Rich Dad - Poor Dad | Book Summary, Notes & Highlights

“Rich Dad Poor Dad” is a remarkable classic book that I highly recommend for entrepreneurs, young individuals aspiring for growth, or anyone interested in unraveling the secrets of the wealthy. This book delves into the mindset of the rich, the habits and beliefs of the poor and middle class, why wealth equals freedom, and the essential tools for achieving financial literacy.

Contents

• 🗝️The books 3 Key takeaways
• 🎨Impressions
• 🙍Who should read it?
  • 🍀How the book changed me
• ✒️My top 3 quotes
• 📖Summary + Notes
  • The poor work for money
    • 🚧Limiting beliefs
    • 🤑Money controls the poor and the middle class
    • 🏠Buys liabilities
    • 🪤Job security, the biggest trap of them all
  • The rich controls their destiny
    • 🤯Start thinking big - Mindset
    • 🎮If I am the problem, I can do something about it. - Take control
    • 🧠Your most valuable asset - Knowledge
    • 📕Work on your weaknesses - learn
  • Liberty
    • 🗽 The 5 reasons you are still poor
    • 🍔Start minding your own business
    • 💵Make money work for you
  • Financial Literacy - Financial Knowledge
    • 💸Cashflow
    • 👨‍💼Management
    • 📚Salees - Become a best selling author, not best writing author
    • 🍀Where are you right now in the Cashflow quadrant?

🗝️The books 3 Key takeaways

1. Buy assets not liabilities and Learn the importance of financial literacy.
2. Invest in your mind, your greatest asset of all.
3. Cultivate a growth mindset, driven by purpose, desire, and a willingness to embrace discomfort.

🎨Impressions

As I grew up in the countryside of northern Sweden, I found that this book reflects the mindset and patterns of many people around me. Its teachings are not commonly found in school, where we are encouraged to conform and seek secure employment. “Rich Dad Poor Dad” equips readers with the knowledge and tools necessary to escape the rat race.

🙍Who should read it?

This book is intended for individuals who want to create value for themselves and develop the mindset required for financial independence. It is a must-read for those seeking wealth-building strategies, looking to escape the rat race, and aspiring to learn the secrets of the affluent.

You’d enjoy this book if:

1. You are seeking wealth-building strategies.
2. You feel trapped in the rat race and want to adopt a wealth-oriented mindset.
3. You are curious to uncover the secrets of the rich.

🍀How the book changed me

• It helped me to differentiate between an asset and a liability.
• From now on I’ve changed my mindset to prioritize knowledge and learning. I’ll Be brave to follow my goals and to see life as the best teacher there is. To learn, relearn and Seeking discomfort which is the basis of personal success.
• I realized that going to school and working a profession my whole life is only a short term solution where I will be controlled by money. Working for money. There is no such thing as job security.
• I definitely noticed that there is a big difference between the rich and the poor mindset among my peers, friends and family.

✒️My top 3 quotes

1. “The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.”
2. “The poor and the middle class work for money. The rich have money to work for them.”
3. “In Texas, everything is bigger. When Texans win, they win big. And when they lose, it’s spectacular.”

📖Summary + Notes

“Rich Dad Poor Dad” is an invaluable book that I highly recommend to entrepreneurs, young individuals, and anyone interested in unraveling the secrets of wealth accumulation. The book explores the mindsets of the rich, the habits of the poor and middle class, the importance of wealth in providing opportunities and security, and the tools and knowledge necessary for financial literacy.

I have structured the book into four categories:

1. Poor, This section discusses the limiting mindset of the poor and middle class, where money controls them. It emphasizes the importance of distinguishing between assets and liabilities and debunks the illusion of job security.
2. Rich, The rich have a fundamentally different mindset and focus. This section explores the habits and mindset of the wealthy.
3. Liberty, Why wealth will make your life easier by allowing more opportunities and safety. The 5 blockers of your financial success. But most important of all is how to escape the rat race.
4. Financial Literacy, is about basics of cash flow. What is a liability and asset, taxes and debt. What skills do you need to learn to succeed in becoming rich? How do you even define rich? What is your financial statement?

