Rich Dad Poor Dad. It is a personal finance book famous all over the world. Since its first publication in 1997 until now, it has remained a bestseller for over two decades. It has been translated into more than 40 languages, sold in 100 different countries, with over 32 million copies sold worldwide.
It is the work of the father of American finance, Mr. Robert Kiyosaki. This book has completely changed the perception of managing personal finance in this modern era. Whether you are interested in personal finance or not, you have probably seen this book with its distinctive purple cover everywhere. Why is this book so famous? Because this book is very well-written. Even those with no financial knowledge can easily understand it. Unlike other finance books that are full of numbers and data charts that are hard to understand unless you already have some financial knowledge.
In contrast, this book is written for everyone. It's written to be easily understood, coupled with short examples. It is the first book you should read if you want to know about finance. Moreover, this book is written based on two different stories, drawn from the real-life experiences of the author, which reminisce from two opposing perspectives on finance and wealth. On one side is the mindset of a poor father, and on the other is the mindset of a rich father. There is a clash and debate that continues until the end of the chapter, like a novel series. The reader truly feels like they are listening to a story.
Mr. Robert Kiyosaki is the author of this book, a son born into a middle-class family in the United States. He received a proper education like other children, but what was different was that he had two fathers. His biological father was an educator who received a high level of education, a Ph.D., and was a smart person who had studied at Stanford and the University of Chicago, which are all famous schools in the United States. His biological father had a good and stable income, lived in a large, decent house, and never lacked for food. It was a happy family that many people wish for. His other father was the father of his best friend. This father was a businessman who did not receive a high education, not even finishing high school. He was a pure entrepreneur. Although he lacked financial knowledge, this father had techniques for managing and allocating personal finances very well. Because as a child, Robert Kiyosaki liked to visit his friend's house, his friend's father treated him like a son.
Every time that father taught his son about financial knowledge and money, Robert would listen in as well. When Robert received education from two fathers from different backgrounds and histories, a clash of ideas occurred. He noticed that the two fathers had opposing views on the same things. They had completely different mindsets regarding finance. Although his biological father appeared to be a successful person in his career, Robert knew that his father was always troubled by money issues. He would chase money for his entire life. Because every day, he was busy working for money and had no time to enjoy with his family. And in the end, he still couldn't achieve financial freedom. As for his godfather, he had a completely different mindset and life from his biological father.
His godfather had plenty of time for his family and also left hundreds of millions of dollars, being a wealthy man in Chicago. When faced with these two life paths, Robert decided to follow the path of the rich father. Many years later, he also became a wealthy man. He achieved financial freedom at a young age, escaping the life of a money slave like his biological father. What did the rich father teach Robert Kiyosaki? Below, we will explain the differences between these two fathers and the two lessons that the rich father taught Robert. First, let's talk about the two different mindsets between these two fathers. In fact, both were smart men and worked hard just the same. But what was different was their perception and attitude towards money. His biological father was a scholar who believed that the lust for money is the root of all evil. People should be content and not desire too much. But his rich, entrepreneurial father said the opposite: the lack of money is the root of the real problem. Poverty causes the loss of many good things. Only wealth can help people in this world become more prosperous. Later, when both of Robert's fathers passed away, his biological father left a list of unpaid bills with the bank, while his rich father left hundreds of millions of dollars for charity and for his successor, who was Robert's friend, to continue managing his business, making even more money.
Robert's biological father, when encountering expensive things, would always say, "We can't afford it." He didn't think about how to afford it. It's like many people in our modern society who see an expensive house or a nice car and don't dare to dream, thinking it's beyond their means. But the rich father always taught Robert, "Don't say that. Don't think you don't have the ability." He told his children and Robert, "Son, you must think that if you want something, you have to ask yourself, 'How can I afford it?'" At this point, we can see that one father used the phrase "can't afford it," which negated all possibilities that could be done. But the other father always asked himself, "How can I do it?" to get what he wanted. This kind of thinking, over time, made the perceptions of these two men completely different from each other. The biological father never used his brain to think of a solution. His financial knowledge dwindled. As for the other father, he always used his brain to think of every way to make money to get the things he loved. His thinking and financial knowledge grew and grew.
