Rich Dad, Poor Dad Summary and Review

by Robert T. Kiyosaki
Want to learn more about Robert T. Kiyosaki’s 1997 book Rich Dad, Poor Dad? Pick up the main ideas of the book from our quick summary. We all know what phrase rat race refers to, but if someone asked, how would you define this concept? A good definition for the concept of the rat race is “The endless routine of working for everyone but yourself.” In other words, a rat race consists of doing all the work by yourself, while others - your bosses, the bill collectors, and the government - reap the benefits. When we think about the rat race, we feel that we are all somehow involved and most of the time, it is something that we all hate. But if that’s the case, why do we keep racing? According to the author, humans are so afraid of society’s disapproval, that they allow their lives to be dominated by what other people think. For instance, think of the mantra “Go to school, get good grades, get a good job.” This mantra is as popular as ever, despite the fact that it is an outdated piece of advice built on past values and ideas. A few decades ago, people who were fresh out of college were very likely to land a job. Most of them would spend their whole adult lives working for the same company and would end up retiring with a cushy pension. Today, however, this life plan is no longer effective and getting good grades in college doesn’t guarantee a life free of financial struggles or of poverty. In today’s economy, those who study hard, get into a good college, graduate, and land a good job are still in danger of never seeing financial growth. This is mainly owed to the fact that they are stuck in the “rat race”. Instead of enjoying the rewards of their hard work, people allow their bosses to get rich and end up with nothing. Nevertheless, a lot of people still believe in and follow the outdated mantra mentioned above because they fear what others might think. Humans are genetically built to always try to be part of the group but in this day and age, this type of attitude is not very helpful. While it might help some people avoid poverty, it certainly won’t make them rich. Because we are so afraid of society’s disapproval, we cannot leave the “rat race” and instead of growing wealthy, we become trapped.

RICH DAD, POOR DAD CHAPTER #1: Ignorant people are very likely to make irrational decisions due to their greed and fear.

When it comes to money, rich people and poor people have something in common - they experience the same basic emotions: greed and fear. If you are wealthy, you will probably focus on all the new and amazing things that you can spend your money on (greed). If you are poor, you will spend most of your time worrying about money and about not having enough (fear). People who are ignorant and who don’t know much about managing their finances are extremely likely to let these two emotions control their decision-making. For instance, let’s say your boss just gave you a nice promotion which came with a hefty pay raise. If you were wise from a financial point of view, you might consider investing the extra money and buying stocks or bonds. These investments would increase your chances of earning more money over time. You could invest the extra money into something like stocks or bonds, which would earn you money over time. But if you were a financially ignorant person, you would immediately think of making a new purchase like a house or a car. This type of behavior indicates that you allow your emotions to take the wheel. The fear of losing money and the need to own certain physical objects (greed) are so powerful that you won’t like the idea of investing in stocks. This is owed to the fact that you want to see an immediate change and fear the perceived risks that come with not spending the money right away. You would, of course, ignore the fact that money well invested will bring long-term wealth. As we mentioned above, you will probably feel a desperate need to use your money for improving your lifestyle. For instance, you might consider buying a nicer car or a bigger house. At first sight, these assets will seem safer than buying shares in a company as they are palpable. But if you take a moment and really think things through, home and car upgrades come with higher bills and a bigger mortgage. These expenses will ultimately have a negative effect on your financial situation. This is how two negative emotions - fear and greed prevent financially ignorant people from achieving long-term wealth. So what can you do in order to prevent these emotions from taking over? The first and most important thing is to start learning and build up your financial knowledge. Learning more about important financial concepts such as risk, debt, and investments will place you in a much better position and will prevent you from making irrational decisions. Fear and greed will prevent financially ignorant people from making rational decisions.

RICH DAD, POOR DAD CHAPTER #2: Although financial intelligence is vital for our personal and collective prosperity, we receive no formal training.

