Rich Dad Poor Dad- Robert Kiyosaki (Review 2022) by Sanjeedeep Mishra

 

When it comes to money, most people want to play safe and feel secured. Its fear that directs them and not the passion. When they don’t get paid enough in their job, they quit. They go looking for another job, a better opportunity, and higher pay, actually thinking that this will solve the problem. In most cases, it won’t. They even accept jobs with low pay. To their every financial problems, their answer is to work harder.

More money won’t solve the problem. In fact, it may compound the problem. Money often makes obvious our tragic human flaws, putting a spotlight on what we don’t know. That is why, all too often, a person who comes into a sudden windfall of cash—let’s say an inheritance, a pay raise, or lottery winnings—soon returns to the same financial mess, if not worse, than the mess they were in before. Money only accentuates the cash-flow pattern running in your head. If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spending. So, for most people, given more money, only get into more debt.

Because students leave school without financial skills, millions of educated people pursue their profession successfully, but later find themselves struggling financially.

 So, if a person wants to be rich, he/she needs to be financially literate.

The first step is it so save your money. Most people fail to realize that in life, it’s not how much money you make. It’s how much money you keep. Then to accumulate assets with the saved money. Assets are something that puts money in your pocket.

“Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets,”

People mistake their home for an asset or their car. However it is not. House, the one in which you live in, brings in bills to be paid and becomes a liability. A new car loses nearly 25 percent of the price you pay for it the moment you drive it off the lot. When it comes to money, high emotions tend to lower financial intelligence.

Rich dad’s financial statement review shows why the rich get richer. The asset column generates more than enough income to cover expenses, with the balance reinvested into the asset column. The asset column continues to grow and, therefore, the income it produces grows with it. The key is to keep expenses low, reduce liabilities, and diligently build a base of solid assets.

Kiyosaki shared some of his investment strategy/preferences. He is fascinated by Real Estates and mostly invests in it. He generally holds real estate less than seven years. He likes starting companies and taking them to public, but not running them. He mostly invests in stocks of small companies, that is where fortunes are made since the opportunity for growth with small companies is maximum. With small companies, his investment strategy is to be out of the stock in a year.

The best asset one can invest on is themselves. That is why he invests in his financial intelligence. Financial intelligence is simply having more options. It is about creating opportunities and making things work in your favors. It is how creative you are in solving financial problems. Financial intelligence is a synergy of accounting, investing, marketing, and law. Combine those four technical skills and making money with money is easier than most people would believe. When it comes to money, the only skill most people know is to work hard.

Financial intelligence improves the odds. Thus, what is risky for one person is less risky to someone else. That is the primary reason Kiyosaki constantly encourage people to invest more in their financial education than in stocks, real estate, or other markets. The smarter you are, the better chance you have of beating the odds.

Kiyosaki learnt from his Rich Dad, the value of being surrounded by intelligent people. “An intelligent person hires people who are more intelligent than he is.” That is why he benefits of spending hours listening to and learning from intelligent people. He surrounds himself with good books, tax accountants, corporate attorneys, bankers, real estate brokers, investors, and so forth.

Often we have heard debates and opinions on “rich should be taxed”. Throughout the history whenever war-like situation arises, The King or the Government tax people. The masses mainly consisting of the middle and poor class vote for it. But in reality, it is them who get taxed heavily, carry the burden of tax. The rich protect themselves with the power of corporations. Even today rich hires legal attorneys and advisors to find loopholes in the system to avoid taxes. They have the money for it. While the poor and middle class wait for the needle of the government to suck their blood.

There are five main reasons Kiyosaki shared on why financially literate people may still not develop abundant asset columns that could produce a large cash flow. The five reasons are:

1.Fear

For winners, losing inspires them. For losers, losing defeats them. Failing provides the inspiration to be better, to practice harder, to study more.

2.Cynicism

Doubts and cynicism that keep most people poor and playing it safe. Instead of analyzing, people chose to close their mind.

3.Laziness

Kiyosaki advices that being a little greedy can be good as it is the best cure for laziness. Rich dad forbade the words, “I can’t afford it.” Instead, rich dad required his children to say, “How can I afford it?” He believed that the words “I can’t afford it” shut down your brain. It didn’t have to think anymore. “How can I afford it?” opened up the brain and forced it to think and search for answers.

4.Bad habits

Paying yourself first. Instead of paying to your creditors and govt. pay yourself first. Let the fear of getting short on money for bills motivate you to use your mental muscles.

5.Arrogance

Many people use arrogance to try to hide their own ignorance. When you know you are ignorant in a subject, start educating yourself by finding an expert in the field or a book on the subject.

Kiyosaki, at last, offers 10 steps to awaken our financial genius.

1.Find a reason greater than reality: the power of spirit.

Emotional reasons makes us standing and want to move forward. Without a strong reason or purpose, anything in life is hard.

2.Make daily choices: the power of choice.

A truly intelligent person welcomes new ideas, for new ideas can add to the synergy of other accumulated ideas. Listening is more important than talking.

3.Choose friends carefully: the power of association

Hardest things about wealth-building is to be true to yourself and to be willing to not go along with the crowd.

4.Master a formula and then learn a new one: the power of learning quickly

In today’s fast-changing world, it’s not so much what you know anymore that counts, because often what you know is old. It is how fast you learn. That skill is priceless.

5.Pay yourself first: the power of self-discipline

Pay yourself first. Let the creditors and even the government scream. Let it get tough. Why? Because those guys will do you a favor. They will inspire you to go out and create more money.

6.Pay your brokers well: the power of good advice.

Rich Dad believed in paying professionals well, and Kiyosaki had adopted that policy also. He had expensive attorneys, accountants, real estate brokers, and stockbrokers. Their services should make you money. And the more money they make, the more money you make. A good broker should provide you with information, as well as take the time to educate you.

7.Be an Indian giver: the power of getting something for nothing

In the world of the asset column, being an Indian giver is vital to wealth. The sophisticated investor’s first question is: “How fast do I get my money back?” They also want to know what they get for free, also called a “piece of the action.” That is why the ROI, or return on investment, is so important.

8.Use assets to buy luxuries: the power of focus

If a person cannot master the power of self-discipline, it is best not to try to get rich. Although the process of developing cash flow from an asset column is easy in theory, what’s hard is the mental fortitude to direct money to the correct use. Due to external temptations, it is much easier in today’s consumer world to simply blow money out the expense column. With weak mental fortitude, that money flows into the paths of least resistance. That is the cause of poverty and financial struggle.

9.Choose heroes: the power of myth

Heroes do more than simply inspire us. Heroes make things look easy. Making it look easy convinces us to want to be just like them.

“If they can do it, so can I.”

When it comes to investing, too many people make it sound hard. Instead, find heroes who make it look easy.

10.Teach and you shall receive: the power of giving

There are powers in this world that are much smarter than we are. You can get there on your own, but it’s easier with the help of the powers that be. You only need to be generous with what you have.