The Recipe of Wealth: Rich Dad Poor Dad

Illustrated by Penuja Hansith

Rich Dad Poor Dad is a popular personal finance book by Robert kiyosaki that has gained a cult following in the years since it’s publication in 1997, has sold over 32 million copies, published in more than 51 languages across over 109 countries. The book tells kiyosaki’s two fathers his biological father (poor dad) and his best friend’s father (rich dad) - and the financial lessons he learned from them.

Poor dad (my father)

• Study hard to find a good job.
• Learn to earn.
• When it comes to money don’t take risks.
• Our house is our largest asset.
• I’ve worked for the government, and I’m entitled to these benefits.
• Learn how to write an impressive resume so you can get a job.
• I’m not rich because I’ve kids.

Rich dad (friend’s father)

• Study hard to find a good company to buy.
• Earn to learn.
• Manage risks. Take calculated risks.
• House is a liability. If it’s your largest investment you are in a trouble.
• Believed in total financial self reliance.
• Learn how to write a business and financial plan so you can create jobs.
• I must be rich because I have kids.

Kiyosaki uses the story of two fathers to illustrate his point. His poor dad is highly educated even had a PHD, worked hard as an employee, On other hand his rich dad is a successful entrepreneur who, only passed eight grade, but he had several businesses with a wide range of knowledge in many fields of studies. He never had excuses more than money unlike his poor dad. 

1. Employee vs Entrepreneur.

The book never suggested that to resign from your job, it says that to use a fraction of your income to buy assets, to start a business. According to Kiyosaki, employees are stuck in a "rat race" where they work hard to make their bosses rich while earning a modest salary. Employees are viewed as people who exchange their time and energy just for a paycheck.

Kiyosaki suggests that employees have a "poor" mindset and are afraid of taking risks. He argues that they are content with job security and the illusion of a steady paycheck, rather than pursuing financial freedom.

On the other hand, entrepreneurs are seen as the ultimate symbol of financial success. They are risk-takers who start their own businesses or invest in assets that generate passive income. Kiyosaki praises entrepreneurs for their ability to think outside the box, take risks, and create wealth. Kiyosaki suggests that entrepreneurs have a "rich" mindset and are not afraid of failure. He argues that they are willing to take calculated risks and invest in their own education and personal development to achieve financial freedom.

2. Asset vs Liability.

Kiyosaki defines assets as things that put money in your pocket. In other words, assets are things that generate income or appreciate in value over time. Examples of assets include rental properties, stocks, bonds, and businesses. Kiyosaki encourages readers to acquire assets as a means of generating passive income and building wealth.

On the other hand, liabilities are things that take money out of your pocket. Liabilities are expenses that do not generate income and can drain your finances over time. Examples of liabilities include credit card debt, car loans, and mortgages. Kiyosaki encourages readers to reduce their liabilities as a means of freeing up cash flow and avoiding financial strain.

One of the key insights from Kiyosaki's perspective on assets and liabilities is that many things that people commonly perceive as assets are, in fact, liabilities. For instance, he argues that a house that you live in is not an asset but a liability because it requires ongoing expenses for maintenance, taxes, and mortgage payments. 

3. Learn skills and earn knowledge.

Rich Dad Poor Dad" emphasizes the importance of acquiring skills and knowledge to achieve financial success. According to Robert Kiyosaki, skills and knowledge are the most valuable assets a person can possess, and they are essential for building a successful career and financial future.

The book suggests that education is not just about getting good grades in school but also acquiring real-life skills and knowledge that can be used in the real world. Kiyosaki argues that the traditional education system is flawed because it does not prepare people for the real world and does not teach them about money and financial literacy.

Ways Collect Skills and Knowledge

1. Learn from experience:

Kiyosaki believes that the best way to learn is through experience. He encourages readers to take action and learn from their successes and failures. Kiyosaki provides an example of how his rich dad taught him about real estate by taking him to properties and showing him how to analyze them. By seeing the properties first-hand, Kiyosaki was able to learn about the real estate market and how to invest in it.

2. Acquire Financial Literacy:

Kiyosaki stresses the importance of acquiring financial literacy. He argues that financial literacy is the key to building wealth and achieving financial independence. Financial literacy involves understanding the difference between assets and liabilities, learning how to read financial statements, and knowing how to invest money. Kiyosaki’s rich dad taught him about financial literacy by making him work at his convenience store and teaching him how to manage finances.

3. Develop Business Skills:

Kiyosaki encourages readers to develop business skills, such as marketing, sales, and negotiation. He argues that these skills are essential for building a successful business and achieving financial success. Kiyosaki says how his rich dad taught him about business skills by making him sell greeting cards door-to-door. By doing this, Kiyosaki learned about marketing, sales, and communication skills. Even rich dad said him to work in every section of his company to gain a wide range of skills and knowledge. 

4. Lessons from the 'Rich Dad Poor Dad'

1. Work to learn not to earn, surround yourself with people smarter than you.

2.Aim for valuable assets, buy luxuries last, not first 

3.Don’t make excuses over money.

4.Learn to take calculated risks, be bold and let your genius convert your fear in to power and brilliance.

5.Poor and middle class work for money, rich make money work for them.

6.Life pushes all of us around. Some people give up and others fight. A few learn and move on. They welcome life pushing them around.

7.Chose a job that improve your skills, system and people, not a one pay you well, not just sell your time.

5. Five overcoming challenges.

• Fear to lose money
• Cynicism 
• Laziness to learn
• Bad habits that hold you back
• Too much arrogance

It is important to realize that Kiyosaki's ideas may not align with everyone and also there's more methods to achieve financial success. However ‘Rich Dad Poor Dad’ presents kiyosaki’s philosophy of wealth and the difference between the rich and poor mindset. 

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"The main reason that over 90 percent of American public struggles financially is they play not to lose,

They don't play to win."

~Robert Kiyosaki~