This semi-autobiography shares Kiyosaki’s financial lessons from his ‘two Dads’, one of whom is rich and the other who is poor. He then explains his belief that it is the value of work and understanding of finance that determine how wealthy you will become in the future.
So what should you teach your kids?
To convert your income from passive to active
You shouldn’t be going to work to earn money. Being reliant on a wage traps you; you feel resentful and are bound to your role or employer. Instead, you should be seeking out financial opportunities that provide you with freedom. You need to create investment opportunities where your money works for you, rather than you working for your money.
To be able to invest you need to spend less than you earn as Kiyosaki explains in chapter two of Rich Dad Poor Dad. It isn’t about how much money you make, but about how much money you keep.
Not to confuse liabilities and assets
Property is at the heart of this lesson for most people. The majority of homeowners believe that their mortgage, their home, is an asset. In fact, until your house begins to generate you revenue, it is a liability. Each month you must remove fixed amounts of your income to pay for your home. The base cost includes mortgage payments, but there are also associated costs such as taxes and maintenance.
Being the boss has advantages
Unsurprisingly, Kiyosaki and his ‘Rich Dad’ are entrepreneurs, his ‘Poor Dad’ works for someone else. Kiyosaki extols the benefits of working for yourself and having the freedom to invest further in assets.
There are good lessons in the ‘Mind your own business’ chapter for entrepreneurs. It is about understanding what the key revenue or asset stream for your business is. The example used here comes from Ray Kroc and McDonald’s. Kroc wasn’t in the hamburger business; he was in the real-estate business. The differentiation between the two is what transformed McDonald’s from a series of restaurants into a global corporation.
Review their opinion on property
The argument on property will be divisive for many readers. Kiyosaki does highlights how property is often an emotional decision and this makes it a financial challenge (and often a misinvestment) for people. You can read more about our take on property purchase here.
Final advice
Kiyosaki gives excellent advice everyone should follow:
“Education is more valuable than money in the long run.”
Continual learning is another form of investment. Education might be in the shape of formal education or courses, or reading books and blogs on new subjects. Rich Dad Poor Dad continually champions the importance of taking control of a situation.