The poor work for money

The rich, those greedy bastards… The poor and the middle class have a limiting mindset of blaming others, of jealousy, fear of losing and ignorance. Money is controlling them instead of being the ones controlling the money. They buy liabilities as cars and luxuries instead of assets. The biggest trap of the poor and middle class is the idea of job security which is just an illusion and short term solution and a ticket to the rat race.

🚧Limiting beliefs

The poor and middle class are carrying limiting beliefs that are stopping them from taking action and calculated risk.

What are limiting beliefs:

• 👈👉Blaming others. But instead blaming others for the responsibility of their life, why their job sucks, for their low paycheck and hopes that someone else will fix their problems. They believe that the government will take care of them and support them with social wellfare when their working days are over.
• 🏎️The poor pay much more effort and resources to look rich . They are jealous with a losers mindset. Instead of trying to become rich, they want to look rich. Another problem is that they think the rich are crooks and evil and should pay more tax, or that they don’t pay tax. They are jealous that someone else are making more money than them.
• 👻Fear directs the poor and the middle class to play it safe. We learn from an early age not to take risky loans, being an entrepreneur is risky, it’s better to get a good education and a stable, secure job. They play it safe and they die boring instead of letting their passion direct them and conquer their fears.
• 😒The poor and the middle class lack curiosity, they don’t learn new things and they dont move on.
• 🧐Having a fast car does not make you rich and it is very ignorant to think that money is the root of all evil. Many intellects of the middle class often think they are “above” sales people even though the sales person might make much more money. This is ignorant, who is actually doing the smarter choices?

🤑Money controls the poor and the middle class

They work for money while still saying that they “are not interested in money” while still working 8h a day. This is straight up denial of truth. The middle class are slaves for money where they accumulate debts and dig himself deeper and deeper into the rat race hole. The higher salary you have, the harder it will be for you to start a side hustle as missed work hours will be more and more valuable. They are working for someone else, half of your salary goes to the government, a big piece to the employer, then to the bank on your mortgage and lastly to them. They work hard but there is no accumulated wealth, the harder an employee works the more value he creates for their boss.

🏠Buys liabilities

The poor and middle class are acquiring liabilities, these are things such as luxury items, cars, tvs, mobile phones, clothes, as well as things they think are assets such as a home. They spend money instead of investing it. Most of the time they spend everything they get, and with increased salary they increase their spending leaving nothing for investing in the future.

🪤Job security, the biggest trap of them all

Imagine being a specialist forever. For the poor and the middle class job security is everything. But the truth is that job security only is a short term solution, where they will work hard to get little in return, a small pension and long term problems. If they quit working today, in how many weeks would you need to find another job? Speciality is a kind of slavery that will be harder and harder to escape, they become indoctrinated and this will be everything they are, working for someone else.

The rich controls their destiny

What if you were in control of your life, you had the mindset to follow your dreams, the know-how and the tools to your personal success? The rich groom their children for success.

🤯Start thinking big - Mindset

Imagine you had all the resources to give a substantial good impact on people. It could be anything from saving life to helping your best friend in business. The rich has a moral compass aiming them towards following their dreams and to work for learning. The path is the goal. If you work for learning instead of for money it will benefit you in the long run. Choose teachers who have done what you want to do. But this will require emotional control, just as when Robert in the book was working for his rich dad in exchange for learning how to become rich. But what is the purpose of all this richness if you are not making other peoples life better, rich dad said, “give and you shall receive”. Treat your business partners fair and well, your wife, and pay your workers well. They will help you make you more money.

The rich people have an ever curious mindset, they carry a sense of purpose and they believe that they have the power of their own destiny. Without the responsibility over yourself you will not take any actions. You need a sense of purpose to be able to aim somewhere, to have the reason for waking up in the morning. But without curiosity you will not look where nobody looked before. Robert says that two of the most important keys to your success are desire and bravery. You need the excitement of winning. Winners are inspired by losing. Winners analyze and losers criticize. Don’t follow the crowd, only dead fish follow the stream.