The majority of people think that if they are capable and talented they will become wealthy. But in reality, the world is full of talented and capable people who never become rich because they are missing a little something called financial intelligence. This essential aptitude allows people to understand important financial concepts such as investing, accounting, etc. Unfortunately, most of us lack financial intelligence because our educational systems are set up to train us in many different subjects, some more useful than others, but financial intelligence is not one of them. In school, children never learn how money works, how to save, and how to invest. As a result, they become clueless adults who max out their credit cards and spend their lives struggling to pay their debt. But this lack of financial training doesn’t apply to today’s youth alone, but also to most highly educated adults who can’t stop making bad decisions with their money. For instance, in an ideal society, politicians should be the brightest and best-educated people. Unfortunately, more often than not they manage to bring countries on the verge of bankruptcy, as most of them lack financial intelligence. But when it comes to handling money, ordinary people are just as bad. For example, half of the workforce in the United States are without pensions and almost eighty percent of the other half have insufficient pensions. It’s clear that we are poorly equipped when it comes to financial knowledge and our society is to blame. However, it is up to each one of us to educate ourselves on these matters. If we want to achieve long-term wealth and independence in a time of perpetual economic change, we need to become more knowledgeable in terms of finances. Most people receive little or no training in financial intelligence despite it being vital for achieving personal and collective prosperity.

RICH DAD, POOR DAD CHAPTER #3: The building blocks of becoming wealthy are being realistic and focusing on financial self-education.

Although you can begin your journey towards financial success at any point in your life, the earlier the better. If, for example, you start focusing on your finances when you are in your 20 you are much more likely to achieve wealth than if you start in your 30s. But, regardless of age, the first steps should always consist of appraising your finances, establishing goals, and acquiring the necessary education. First and foremost, you need to check your current financial state and be as objective as possible. What is the average income that you can realistically expect from your current job and what will your future expenses be? Can you handle them? Chances are that the new car that you’ve been drooling over might not be affordable. After you have a clear picture of your present and future finances you will finally be able to set realistic financial goals. For instance, you could say that you want to be able to afford that new car in five years. The next step is to become more financially knowledgeable. Start to build your financial intelligence by focusing on your greatest asset: your mind. There are many different ways to do this but a particularly effective approach is to shift focus: invest your time and effort into learning instead of focusing on what you earn. For instance, if you fear rejection, it might be a good idea to work for a network marketing company. You might not earn a lot of money but you will gain a lot of self-confidence and sales skills that will come in handy in the future. In your spare time, you can continue working on improving your financial education. Sign up for finance classes and seminars, read magazines and books on the topic and try to network with experts. If you gain sufficient knowledge, you will be able to base your actions on the building blocks and increase your chances of becoming wealthy. The building blocks of becoming rich are getting financial education and appraising your finances realistically.

RICH DAD, POOR DAD CHAPTER #4: You need to learn to take risks in order to become wealthy.

The definition of insanity is doing the same thing over and over and expecting to get different results. If you want to change your financial state, you need to embrace this logic and start doing things differently. A huge challenge will be learning how to become more comfortable with taking risks. The great majority of financially successful individuals have taken many risks along the way, and they learned how to manage their risks instead of fear them. When you put your money in savings accounts and basic checking accounts you are not taking any risks. However, if you want to actually earn something, you need to learn how to accept not always being balanced and safe with your finances. Instead of playing it safe, you should try to invest in bonds or stocks, which are considered riskier than your typical savings accounts but tend to generate much more revenue. It is a well-known fact that stocks can produce a lot of wealth in a relatively short period of time. If, however, you are not keen on committing yourself to the stock market, there are other types of investments that you can consider. For instance, real estate or tax lien certificates are another great way of growing your wealth. With tax lien certificates, you can get an interest rate as high as thirty percent. Of course, with a potential for a higher return come higher risks. It is worth mentioning that when it comes to stocks there is always a slight chance to lose everything that you invested. But, if you are not willing to take the risk, then you won’t make any big returns. So, it’s important to remember that in order to make bigger income, you need to be willing to learn how to manage bigger risks. In order to make more money, you need to be willing to take bigger risks.

RICH DAD, POOR DAD CHAPTER #5: Becoming wealthy can take a long time, so you need to keep yourself motivated.

The journey to becoming wealthy can be long and trying. It’s very easy to become disheartened when you hit an obstacle such as seeing the price of a stock you invested in suddenly fall. But if you want to achieve your financial goals, you need to come to terms with these setbacks and find ways to stay motivated. A great way to boost motivation is to make lists of “wants” and “don’t wants” for your personal reference. For instance: “I don’t want to work in a cubicle for the rest of my life” or “I do not want to end up like my parents”. You can reread these lists whenever you need a reminder of why you took this path in the first place. Another effective way to stay motivated is to allocate some money for your personal needs before you start paying your bills. Although this strategy might seem counterintuitive, it will help you understand how much money you need to satisfy your personal needs and your financial objectives. You shouldn’t neglect your personal desires, whether you want to buy a vintage guitar, or changing your wardrobe regularly, or traveling the world, as these are the things that will make you happy and keep you motivated. Of course, you shouldn’t go overboard and rack up lots of credit card debt, but do think of yourself first. If paying the bills will prove to be difficult afterward, you will be forced to find new ways to satisfy all your needs. This method will develop and sharpen your financial self-discipline, which is a very important part of becoming a financially successful individual. If you need some external inspiration, you can read the life stories of successful people such as Donald Trump or Warren Buffett and find out what they did in order to become wealthy. Reading about other people’s struggles and what they went through before finally achieving success will keep you motivated. Staying motivated shouldn’t be too difficult, especially when you always keep your goals in mind, but when it does, put these tips into practice. Because the road to wealth can be quite long, you must find ways to keep yourself motivated.

