Go to college.
Get a good job.
Save your money.
Buy a house.
Provide for your family.
Retire at a reasonable age.
These are the cookie-cutter instructions for a happy, financially stable life that everyone receives . . . and hardly anyone questions. It’s the reason most intelligent, high-performers never truly become wealthy. Instead, they find themselves suffering financially, barely able to keep their head above water. As reported by Experian, “Since 2010, consumer debt has increased a whopping 31%,” leaving the average American with over $90,000 in debt. It goes to show Robert T. Kiyosaki’s Rich Dad Poor Dad is more relevant than ever.
Whether it’s keeping up with the Joneses, not making enough money, or poor financial management, a large majority of Americans don’t know how to generate wealth because they have the wrong mindset. They’ve been suckered into following society’s blueprint of the Poor Dad, believing that if they keep their head down and do what they’re supposed to do, they’ll be financially rewarded.
Those with this mentality end up waiting their entire life for that day to come.
According to Kiyosaki, a self-made millionaire, there’s nothing “traditional” about achieving long-term financial success. If you want to become wealthy, you’ll need to scrap everything you’ve learned and adopt a different mindset—that of the nonconformist Rich Dad.
Ready to stop struggling financially? Get started by learning the top lessons in this Rich Dad Poor Dad summary.
Top Differences of Between the Rich Dad Poor Dad Mindset
Growing up, Kiyosaki learned about wealth from two important figures in his life: his Rich Dad (his friend’s father) and his Poor Dad (his own father). Find out the key differences below.
The Poor Dad Mindset
- The Poor Dad is the plight of most poor and middle-class Americans who get caught in the rat race.
- These people aspire to earn more so they can spend more.
- This type of person ends up acquiring liabilities such as a large monthly car payment or an unsustainable mortgage payment.
- Ultimately, someone with this mindset is operating from a place of scarcity, fear, and greed—all of which keep them poor.
The Rich Dad Mindset
- The Rich Dad has a growth mindset and a hunger for becoming financially literate.
- Instead of chasing the next paycheck, they learn to invest their money wisely.
- With financial literacy, they remove themselves from the vicious cycle their counterparts can’t escape.
- This allows them to work because they love what they do, not because they need more money.
- Unlike the Poor Dad, they also let their money work for them, using it to acquire and grow income-generating assets.
Top 5 Lessons From the Summary of Rich Dad Poor Dad
1. Work for Assets
“The rich buy assets. The poor only have expenses. The middle class buy liabilities they think are assets.”
Rich people with a financial education know the difference between an asset and a liability.
Because they do, they set themselves apart from poor people (meaning people with a poor mindset) in the following ways:
- Their income isn’t dependent upon an employer or boss: The streams of revenue a wealthy person has might include dividends, interest, rental properties, and royalties.
- They spend their time, energy, and money on acquiring assets: There are four assets that can make a person rich.
- Businesses (ones that don’t require the founder’s presence)
- Real estate
- Paper (stocks, bonds, mutual funds, and savings)
- Commodities (oil, gold, silver, etc.)
- Wealthy people avoid expenses and liabilities: On a financial balance sheet, this looks like a full asset column, while their expenses (taxes, food, clothing) and liabilities (mortgage payment, consumer loans, and credit card debt) columns are entirely empty. For those financially struggling, the reverse is true. As Kiyosaki puts it: “Their balance sheets are not balanced. Instead, they are loaded with liabilities and have no real assets that generate income. Typically, their only source of income is their paycheck. Their livelihood becomes entirely dependent on their employer.”
- Rich people work for themselves: The Rich Dad only works for another person for a short period of time so they can gain more assets. However, the Poor Dad carries the incorrect belief that working for someone else for a lifetime is what generates wealth.
- The financially well off forget about receiving a paycheck every week: Wealthy people stop chasing money and start chasing opportunities. They work to learn, explore what they’re passionate about, experience human connection, and feel fulfillment and happiness. On the flip side, the poor and middle class work for money. They want more of what they don’t seem to have enough of. Additionally, these people fear that what they do have will run out. As a result, they are constantly in a state of being that operates from a place of fear and greed.
2. Understand Financial Independence Starts with Independence
“The idea that ‘it takes money to make money’ is the thinking of financially unsophisticated people . . . Every self-made person started small with an idea, and then turned it into something big . . . It’s what is in your head that determines what is in your hands. Money is only an idea.”
Too often, people chase financial stability their entire lives because they are dependent upon a structure that’s designed to keep people indebted. Whether it’s paying excessive taxes or spending your life making someone else rich, the default operating system keeps the average American poor.
The solution to getting out of the Matrix is simple.
Becoming financially independent is something everyone can do. This is because all people can learn more about how to become wealthy, change their mindset around money, and increase their financial IQ.
Those with a high financial IQ become experts in four areas:
- Accounting: Properly managing your cash flow requires the ability to read and analyze financial statements. With this analytical skill, you can identify the strengths, weaknesses, and opportunities of any business.
- Investing: Investing is the science of money-making. While it can be a creative process, there are strategies and formulas a person should know and use to generate wealth.
- The Markets: Wealthy people understand supply and demand. Those with a high financial IQ know the emotion-driven market, but also have knowledge of how their investments fit into the grand scheme of the economy. This helps a person invest in assets with the highest return.
- Law: Knowing federal and state law aids business owners and investors in rapidly excelling their wealth. For instance, if you’re aware of tax advantages and the legal protections of a corporation, your wealth will grow quickly. Understanding taxes provides money-making opportunities, gives you some power and control over your finances, allows you to create more assets, and lets you reduce expenses.