🎮If I am the problem, I can do something about it. - Take control

The rich focus on the thing that they can control. Stop blaming those around you. You cannot control people around you. You need to realize that the only thing you can actually control is yourself. Start taking control of your feelings, become an observer and choose your thoughts. Don’t react to your feelings. Today’s society is focusing too much on feelings. Listen to your head, not your heart. When the emotions go up, the brain goes down. It’s how you handle your emotions and experiences that matters. A glass can be half full or half empty. Choose to see the good things.

🧠Your most valuable asset - Knowledge

This is why the rich focus on learning new things. The knowledge and wisdom the rich have is what makes money work for them. Every dollar holds power and they hire people smarter than them. They pay less tax and buy luxuries last. Learning is everything and it’s your financial literacy that will help you buy assets and manage your money and the people working for you.

📕Work on your weaknesses - learn

Learn to make money work for you. How to make every dollar you own in a money growing tree is not something you will learn in school. The school doesn’t teach you how to master money, most of the time the teachers are lacking real life experience. More than good grades are required to succeed in life. Instead the school teaches you to learn how to work for money. Get good grades and you will get a good job. People become what they study. The school does not produce entrepreneurs. To succeed in life you will need much more than just braveness, dedication and grit. Not just study hard. Life is the best teacher, but learning to make money is a lifetime project. But you need to start taking control of your life, it requires guts and brilliance. Start learning the things you don’t know. Work on your weaknesses because seeking discomfort is the primary basis of personal success. It is what we know that is our greatest asset, it’s what we don’t know that is our greatest risk. Your capacity to learn, relearn and apply what you’ve learned is your most important skill.

Liberty

Imagine you or someone you love got into a life threatening accident or sick from a curable disease and you knew that if only you had the money you could save that person. This could be the case even though you live in a country with social welfare programs. Hospitals will always have to prioritize with governmental money. The rich live a much easier life with less stress, fear, negative emotions and not a must to work. They have better healthcare, preventive care, better retirement education and power over their faith. Before I’ll tell you how to escape the matrix, The Rat Race, I will share the 5 big blockers that are still keeping you poor:

🗽 The 5 reasons you are still poor

1. 😱Fear - Be a Texan The rich dad said “The situations you fear is the skill you need to learn the most.” He wanted you to be a Texan. When they win, they win big and when they lose, it’s spectacular! You need to learn to handle your life, you do not want to go broke over something lame. Instead be inspired by your loss to practice harder, study more and become better. Failure inspires winners while failure defeats losers. Too many people are so afraid of losing that they already lost. They did not try. Being a winner means you are unafraid of losing. Our biggest fear is rejection. We just have to fail a lot and learn. Every rich person lost money. If you are afraid of risk, start early. Then you will get the compounding effect on interest on interest. Do mistakes early and learn.
2. 💩Cynism - Doubt is expensive The biggest problem with cynics is that they focus on the bad stuff. This will shut of your brain of trying. If you want something, think how can I afford it? What if X? This will start the creativity in your brain. Clinics do not see mistakes as opportunities to learn. Unfortunately this is not encouraged in school, we are taught to avoid mistakes. This is what keeps people poor, they play it to safe. Instead, focus on the good stuff, most people are not born rich and worst times are where you can make the best investments. Winners analyze, cynics criticize.
3. 😴Laziness - The cure is Greed One way the poor and the middle class are keeping themself poor is by being “busy”. Doing other things then they need to do. Laziness by being busy, too busy to take care of their own wealth. To busy watching TV, to busy ordering things online. There are a lot of ways the poor and middle class fool themselves by procrastinating with shopping, hobbies, fishing, their kids or their work. “I have so much to do at work”. The cure for laziness is a little bit of greed. Greed is seen as something negative among the poor and middle class. “They think only about themself”. But ask yourself, “how would your life be if you didn’t need to work again?”, the world evolve and progresses because we all want something better. The lazy mind has a lot of sneaky tricks up its sleeve: I’m tired, I worked really hard today or I cannot afford it. Rich dad forbid the words “I cannot afford it”. It creates depression, helplessness and shuts off your brain. How can I afford it? Opens up our minds for possibilities, excitement and dreams. You know somewhere deep inside there is a spirit saying: “Let’s go to the gym”. Action beats inaction.
   The lazy people will be victims to those who have self discipline. The disciplined people will win over you. But remember that the hard road always becomes easier and the easy road becomes hard.
4. 😎Arrogance - Educate yourself Be honest with yourself and other people around you. Arrogant people think they are the center of the universe. Rich dad said: “What I know makes me money, what I don’t know loses me money”. Self esteem is something a lot of arrogant people lack, this is something you earn. The solution is to stop lying, to yourself and others. Say you don’t know. And most important of all - Educate yourself.
5. 🚬Bad Habits - Our life is a reflection of our habits We are not more than our habits. It’s the action we take that will be seen. Habits are more important than education. To become rich you will need the habits of the rich. And habit number 1. Only put money in the asset column.

