By: Rick Ribar
Finance 1050
11/24/2015
Rich Dad Poor Dad, What the Rich Teach Their Kids About Money and the Poor and Middle Class Do
Not! By: Robert Kiyosaki
This book attempts to distinguish between the way rich people teach their children about money and what
most middle class people teach their kids about money. The author, Mr. Kiyosaki was fortunate in that he had, what
he calls, two dads while he was growing up. Each dad was highly educated, although his rich dad never finished the
8th grade. His poor dad (biological dad) was educated in the collegiate sense and had attained multiple prestigious
degrees. Each dad had a very different perspective of how money is made and how to prepare for a career.
The author, Mr. Kiyosaki, chose at the age of nine to listen to the advice of both dads and make a choice in
which advice he would pursue in his own life. His poor dad had the philosophy that a college education would be
most beneficial in preparing him for a high paying job at a good company. In contrast his rich dad believed that he
should learn how money works so that he could purchase the good company. The poor dad wanted Robert to work
for money. The rich dad wanted Robert to learn how to have money work for him. He ultimately chose to listen to his
rich dad’s approach in his pursuit to make money and become financially independent.
The book begins with two boys at the age of nine who agree to form a partnership to make money. Robert
and his friend Mike had decided that they wanted to make money. They collected used lead toothpaste tubes and
used them and plaster of Paris molds to cast their own coins. To their surprise they learned that their actions were
illegal and the business venture was over. Roberts’ dad suggested that the two boys learn how to make money from
Mikes’ dad, who was said to be amassing an empire and would soon be a very rich man. The two boys met with
Mikes’ dad to ask for help learning to make money. Mikes’ dad agreed and through a series of life lessons began to
teach the boys why the rich become rich and how they think differently than poorer people do.
The first lesson he taught the boys was to not accept a job as a means of making money. He did this by
having the boys work in one of his stores for 3 hours each Saturday for .10 cents per hour. The boys agreed to do the
work and give up softball and other pleasant childhood experiences for the opportunity to learn how to make money.
After several weeks of frustrating work Mikes’ dad (Rich dad) finally explained that many people fall into a trap of
working for money and that people cling to these jobs because of two powerful emotions fear and desire. Fear of not
having money pushes people out the door in the morning and desire keeps them at the job. Rich dad explains that
this is the trap that most people get caught in which he calls “the rat race”. He discusses with the boys that they
should not be ruled by emotional decisions and that a job is only a short term solution to a long term problem. This
By: Rick Ribar
Finance 1050
11/24/2015
point is repeated and re-stated many times in the book. At first I thought the repetition was solely to fill pages, but I
believe the repetition is intended to be for emphasis.
The next important concept (Lesson 2) that is relayed through the authors’ life experiences was the concept
that rich people buy assets and poor people buy liabilities. Robert explains that his rich dad taught him the simple
definitions of asset and of liability. In his perspective an asset adds money to your pocket and a liability takes money
out of your pocket. This concept is presented to the reader the same way it was presented to nine year old boys.
Robert gives an example of how his two dads thought differently about assets and liabilities. His example shows that
his poor dad viewed his house as his largest asset. His rich dad felt the opposite because, a mortgage payment,
mortgage interest, taxes, maintenance, utilities, furnishings and many other expenses take a significant amount of
money out of our pockets. More important is the idea that this money spent on a home, would be money that could
grow when used to purchase true assets thus is viewed by rich dad as lost opportunity. This concept, along with, “Do
not get trapped in the rat race”, are two of the main emphasis points of the book. They are repeated many times
throughout the book “Do not get trapped in the rat race” and “know the difference between an asset and a liability,
buy assets”.
In my opinion these first two lessons are the primary focus of the book. The author continues on with 5
subsequent lessons that are related to how the rich think about money.
Lesson 3 – Mind Your Own Business, this lesson Mr. Kiyosaki encourages the reader to mind their business
which he explains is the readers’ asset column. He continues his explanation stating that most people are concerned
with their income statement or paycheck that they receive from working for someone else. Mr. Kiyosaki again
encourages the reader to refer to the previous lessons and to pay attention to the asset column and not your
paycheck in order to reach financial independence.
Lesson 4- Mind Your Own Business, explains how the national tax code evolved since its inception. The
lesson is that taxes were implemented as a way to tax the rich and give to the poor like the story of Robin Hood. Mr.
Kiyosaki explains that the rich did not just sit by idly and accept the tax burden. He explains that the rich found a way
around the law legally by using corporations to shelter their assets, thus lessening the tax responsibility of the rich.
Mr. Kiyosaki encourages the reader to learn the tax laws and use them to an advantage to not pay the high tax rate
imposed on most. He offers the use of a corporation as an example that the rich use to keep more of their money.
This strategy allows the rich to invest more in their asset column and have their money work for them. Money making
money is the way rich stay rich.
By: Rick Ribar
Finance 1050
11/24/2015
Lesson 5- The Rich Invent Money
This chapter talks a great deal about financial intelligence and the ability to see and make opportunities that
others don’t. While I think this topic is very important, I believe that developing this skill is probably going to be
difficult. Not everyone has developed their financial creativity (speaking for myself). This type of thought probably
takes some practice and some trial and error type of learning.
Lesson 6- Work to Learn, Don’t Work for Money
The title of the chapter is self-explanatory. Mr. Kiyosaki recommends that working at a job should only be
done to gain the knowledge of how the business works. That we should learn as much as we can about our financial
interests so that we can make smart informed business decisions.
With the completion of the 6 lessons the author offers three more chapters detailing how to get started on
our way to financial independence. Each chapter has an example of how Mr. Kiyosaki made smart business
decisions using the 6 lessons stated above.
In my opinion this book has raised my awareness by showing me that so far in life I have followed the path
that most people follow. I have bought with credit, payed interest and have not created an asset column that adds
money to my pocket. I have chosen to take part in the “Rat Race” like many others. From reading this book I have
established some financial goals (with my wife s’ consent). We have decided to eliminate all of our consumer debt.
We have decided to create an emergency fund. We have agreed to look for and purchase income producing assets.
We have both come to understand that there is no financial security in working for someone else. We are trying to
open our minds and not think like those in the “Rat Race”. We are improving our financial intelligence and making the
financial moves to better our position. I may never be able to quit working for someone else, although I’m going to try
my best to get to that point. I have already begun teaching my seven year old son that it’s better to own the company
rather than work for the company. I’ve already begun talking about interest income and how it’s smart to have his
money make money for him. I know he doesn’t totally understand what I mean, but he will. My main goal is to teach
my son that he doesn’t have to work a traditional job and rely on someone else for his financial well-being. I can’t say
that I can implement all of the lessons contained within “Rich Dad Poor Dad” but I will use the ones that are relevant. I
will also keep this book and give it to my son so he can read and understand the lessons when he is ready.