The biological father always thought that the government really doesn't care about the people. The hard-earned salary has one-third taken for taxes to the state. As for the rich father, he thought that the government should take taxes like that, because if the state doesn't take taxes, where would it get the money to build roads and schools? And how could we get a good education? Taxes are a tool to encourage the diligent and discipline the lazy. The poor biological father always taught him, "Son, you must study hard. In the future, find a good job so you can support yourself." All of you have probably heard this phrase somewhere. It's not wrong. Most parents teach their children to do this. Maybe your parents are the same, telling us to study hard to get a good job. If you don't study hard, you won't have a job. But the rich father always said, "Son, you must study hard. In the future, you can go out and do business, create a company, and provide job opportunities for more people." You see? These two fathers taught their sons to walk two different paths, setting two different life goals. The first one shows fear. When you don't study hard, you lose something. The first father shows fear, telling his son that if he doesn't study hard, he will lose something. The other father shows hope, that if you work hard, you will gain something. You can help others. The poor biological father, when eating, never talked about money. Eating was for eating. If they talked about money, it had to be secretive and not open. When spending money on something, he would consider it for a very long time, afraid that the money spent would be hard to get back. But the rich father, whenever they ate, he always talked about business. He told Robert, "Don't be afraid of money running away from you. As long as it's under our control, don't be afraid to invest. You must dare to face risks, but they must be controllable." The poor biological father, when it was time to pay a bill, would wait until the end of the month to rush and pay it. As for the rich father, he didn't wait until the end of the month.
He always paid the bank at the beginning of the month. He never let it be late, not even once, because he understood that paying late incurs unnecessary penalties and makes his credit rating drop. It affects his financial history. The poor biological father always placed his hopes on the government. He had a retirement plan that relied entirely on the state. Therefore, he paid close attention to salary increases, retirement plans, health insurance, and social security for the elderly. He hoped that when he retired, he would receive a steady salary from the government. But the rich father didn't think so. He believed that people shouldn't depend on others. When you rely on others, you become weak. You don't have the willpower to demand and seek what is good in life. And this is the reason why some people cannot escape poverty. A person must be responsible for their own financial situation. Working hard and learning is the key to truly escaping poverty. The poor father, day after day, taught his son how to prepare a resume to find a good job. As for the rich father, he taught his son to write a business plan and to learn how to read financial statements. Both fathers experienced bankruptcy.
But the poor father, after going bankrupt, was very discouraged and said, "Son, come here. Our fate has ended up like this. Our family can't become wealthy and prosperous again." As for the rich father, after going bankrupt, he spoke with hope, "Business failure and bankruptcy are normal. Failure is just a temporary setback. Even though my pockets don't have a single riel, I still have my knowledge. I can still earn all that money back." Therefore, he still believed and thought like a rich person. And in the end, he recovered from bankruptcy and started to prosper anew. Speaking up to this point, you probably have an idea of the different perspectives of the two fathers regarding wealth. The poor father never talked about money, couldn't see opportunities, didn't think about it, and didn't pay attention to money at all. Of course, in the end, he couldn't become rich. As for the other father, who was rich, he was a person who wanted money, set clear financial goals for himself, had strong self-belief, and thought about money all the time. Thinking positively about money is very important. In this society, there are many capable people, but they still live in difficult circumstances. What is the reason for this? This is due to attitude. Relying too much on one's own abilities.
They regret the knowledge they have, but don't dare to risk it in business. They just want a steady salary to ensure their personal financial situation. One day, Robert was at a book signing and met a woman. The woman asked for his autograph and then asked him, "I've been reading your books for a long time, they're very good. But I still have a personal question that I want to ask you directly." The woman continued, "I have a PhD in English literature. But recently, because I just divorced my family, my financial situation is in trouble. The bank is about to repossess my house. For my children's future, I can't let the bank repossess it. What should I do at this time?" Robert listened and said, "A PhD in English literature, right? Now, I'll give you some advice. Go work in sales for a while. Sell anything, you can sell houses, sell cars." The woman reacted immediately, "What did you say? I have a whole PhD in English literature, and you want me to be a salesperson? I respect you so much, why are you looking down on me like this?" Robert, afraid of a misunderstanding, began to explain. "I want you to try being a salesperson because I want you to learn how to package yourself. You have a PhD, which is better than 99% of the American population. With such a good education, you must know how to package yourself well. You have to know how to sell yourself, to use the knowledge you have to generate income. If I were you, during the day I would work in sales, and at night I would write books to sell and earn a lot of money." They talked back and forth, but the woman still didn't understand. Robert tried to explain further, "Look at my book here. On the cover of the book, what does it say? It says 'The #1 Bestselling Finance Book in the World'. It's not wrong, it is a bestseller.
