. But Rich Dad explains that the real problem is often a lack of financial literacy and an inability to understand cash flow. He encouraged Robert and Mike to question common financial beliefs rather than simply following the crowd. Instead of assuming that a bigger house, higher income, or more debt automatically means greater wealth, they learned to ask, “Does this really make sense?” The key lesson is that earning more money does not necessarily create wealth. What matters is how money flows through your life and whether you are building assets that can support you in the future. A strong financial foundation begins with understanding the differ ence between assets and liabilities and learning to make thoughtful financial decisions.
11 Why the Rich Get Richer Rich Dad explained that the rich become richer because they focus on building income-producing assets. The income from these assets covers their expenses, and the extra money is reinvested to buy even more assets. As the asset column grows, so does the income it produces. The middle class often follows a different pattern. Their main source of income is a salary, and as their income increases, their tax es and expenses often increase too. They may buy bigger homes, cars, and other liabilities, leaving little money to invest. This can keep them trapped in the “Rat Race,” constantly working to maintain their life style. The key is to focus on building assets while keeping unnecessary expenses and liabilities under control. Over time, assets can generate enough cash flow to cover living expenses, reducing dependence on a paycheck. Rich Dad’s simple idea was: The rich buy assets. The poor have expenses. The middle class buy liabilities they think are assets.
12 Chapter Three LESSON3: MIND YOUR OWN BUSINESS The rich focus on their asset columns while everyone else focuses on their income statements. One of the most important lessons Rich Dad taught Robert and Mike was to “mind your own business.” At first, this sounded like ordi- nary advice, but Rich Dad meant something much deeper. He wanted them to understand that there is a difference between having a profes- sion and having a business of your own. A person may be a teacher, banker, doctor, engineer, chef, or me- chanic. That is their profession—the work they do to earn an income. But their profession is not necessarily their business. Rich Dad believed that while people could continue working in their chosen professions, they should also build something for themselves by developing their asset column. He often pointed out that many people spend their entire lives working for someone else. They work for a company, pay taxes to the government, and then use much of their remaining income to pay banks through mortgages, loans, and credit-card debt. They may earn a good salary, but very little of that money is actually building their own financial future. Rich Dad wanted Robert and Mike to think differently. Instead of focusing only on getting a better job, earning a higher salary, or re- ceiving a promotion, they should focus on building assets that could generate income. A higher salary can certainly help, but if all the extra money is spent on bigger expenses and more liabilities, it does not nec- essarily create wealth. This is why Rich Dad’s advice was simple: keep your day job, but start minding your own business.
13 Many people confuse their profession with their business. For ex- ample, someone might say, “I am a banker.” But if that person works for a bank and does not own it, banking is their profession—not their busi- ness. The same applies to a chef who works in a restaurant, a teacher who works for a school, or an employee who works for a large compa- ny. There is nothing wrong with having a profession. In fact, profes- sional skills are important and can provide a stable source of income. The problem begins when people depend completely on their salary and never build anything of their own. Rich Dad believed that a person should gradually create a strong asset column while continuing to earn a regular income. Instead of al- lowing every increase in salary to disappear into new expenses, part of that income could be used to acquire assets. The goal is not simply to earn more money, but to make sure that some of the money you earn is working toward your financial indepen- dence. Rich Dad’s idea of “minding your own business” was closely con- nected to the lesson about assets and liabilities. An asset is something that can put money into your pocket, while a liability takes money out. Therefore, building wealth means gradually increasing the assets that can produce income. These assets could include businesses that do not require your constant presence, stocks, bonds, income-generating real estate, notes, royalties, or other investments that have value and can produce in- come. The important point is that you do not have to quit your job imme- diately to begin building your own financial future. You can keep work- ing, earn your regular income, and slowly use part of that income to build your asset column. Rich Dad himself encouraged this approach. Robert explains that even while working for large organizations, he continued to work on his asset column by investing in real estate and stocks. He learned that the stronger his understanding of accounting and cash management became, the better he was able to analyze investments and build his financial knowledge.
14 This approach requires patience. Building assets does not always produce instant results. But over time, the goal is for those assets to generate more income, which can then be used to acquire more assets. Rich Dad’s lesson was not that everyone should quit their job and start a company. In fact, he encouraged people to keep their jobs unless they truly wanted to become entrepreneurs. His message was much simpler: do not let your salary be the only thing you are building. Keep developing your professional skills, but at the same time, develop your financial skills. Keep earning an income, but use part of that income to acquire assets. Keep your expenses under control, re- duce unnecessary liabilities, and give your money a chance to work for you. The ultimate goal is to build an asset column strong enough to create income without depending entirely on your physical labor. Mind your own business. Keep your day job if you need it, but build your own financial future. Start with assets, control your liabili- ties, and let your money work for you.
15 The main purpose of this book is to show how financial intelli- gence can help us solve many of the financial problems we face in life. Working hard, saving money, and earning a good income are import- ant, but they are not always enough. We also need to understand how money works and learn how to make better financial decisions. The author explains that you do not need to begin with a large amount of money to become financially successful. What matters is having the right knowledge, recognizing opportunities, and learning how to use money wisely. By starting small and continuing to learn, even a small amount can grow into something valuable. Financial freedom, therefore, is not simply about earning more money. It is about gaining the knowledge to build, manage, and protect wealth. The author encourages readers to educate themselves, start small, take action, and develop the confidence to make smarter financial choices. In the end, the message is simple: your mind and your time are your greatest assets. Learn how money works, build assets, and make your money work for you. The financial choices you make today can shape your future. FINAL THOUGHTS
16 About The Author Robert Kiyosaki Robert Kiyosaki is best known as the author of Rich Dad Poor Dad, one of the most widely recognized personal-finance books. As an entrepreneur, educator, and investor, he has encouraged millions of people around the world to rethink the way they view money, invest- ing, and financial success. Kiyosaki is a strong advocate for financial education and often challenges traditional ideas about money. Rather than simply relying on a salary, he encourages people to understand how money works, build assets, invest for cash flow, and take greater responsibility for their financial future. Through his books and the Rich Dad Company, which he found- ed with Kim Kiyosaki, he has shared financial lessons in a simple and practical way. His teachings often question common advice such as simply getting a good job, saving money, and working for a paycheck. Instead, he encourages people to develop financial intelligence and think independently. His straightforward and sometimes controversial ideas have made him a well-known voice in personal finance. His central message is that financial freedom begins with education—learning how to manage money, build assets, and make informed financial decisions. Through his writing and teachings, Kiyosaki continues to inspire read- ers to look beyond traditional ideas of success and take an active role in creating their own financial future.