RICH DAD, POOR DAD CHAPTER #6: Even the most financially knowledgeable people can be driven to poverty by arrogance and laziness.

Personality pitfalls can lower your chances of becoming wealthy even if you strengthen your financial intelligence. Arrogance and laziness are perfect examples of two such personality pitfalls which will work against you in unexpected ways. When we think of laziness we think of doing nothing and slouching around. But laziness comes in many different shapes and it doesn’t always mean inactivity. Sometimes, laziness means to avoid certain things that are difficult and that must be done. For instance, think of a businessman who spends over 60 hours per week working. To the outside world, he doesn’t seem lazy at all. However, by spending so much time at work, he alienated his family. Many people avoid spending time with their families when they have trouble at home. Instead of addressing their issues, they prefer to bury themselves in their work, just like the businessman did. In other words, the businessman is lazy because he is avoiding solving his problems and many people might suffer as a result. Another devastating weakness that can prevent you from achieving financial success is arrogance. When it comes to financial ruin or bankruptcy, arrogance can be defined as “ignorance plus ego” and it consists of a combination of not having sufficient financial knowledge but being too proud to admit it. Arrogance can be a very dangerous shortcoming, especially when you want to invest money. For instance, an experienced stock-broker might notice that you are arrogant and thus, use this to his advantage by convincing you to buy more shares. Stock-brokers can be as dishonest as second-hand car salesmen. They will boost your ego and take advantage of your ignorance in order to make you act in their favor. So even if you achieve sufficient financial knowledge, you need to be careful about these personality pitfalls. By owning up to your shortcomings and keeping them in check, you are much more likely to avoid financial ruin. Arrogance and laziness can prevent you from achieving wealth, especially when combined with ignorance.

RICH DAD, POOR DAD CHAPTER #7: Avoid liabilities that take money out of your pocket and focus on assets that put money in.

Understanding the difference between a liability and an asset is key to ensuring you’re making good investment decisions. In other words, a liability will cost you, while an asset will make you money. So it is quite clear that, if you want to achieve financial success, you need to focus on investing your money in assets. Assets include stocks, businesses, bonds, royalties from intellectual property, mutual funds, IOU notes, income-generating real estate, and pretty much anything that has value and that produces income, becomes more valuable over time, and can be sold easily. When you invest in assets, you can think of your dollars as your employees who are working tirelessly to generate income for you. The more “employees” you have, the better. The main goal is to achieve an income level that is higher than your expenses. The next thing you want is to reinvest the extra income into other assets and to employ even more money to work for you. Unfortunately, mistaking a liability for an asset is a common mistake that many investors continually make. For instance, a house is generally considered an asset, but it can also be a huge liability. For most people, buying a house is synonymous with working an entire life to pay off the mortgage while also paying property taxes. There are two ways in which this works against you. Firstly, for the next 360 months, you will have a huge expense taken away from your income. Secondly, those 360 payments might have been much more productive if they were invested in more lucrative assets such as real estate that can be rented or stocks. Before investing your money, it’s extremely important to understand the difference between a liability and an asset. This means that you need to judge whether an investment should be avoided or not. It is important to focus on investing in assets and to avoid liabilities.

RICH DAD, POOR DAD CHAPTER #8: The main purpose of your profession is to pay the bills, but only your business can make you rich.