With this, you can also capitalize on legal loopholes—a strategy most extremely wealthy people follow. One of the top benefits of owning a corporation is paying for expenses before paying their taxes. It’s how the rich live extraordinary lifestyles without facing massive debt. As their corporation earns money, they spend almost everything the business makes to avoid paying tax. Board meetings in Hawaii, luxury cars, and fine dining are all paid for legally with pre-tax dollars.
Knowing the law also prevents a business owner from financial ruin should a person sue them. Most wealthy people own nothing. Their money is hidden in safe places like corporations and trusts, which protect their assets from creditors.
3. Know When Opportunity Comes Knocking
“There is gold everywhere. Most people are not trained to see it.”
One of the biggest lessons in Kiyosaki’s book is to stop chasing money and start uncovering your opportunities. To do this, be intentional about increasing your financial intelligence. Knowledge is power. With it comes a new type of clarity to see just how many wealth-making opportunities are right in front of you.
Get started by:
- Acquiring the assets you love and want to take care of and invest in.
- Working for free, building contacts, and finding ways to serve others.
- Using your imagination and creativity to identify opportunities. As Kiyosaki explains, “In the Information Age and the age of the Internet, millions of people under the age of 30 are getting rich using their imaginations to create apps that change the world—from Facebook to Uber to Snapchat and others. Those with imaginations thrive while those without it are still looking for a job . . . a job that may soon be replaced by robots and technology.”
- “Inventing money” or finding opportunities that others missed because they don’t have the right skills, knowledge, resources, or connections. As the author says, “Financial intelligence is simply having more options, figuring out ways to create opportunities or altering situations to work in your favor.”
- Gaining experience at identifying great opportunities by applying what you’re learning in the real world.
4. The Rich Mindset
“Money—which isn’t real, by the way, but just what we agree it is—isn’t our greatest asset. Our mind is. Train it well. Millions can be made from nothing more than ideas and agreements.”
We all know someone who appears rich but is one bad day away from bankruptcy. If this summary of Rich Dad Poor Dad teaches you anything, it’s that you can make a million dollars per year and still be broke. It’s all about your mentality. For example, this might look like a millionaire buying a 50 million dollar house they can’t afford, purchasing seven luxury cars, and spending exorbitant amounts of money on clothes.
Truthfully, a person with a Rich Dad mindset who only has a $25,000 salary is better positioned to experience exponential wealth. This is because they will use their money wisely to buy assets, capitalize on various income-generating opportunities, and quickly multiply the money they keep. However, the person with low financial intelligence will sink further into debt, letting their bad habits get the best of them.
Throw a wrench in the Poor Dad cycle by overcoming:
As Kiyosaki says, “The primary difference between a rich person and a poor person is how they manage fear.” Those with the Poor Dad mentality cling to their money in the hopes of not losing it. They don’t realize this mindset is exactly what causes them to lose it (to expenses and liabilities).
To play the game, you’ve got to take some risks. Understand that even if you do fail, this doesn’t define you. As John D. Rockefeller said, “I always tried to turn every disaster into an opportunity.” This is the mindset of the wealthy. Even when they do suffer losses, they ask themselves, “How should I respond to this failure? How can I let it inspire me? What can I do to move past it?”
Cynics assume the worst in themselves and others. They hold the mentality that people are intrinsically self-interested and don’t act with pure motives.
Hold the reason you want to become wealthy near your heart: It is your truth. This will protect you from the internal noise (negative self-talk, “what ifs,” and limiting beliefs). It’ll also keep you from caring what other people have to say about you as you grow wealthier.
Busy people bog themselves down with tasks and work to avoid something they don’t want to face in life. If there’s something you’re avoiding right now, it’s time to get a little greedy. It’s the cure for laziness. Ask yourself, “What’s in it for me?” Realizing this will benefit you in the future, as it is a source of motivation.
4. Bad Habits
The easiest way to tell if a person has a Rich Dad or a Poor Dad mindset is to look at their habits. Good money habits include paying yourself first and paying your bills last. Kiyosaki’s Rich Dad told him, “I still pay myself first. Even if I’m short of money . . . Who do you think will complain louder if I don’t pay them—me, or my creditors? . . . That pressure made me work harder, forced me to think, and all in all, made me smarter and more active when it comes to money. If I had paid myself last, I would have felt no pressure, but I’d be broke.'”
Finally, the last thing a person must overcome to have a Rich Dad mentality is arrogance, which is ego and ignorance combined. Arrogant people’s inflated sense of self causes them to stop learning and growing because they’re lying to themselves about having everything all figured out. However, this is often a telltale sign a person feels insecure about their lack of knowledge.
If you struggle with arrogance, it’s time to get real with yourself. Why are you acting this way? What do you need to educate yourself more on?
The Real Reason You Want to Become Wealthy
There’s really one reason that fuels a person’s desire to become wealthy: love.
It might sound cheesy, but it’s true. Love is what will get you over the hurdles and sacrifices you’ll have to make, especially starting out. The love for what you do is why you might find yourself eating almond butter and flaxseed crackers for three months as you jumpstart a new entrepreneurial venture. Love for your family is what causes you to get up at 5:30 a.m. every day to study the principles of accounting. Loving your community and living a life of service makes the long days and nights all worth it.
Truthfully, love for other people is the number one driver of success.
Tap into who and what you love, and you’ll quickly find yourself adopting a wealthy mindset.