🍔Start minding your own business

What does Robert Kyasaki say is the plan to escape this slavery? First of all. Keep your expenses low, replace that Friday stake with a bowl of oatmeal porridge instead. Do not, I repeat. Do not go in to any large dept positions or you will be stuck in the rat race. You need to have free capital, money to invest and start minding your own business. But what does that actually mean? Build a foundation, start educating yourself. Take a class, or course in something you do not know. Learn how to make money work for you. What are assets you are interested in? What is your business? If you are working a full time job, maybe it is stock investments. Can you start a side business? Can you increase your wealth by becoming better at what you do? Ordinary earned money by working for someone else is what is taxed the highest. Save up and build a portfolio and you will get a passive income. How about your pension? In a lot of countries the retirement age increases every year. Governments get more and more in depts and governmental pension has history to fail. Look at Greece, Italy and Sweden. There are no guarantees. Focus on selling and the delivery, you do not need to be best, just smart. Be like McDonalds, they are the best in the world at selling mediocre burgers. Focus on your business, not on your burger.

💵Make money work for you

• 🏢Build assets Make sure you have a solid base before you get married, buy a house, have kids, take a risky financial position or get stuck in your job. You need to have money free for opportunities. You need free capital, therefore focus on your asset column.
• 🏭Become a producer, invent money. Intelligence solves problems. And problem solving produces value. Value can be converted to money.
• 🔨Learn through life. Nothing worth having comes easy. All these things are learnt outside school. They are learnt in life. Is working harder at this the best solution to this problem? We need to make a lot of mistakes to progress.

Financial Literacy - Financial Knowledge

In order to become rich we need to learn to become financial literate. To read and understand the language of money. How cash flow, accounting and management and other key skills for financial success. But how would you even define rich? Or even wealth? Rich dad talks about your financial statement. Your level of wealth. This is not your net worth, when you sell you will have to pay tax on your gains. But how many days, years or months can you go without having to work again? If you stop working today, in how many months or weeks do you actually have to find a job? If you are at a point where your passive income is higher than your expenses, then you actually don’t have to work again. You are now financially independent.

💸Cashflow

According to Rich dad the most important financial skill is cash flow. Things you need to learn are accounting, balance sheet, liabilities, assets, taxes and debt.

