Rich Dad Poor Dad by Robert Kiyosaki is one of the most read books in the personal development and wealth-generating space. It may be of particular interest to investors, as Robert’s initial strategies in wealth generation were using property.
That said, this is not just a book on property investment strategy. The book uses the story of the author’s own father (Poor Dad) and his friend’s father (Rich Dad). It helps to delineate the different approaches to jobs and investments.
The book itself was first written in 1997, but still holds enormous appeal. The Rich Dad Poor Dad brand now encompasses a training company and many other titles in the Rich Dad vein on a wide range of related business and wealth creation topics.
What does the book cover?
The main chapters of the book concentrate on why running your own business is better for wealth creation. It covers six lessons:
- The rich won’t work for money
- Why teach financial literacy
- Mind your own business
- The history of taxes and the power of corporations
- The rich invent money
- Don’t work for money
Each lesson chapter gives you some thinking to do to help ingrain the knowledge contained in it. The book is very accessible and explains lots of complex structures and ideas simply. This is the real power of the book – the way the story of the two dads really helps people understand the different mindsets.
The version I am reviewing is the 20th-anniversary issue and has some look-back snippets through the book to give it more up to date context. If you haven’t read an up to date version, I would highly recommend it.
5 things you can implement from Rich Dad Poor Dad
The main five takeaways property investors’ can implement from the book are:
Not the sexiest of takeaways, but Robert’s explanation of basic income statements and balance sheets are beneficial. While the book is US-focused, there are still a considerable number of applications for the book in the UK. The simple diagrams used will help even the most non-financial of people to understand the flow of money in and out of a business.
Flow of money in a business
While this is similar to point 1, this section of the book further drills down managing income and expenditure – so you can understand how much money you are really making. This will be useful for those people who struggle with numbers and finances. The book also describes how personal and corporate taxes work, and how to use them to your benefit – so saving you money.
A business shouldn’t be a job
Robert talks a lot about having a business that works for you. This is a slightly different mindset for people who think they ARE the business. Focus on the systems and people you need to run your business. It doesn’t have to be you.
As we have discussed before, mindset is one of the critical factors in becoming successful in any field – but more so in property. Successful property investment is not understood by lots of people, so you need to build a strong mindset to stay the course.
Buying assets, not liabilities
This is a huge thing. Before you buy something, look to see if it will be an income-generating asset or an income-losing asset. Knowing the difference before you buy something will again help you become successful in property.
This book is perfect for anyone considering a career or setting up their own property business. This won’t give you purchasing strategies or tell you what types of property to buy. It will, however, provide you with something much more important – the mindset and the foundation of building your business the right way.
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