My work might not win a Nobel Prize, but at least it can help many people, and I myself can make a little money from it. But my knowledge is not as good as yours. You should think for yourself about what you should do." In the story above, we see two things. First, many people, when they are engrossed in doing a certain job, they can't see new opportunities to make money. Even if they create something good, they don't know how to sell it for money. And there are some people who really don't value business. They see business as a small thing. They don't like business people. Whenever money is mentioned, they don't really pay attention. Why is it like this? Is it because schools don't teach financial knowledge? You should think about it, whether it's Robert's poor dad or the woman who received a PhD, they are all people with high knowledge, they are smart people, they are rare human resources in a company. Why can't they get by? Why can't they have financial freedom? On the other hand, those who don't have a high education, like Robert's rich dad, he was never deeply involved in the field of education. But he was very involved in the market. He used his brain and practiced his financial knowledge a lot. This type of person understands that as long as you earn money legally, it's not something to be ashamed of. Therefore, in society, you often find this type of person creating companies, creating job opportunities for people with high education from those schools to come and work as their employees. Speaking up to this point, many will surely disagree.
In fact, what's important is not whether they have a high education or have been in the business world for a long time. The author just wants to awaken our minds to the importance of financial knowledge. Financial knowledge, which we call FQ, cannot be measured like IQ, nor is it something people value highly like EQ. But it is an ability that helps us escape the financial trap. The fact that it's not taught in school doesn't mean it's not important. This is a huge flaw in the education system. So, what should we do to develop better financial knowledge? What the rich dad taught Robert can be summarized in two important points. First, the rich don't work for money. This means the rich do not trade their time and physical labor for money. This is the work of the poor. The rich must spend their time focusing on their business. They place a high value on their time and their thoughts. When they start working, they do work that only requires using their brains. The remaining things are the work of the poor. And they do work that they want to try or for enjoyment, but they don't spend their time trading it for money. The rich dad explained the example of the hamster in the wheel, which we call the "rat race," for Robert to listen to. He said that people with high education, most of them, no matter how different they are, they have one frightening thing in common: they live in a middle-class mindset, which is called "average people." Just like they were told as children to study hard so they can get a good job later. Their lives are like a hamster running in a wheel. No matter how hard they run, they can't get out of the wheel. They have a stable job and a steady income.
Their jobs are like doctors, teachers, employees of various institutions. They receive a steady income, but it's just enough to support their family and pay their mortgage. When there are additional expenses, they work even harder to increase their income to support the family. Other expenses increase, things get more expensive. They work even harder, like a hamster running in a wheel. It looks like they're working hard, but in reality, they stay in the same place their whole life. So, how can one escape the situation of the hamster in the wheel? First, you must learn to face fear and greed within yourself. Be calm and stable, don't get agitated by small amounts of money. Some people go to work because they are afraid they can't support themselves, afraid they have no money, no house, no clothes, afraid people will look down on them. These people are all slaves to money and will have to chase money their whole lives. To overcome these fears, they sell their physical labor for a cheap price. Remember, the rich use money to buy your time to do the work they don't want to do. To make his son and Robert accustomed to fear and greed, the rich dad taught them a lesson. He gave money to the two kids in exchange for their physical labor, paying them $1 per hour. The rich dad told the two kids, "If you want to take the $1 an hour, that's fine, but you won't learn a new skill. If you kids want more money, you have to make a bigger sacrifice. So, how can you earn more money than this?" He added, "Do you kids want to learn how to earn more money than this?" The two of them answered enthusiastically, "Yes, we want to!" The rich dad said, "If you want to learn, I can teach you.
