Rich+Dad,+Poor+Dad

Dylan Pure Mrs. Moeller Book Review 12/9/08 Rich Dad Poor Dad __Rich Dad Poor Dad__ is a book about not only about getting rich, its about the attitude it takes to be rich. Robert Kiyosaki is a wealthy investor who grew up in a middle class household and received financial advice from his best friend Mike’s dad, also known in the book as “rich dad”. The book includes six major lessons and dozens of miniature lessons within the six. The lessons are: The rich don’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, and work to learn-don’t work for money. Throughout the course of the book, Kiyosaki explains how each of these lessons allows an individual to succeed financially and create wealth; all while getting out of what he refers to as the “rat race” of life. It is also important to note that while these are the main lessons, there are countless references to the attitudes of wealthy people that indeed play a significant part in their ability to become affluent. The first lesson, “The Rich Don’t Work For Money” is about the attitude rich have towards money, but more importantly the way the rich make money work for them. The attitude portion of this lesson is explained by an example Kiyosaki gives from his childhood. His “rich dad” has hired him to work as a nine-year-old kid and at first pays him ten cents an hour, then nothing. Young Kiyosaki confronts his “rich dad” and receives a lecture about not allowing money and rich people to push him around. Kiyosaki explains that you can’t blame your boss or you job for your problems, you can’t focus on working for money, you need to figure out away to “push back” and create opportunities to gain wealth for yourself. However, the most important part of this lesson is “making money work for you”. Kiyosaki explains life’s biggest trap is the “rat race”, a person starts a job, buys a house, buys and buys on credit and then must work to pay their credit and their taxes, which keeps them working forever. However, he explains the way out of the “rat race” is making money work for you. This lesson goes hand in hand with the “minding your own business” lesson. Basically, Kiyosaki explains the importance of putting money in places that will earn you more money. For example, buying foreclosed houses with a 2,000 dollar down payment on a $40,000 house and then selling it for $60,000 almost immediately. Kiyosaki gives dozens of examples of making money work for you. When he refers to minding your own business, he means having your own business aside from your “job”. An example of this is when he worked at Xerox, a great company with great benefits, but getting rich as a salesman was unlikely, therefore Kiyosaki decided to mind his own business and begin investing in real estate and stalks, all of which created a cash flow. This allowed him to mind his own business, become wealthy, and step out of the rat race. The next lesson is on financial literacy, or basically understanding finances. He poses the question “Why is financial literacy important”? He explains that financial literacy is only important if you want it to be; if you are content with being poor or middle class, or if you are simply to afraid to take the chances on investing then fine, just don’t expect to be rich. While Kiyosaki comes off as extremely arrogant at times, he is often making a point with his arrogance. He explains the most important part of financial literacy as understanding assets and liabilities. Simply put, the knowledge of these two things is all one needs to become wealthy. Its easy, stack the asset column, minimize the liability column and TA DA, your rich. Although he says it is this simple, he goes into further detail showing many diagrams of how the assets of the rich make them money, while the assets of the poor aren’t really assets, the poor just think they are. Once again, he shows truth within the arrogance. He explains that his real estate investments could be considered liabilities, but he has tenants that not only pay for the liabilities, but also increase his cash flow by paying him on a monthly basis. Financial literacy, Kiyosaki explains, is the most important component to becoming rich because if you can read the numbers, you can read the story. The next lesson, “The History of Taxes and the power of corporations”, is more about personal corporations than the history of taxes. While Kiyosaki does give a brief history of taxes and how they started, the important part is his knowledge of personal corporations. Basically, he explains that creating a personal corporation is a way of avoiding an enormous part of the tax burden that is put on the rich. However, selfish he may seem, he does show a great legal way of protecting your money from the government. By creating a personal corporation, an individual’s income is not being taxed, and considering the money made from the corporation whether it is from real estate, stocks, bonds, etc. is not taxed, because it is not considered income. Thus, Kiyosaki explains the importance of corporations to help make you more money and shield your money from the government (if you are interested in being a selfish, arrogant multi-millionaire). Kiyosaki also explains that real estate assets are also a way to avoid taxation because if you “trade up” in a real estate deal, sell one building and buy a bigger one; the government does not tax your profit on the smaller building. The last two lessons on “Inventing Money” and “Working to Learn” are somewhat similar. First of all, the rich don’t actually invent money, they learn opportunities and see money in places others don’t. He explains how working helps rich people become more aware of financial opportunities in the marketplace and thus helps them “invent money”. He also explains (and this goes back to financial literacy) the importance of learning the tax laws and other financial laws the government has in place that can cost or create money. Basically, working to learn, allows you to create money. However, Kiyosaki also explains that some people just don’t have the guts, courage, or intelligence to invent money. He discusses how the poor stay poor and the middle class never become rich because they are afraid of seeking out opportunity, they are afraid that anything that will make them rich is too good to be true. While he does make a some valid points here, his arrogance does seem to get in the way of honest thinking. The poor are not just poor because they are scared to invest, and the middle class may not become rich for reasons other than stupidity and fear. Overall, this book offers many interesting and true points of view. However, Kiyosaki’s blatant arrogance throughout the story and constant feeling of superiority make the book slightly annoying. Also, it is interesting to see how he invested when this book was published in the year 2000, because it seems that if he invested that way now he would be sleeping in a cardboard box under a bridge. Although, if his financial literacy is what he made it out to be, he may have been one of the few people to see this current catastrophe coming. All in all, the book makes interesting points towards becoming rich and the attitude of the rich, it’d just be much more pleasurable without the snobbishness of the millionaire author.