Most people think that having a profession and building a business are one and the same. But when it comes to becoming financially successful, there is a huge difference between the two. The profession is the work that you do 40 hours a week and its main purpose is to pay the bills and cover all your living costs such as rent, groceries, clothes, etc. The profession will also have a specific title such as “salesman” or “restaurant manager”. Your business, however, is a venture that you invest money and time into and that enables you to grow your assets. It is highly unlikely to become wealthy from your profession alone. In order to achieve financial success, you need to focus on building a business while you also work at your profession. For instance, a person who went to a culinary arts school is a professional chef. Her profession is cooking and it provides enough money to pay rent and other expenses. But in order to become wealthy, the chef will have to start a business. As a result, she decides to invest in real estate. All the extra money that she makes each month, she saves and puts towards purchasing assets that will produce income, such as condos and apartments. Alternatively, a car salesman can, in order to become wealthy, invest the extra money that he makes each month into stock trading. The chef and the car salesman were able to make enough money each month from their professions to survive and to put a little extra in their business. These people are making strides towards achieving wealth by growing their assets. If you want to achieve sustainable growth, it’s important to keep your day job, as it will pay for your daily expenses and fund your ventures. As soon as your assets become your main source of income, you can consider quitting your day job. And that is what true financial independence is all about. You can rely on your profession to pays the bills until you start making money from your assets.

RICH DAD, POOR DAD CHAPTER #9: You can minimize your taxes by understanding the tax code.

It is a well-known fact that taxes can lower your financial gains, but most people don’t make any effort towards learning how they can pay fewer taxes. If you want to grow your business, it’s very important to know that there are many legal ways to minimize your taxes. A great way to reduce your taxes is to use the coverage of a corporation when you invest your money. If you create your own corporation and invest money through it, you will pay fewer taxes than you would by investing in your own name. American corporations have many different benefits. For instance, liabilities and debts are not placed in the owner’s name, but in the name of the corporation. This allows you to have limited losses if things go bad. As an American employee, you earn money, pay taxes, and live with whatever money you have left. But when protected by a corporation, you can make money, invest it, and spend as much as you can, and only pay taxes on what’s left. It comes as no surprise that people who build corporations can get rich rather quickly. There are many different ways to minimize your taxes but the first thing that you need to do is to educate yourself and learn about the loopholes and benefits of the current tax system. For instance, according to Section 1031 of the Internal Revenue Code of the United States tax system, people can sell the real estate assets that they own in order to buy more expensive ones. The trick here is that the government doesn’t tax your newly purchased assets until you liquidate the property. In other words, because the government won’t take anything from you immediately, your capital gain will increase. By learning as much as you can and knowing how the “system” works in your country, you can reduce the amount of money that you pay the government in legal ways. If you want to minimize your taxes, you need to understand how the tax code works.


What is the key message of Robert T. Kiyosaki’s 1997 book Rich Dad, Poor Dad? Because most of us learn close to nothing about money and finances in school, it is up to us to acquire this knowledge on our own. Only by having a strong financial IQ and a determined mindset can we become wealthy or financially independent. In the end, we first need to invest in our minds in order to achieve success, because the mind is the most important asset that we have. Valuable advice: It is never too late to start investing your money. If you want to achieve financial independence, you need to start as soon as possible. Although the author shows us the path to wealth and financial independence, we can only achieve these things once we understand that we need to start working towards our goals as soon as possible. What this means is that we need to do some research and read the best books on topics such as the stock market, real estate, etc. We can also talk to more experienced people and pick their brains or read the biographies of successful people. Another effective way to learn more about finances is by spending time on websites that have great financial information for beginners like In any case, it’s important to remember that by staying informed and understanding the market we increase our chances of success. Track your monthly income, expenses, assets, and liabilities by making a column sheet. A great piece of advice that Kiyosaki gives us throughout his book is to make sure that our income is higher than our expenses. To keep a closer eye on your money, you can create worksheets using programs like Microsoft Excel. By updating the worksheets on a monthly basis, you can have a clear picture of your income, your bills, your lifestyle expenses, and other costs. You can also keep track of how much money your current assets are bringing and how much your liabilities are taking away. This will allow you to prevent losing money and to manage your finances more effectively. Talk to people who have the same goals and who do the same thing as you. By getting to know other people who are already active in the markets that you are interested in, you can build useful relationships that will come in handy in the long run. For instance, if you meet someone who knows a lot about tax lien certificates, you can ask them out to lunch and pick their brains. Make sure that they understand your situation and that they are willing to help you. If you are honest about your intentions, you will notice that more people will be glad to offer advice. What to read next: The Millionaire Fastlane by MJ DeMarco We all want to achieve wealth but only a few of us ever succeed. According to MJ DeMarco, there is a simple explanation for this: when it comes to becoming rich, the conventional roads do not work. The good news is that by making sacrifices and by investing time and effort into your business, you might be able to achieve wealth quicker than you think.