But I won't pay you a salary. Not even a single cent. But I will set up a workplace for you. And that work will teach you how to work and how to make a lot of money in the future. But first, you have to be clear about the work you want to do." The two kids discussed for a long time and decided they wanted to open a bookstore. After setting their goal, the two kids started selling Coca-Cola to raise capital to open a bookstore. Later, the rich dad created a situation to tempt them. He told the two kids, "We have a neighbor who needs someone to cut the grass. They'll pay us $1 an hour. Are you two willing to do it?" The two thought about it and said, "No." The rich dad added, "What if it's $2 an hour?" They still refused. The rich dad continued, "What if it's $5 an hour?" Robert thought and said, "No, we want to open a bookstore." The rich dad had successfully tested them. They had passed this stage, which is the fear and greed for things right in front of them. Later, Robert said that after he went through this, no matter how much money people offered him later to work for them, he wouldn't agree. He only did what was his dream. He did work that added to his experience and added value to himself. Learning and self-development became a very important motivating factor for him. To say it is easy, but to do it is difficult. In a society full of temptations, it's hard to make ourselves focus on doing just one thing. This is the first lesson that the rich dad taught Robert. You must stay focused on the goal you've set, but not run hard in the same place like a hamster in a wheel.
The second lesson that the rich dad taught the poor son is to distinguish the difference between assets and liabilities. You probably think this is not a complicated issue. But many people really cannot clearly distinguish between assets and liabilities. For example, you have a car. Do you think it's an asset, or do you think it's a liability? In fact, a car is more of a liability. You spend time and money to repair it constantly. The second lesson the rich dad taught us is the most important principle for becoming rich. That is to clearly distinguish between assets and liabilities. He said that the rich must buy a lot of assets. This principle looks very easy, but it's not easy for many people to do. In the minds of most people, when they have a lot of income, they start buying liabilities. This will cause expenses to increase. Around us, there are probably some people who received a large amount of money by chance, like lottery winners. They start buying houses, cars, or villas. Their quality of life improves in the blink of an eye. But if they don't use that money to invest, no matter how much money they have, one day they will return to their original living situation. And this situation will be even worse if they have more money. This is a poor person's mindset. Even if they get money for whatever reason, if they don't have a rich person's mindset, if they don't have financial knowledge, the money they have will flow far away from them. How do the rich spend their money? The rich never use money intended for buying assets to buy liabilities. If they need to buy luxury items, entertainment items, etc., they will use the money that comes from the assets they have. They get it from investments and use that money to buy the things they need. It can be said that they use every means to find ways for money to make money first, then think about unnecessary expenses. As for assets, what are they? Such as houses, land, stocks, corporate bonds, company shares, etc. On the market, there are many things that can be assets, that can make money for all of you. The poor never invest in assets. First, they are lazy. Lazy to seek information, lazy to invest. Even if they decide to invest, they go to a third party to invest on their behalf. Even though they themselves have no knowledge of this at all, such as investing in international cryptocurrency trading. Another thing, they think their money is too little.
Even if they invest now, they won't get much money. They don't see the value and power of the money they have. This is the main reason that makes them poor. For the rich person's mindset, every single cent they have is like a soldier. It cannot be lost. These soldiers are the ones who help build their kingdom of financial freedom to become rich. As for the poor, they can't handle this stage. However much they have, they spend that much. If you are wasteful with that small amount of money and don't use it to make more money, you will never have financial freedom. Therefore, the second lesson that the rich dad taught Robert is to distinguish clearly between assets and liabilities. You have to learn to control yourself, not to spend according to your desires. You must accumulate enough assets to generate a reasonable income. Only when you can do this can you say that you truly understand the knowledge of personal finance management. The above are the two important themes in this book.
You might think it's too simple. But it's because it's simple and easy to understand that this book has sold over 32 million copies worldwide. Many people think this book seems a bit outdated. In the past, it could be applied. But in this era, it's a bit difficult. In fact, financial knowledge is never outdated. Any generation can use it. What is outdated is the method of application. This one purple book has changed the understanding of finance for many people around the world. If you've never thought about this before.