• 🧾Accounting & the Balance sheet The balance sheet is a very powerful tool to understand your financial standing. It consists mainly of two components: the assets and the liabilities. Focus on building the asset column and minimize the liabilities column in the balance sheet.
• 🏠Assets This is what the rich focuses. Money will work for you 24/7, imagine every dollar as an employee or as a money growing tree. Rich dad always recommended buying assets he loved. Assets you are naturally interested in. This way you will be more engaged and dig a deeper understanding. There are multiple categories of assets. A few are: ○ Business with no required presence ○ Stocks ○ Royalties from intellectual property ○ Income generating real estate ○ Bonds ○ Notes (IOUs) ○ Anything else with value.
• 🏎️Liabilities Take money from your pocket. Try to accumulate as little liabilities as possible. The poor pay them first, while the rich pay himself first. When assets generate enough income to cover your luxuries. Then it’s time to buy them.
• 🪙Taxes - The government & Corporations The government will always try to take as much money as it can if you let it. Therefore it is very important for you to know the tax rules. If you know you’re right you don’t need to be afraid. Everyone is always afraid of the tax man. Fight back! The problem with the government is that it will always need more money. As the government grows it also needs to increase taxes. The more money the government has, the more they need to spend. The more they spend the bigger budget they get next year without creating any kind of value. This unfortunately creates a pack of lazy thieves. According to rich dad the government are lazy workers trying to live off people who create real value. Instead they try to invent ways of using others’ money. The government has invented multiple different ways of making you pay more tax than you realize. You pay not just income tax on your labor. But the employee pays employee tax for every employee, social security or medicare tax, value added tax on goods and then you pay in some countries property tax. In the country Sweden that has the highest marginal tax in the world, the average swede works 9 months for the government and only 3 months for themself. They have a marginal tax of 75%. Of every 100 sek 75 goes to the government. But the rich always find ways to pay less tax. And now we will get into the secret of the rich. Corporations, a way to legally evade personal responsibility and create a shared ownership. Corporations are just a folder of legal documents creating a new legal entity. The difference between a corporation and the government is that the less people hired, the less expenses the company has and the more money the rich make. Through this the rich pay less tax, minimize risk and can use tax advantages. With a corporation you pay less tax on dividends but can also pay expenses on before taxed money. With proper tax planning you can pay computer, phone, health club as company expenses. And you can do board meetings and conferences abroad in exotic places like Hawaii and combine it with your vacation.
• ✅Good dept - There are good debts and bad debts. Good debts are a mortgage on real estate, business loan or educational loan.
• 🛑Bad debt - Credit loan, loan for luxuries or high interest short term loans.

👨‍💼Management

The most important management skills you need to learn are, the management of risk, systems and people. But not just any people, good people and good staff. The second which is one of the hardest things to find. If you are a good leader you will get a good troop, you don’t want to be shot in the back. If you surround yourself with good people make sure to pay them well. Pay your accountant, your broker and everyone helping you well, as they are there to help you make more money. We become like the people we surround ourselves with.

📚Salees - Become a best selling author, not best writing author

The 3 most underrated skills as an entrepreneur are sales, marketing and communication. Sales is like dating, you have to talk to a lot of people to get a good deal. Learn to get over the fear of rejection as this is the biggest trap. Rich dad recommends taking a sales job or sales class and all your communication will improve. Make a lot of offers and use an escape clause where you need approval of a business partner. Just don’t tell them it’s your cat. Be the best selling author, not the best writing. Be best at sales. For marketing you want to be controversial, it attracts attention. Good or bad, it’s still attention. Learn communication skills such as writing, speaking and negotiating.

🍀Where are you right now in the Cashflow quadrant?

Robert Kayousaki developed the cashflow quadrant for you to realize part of the financial freedom you are in. It’s useful for you together with your financial statement to evaluate your career and your professional life. Each letter represents the type of worker you are.

• E - Employee💲
• S - Self Employed 💲💵
• B - Business Owner 🤑💵💵💵
• I - Investor 🤑💸💸💸💸💸💸💸 From left to right we got economical leverage, from working for money to money working for you. And from top to bottom we got freedom, from your presence required to the income not being dependent on any active work. The optimal position is to be in the bottom right corner. Where you will generate a lot of money without doing anything, total freedom. As self-employed you still have freedom but you are still required to work hours to get paid, maybe you are a freelancing developer or a doctor. If you are a business owner your time is compounded by your employees but you are still required to be there and attend the business in one way or another. Example of a business owner is running a store, an IT company or a consultancy firm. Examples of the investor only owning the process but someone else is doing all the job for you, by owning shares, stocks, funds and royalties.

I hope you all enjoyed this book summary of Rich Dad Poor Dad. It’s been a pleasure to write my first book summary for you. I read the book a second time and it’s one of the first financial books I’ve read in my career towards financial freedom. I truly recommend it to all young and aspiring entrepreneurs and engaged responsible people out there. Did it inspire you to adopt a growth mindset? What assets have you bought and liabilities sold because of this book? How are you going to start investing in yourself?

Learning is everything.

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