Rich Dad, Poor Dad by Robert Kiyosaki - Notes and Highlights

ABOUT THE BOOK:

Rich Dad, Poor Dad is a book written by Robert Kiyosaki and co-authored by Sharon  Lechter. It was published on April 1, 2000. It is an international bestseller book which advocates financial independence and wealth building through investing, starting and owning businesses, as well as financial intelligence.  This book accentuated the possession of high value assets that produces cash flow, rather than being an employee and only working to get paycheck which is only enough or may not be enough for monthly expenses.

Some of the book's topics are:

• Robert Kiyosaki's personal story
• The difference between assets and liabilities
• What the rich teach their kids about money that the poor and middle class do not
• The idea that your primary residence is not an asset, but a liability
• The value of financial intelligence and financial literacy
• The importance of investing and entrepreneurship

6 Major or Important Lessons from Rich Dad, Poor Dad Book:

• The rich don’t work for money
• Significance of financial literacy
• Minding Your own business
• Taxes and corporations
• The rich invent money
• The need to WORK TO LEARN AND NOT TO WORK FOR MONEY

Karen Mikhai's Notes and Highlights of 

Robert Kiyosaki's "Rich Dad, Poor Dad" book.

  As I was reading Robert Kiyosaki's book, I can't help but to write down important and useful lines he mentioned in the book and I will be sharing all of those highlights to you in chronological order.  I also made images of my favorite lines or quotes from Rich Dad, Poor Dad Book.  Enjoy Reading! ^_^

 
• Know the difference between employee and employer. The difference between controlling your own destiny and giving up that control to someone else.
  
• Instead of teaching your children to simply play it safe, it's best to teach them to play it smart.

• No matter how many computers they put in the classroom or how much money schools spend, how can the education system teach a subject that it doesn’t know? (Financial Literacy – Rules of money that the rich play by. Only 5% of the population know these rules)
• Educated dad encouraged Robert to be a smart person. His rich dad encouraged Robert to know  how to hire smart People.
• Educated dad advised him to work for a corporation. His Rich Dad advised him to own the Corporation.
• Financial intelligence is the mental process via which we solve financial problems.
• Understand how money works and learn how to have it work for you. 

• Money is one form of power but what is more powerful is Financial Education (education we can't find in schools).
• Opportunities come and go. Being able to know when to make quick decisions is an important skill.
• Most people become a SLAVE of MONEY.
• It is easier to work for money, especially if fear is your primary emotion when the subject of money is discussed.
• It is FEAR that motivates people to work hard (fear of not paying their bills, fear of not having enough money etc.) and once they get their paycheck/salary, greed or desire starts them thinking about all the wonderful things money can buy.
  They are just victims of their own fear and greed due to ignorance. (RAT RACE)
• It is not how much money you make now that will determine if you will be rich or poor because MONEY WITHOUT INTELLIGENCE IS MONEY SOON GONE.
• Take Risks, choose the less traveled road, don't just do what many people are doing (Working until they retire or die), Use your head, don't let your emotion do the thinking, overcome your fear, suppress your greed.  (Mikhai)
• People really wanted to win but the fear of losing was greater than the excitement of winning.
• The avoidance of money is just as psychotic as being attached to it.

• We must master the power of money and not be afraid of it. Don't let money run your life.

• Most people use fear and greed against themselves. That’s the start of ignorance.
• Financial Intelligence solves problem and produces money. MONEY WITHOUT INTELLIGENCE IS MONEY SOON GONE.

• It is not how much money you make, it’s how much money you keep.

• Financial intelligence is a synergy of Accounting, Investing, Marketing and Law. Combine those four technical skills and making money is easier.
• People must recognize different financial options. People who are caught in the rat race are those who are not familiar with numbers and often do not understand the power of investing. Rich people are often creative and take calculated risks.Job security meant everything to my educated dad. Learning meant everything to my Rich Dad. Rich dad thought it is best to go broke before the age of 30, “You still have time to recover”.
•          There is an old cliché that goes, ‘JOB is an acronym for “JUST OVER BROKE”.’ This saying applies to millions of people. Because school does not think that financial intelligence is an intelligence, most workers “Live within their means.” They work and they pay the bills.
• Workers work hard enough to not be fired, and owners pay just enough so that workers won’t quit.
• Most workers focus on working for the pay and the benefits that reward them in the short term, but it is often disastrous in the long term. Instead I recommend to young people to SEEK WORK FOR WHAT THEY WILL LEARN, MORE THAN WHAT THEY WILL EARN. Look down the road at what; skills they want to acquire before choosing a specific profession and before getting trapped in the “Rat Race”.
• I suggest taking a long view of their life. Instead of  simply working for the money and security, which I admit are important, I suggest they take a second job that will teach them second skill.
• I recommend joining a Network Marketing company, also called Multi Level Marketing, if they want to learn sales skills. Some network marketing companies have excellent training programs that help people get over their fear of failure and rejection, which are  main reasons people are unsuccessful.
•          Education  is more valuable than money,  in the long run.
•          Unless a person is used to changing, it’s hard to change.
• For those of you who might be on the fence when it comes to the idea of working to learn something new, I offer this word of encouragement: LIFE IS MUCH LIKE GOING TO THE GYM. The most painful part is deciding to go. Once you get past that, it’s easy.
• If you are unwilling to work to learn something new and insist on, instead, becoming highly specialized within your field (Taking Masters Degree), make sure the company you work for is unionized. Labor unions are designed to protect specialists.
• Can you cook a better hamburger than McDonald’s, how come McDonald’s makes more money than you? The answer is obvious: Mc Donald’s is excellent at business systems. The reason why many talented people are so poor is because they focus on building a better hamburger and know little to nothing about business system. THE WORLD IS FILLED WITH TALENTED POOR PEOPLE. All too often, they’re poor or struggle financially or earn less than they do not know. They focus on perfecting their skills at building a better hamburger rather than the skills of selling and delivering the hamburger. Maybe Mc Donald’s does not make the best hamburger, but they are the best at selling and delivering a basic average burger.
• For the World War II generation, it was considered “bad” to skip from company to company. Today, it is considered smart. Since people will skip from company to company, rather than seek greater specialization, why not seek to “learn” more than “earn”. In the short term, it may earn you less. In the long term, it will pay off in large dividends.
• The main management skills needed for success are:
  1.      The management of cash flow
  2.      The management of systems ( including yourself and time with family)
  3.      The management of people
• The most important specialized skills are sales and marketing. It is the ability to sell-therefore, to communicate to another human being, be it a customer, employee, boss, spouse or child- that is the base skill of personal success. It is communication skills such as writing, speaking and negotiating that are crucial to a life success.
• Disadvantage of specialization: Once their high-paying position is gone, they have limited skills to fall back on. It is like professional athletes who suddenly are injured or are too old to play.
• Rich Dad encouraged me to know a little about a lot. He encouraged me to work with people smarter than me.
• I know of other skills to be more important than selling as well as marketing. The skills of selling and marketing are difficult for most people primarily due to their fear of rejection. The better you are at communicating, negotiating and handling your fear of rejection, the easier life is.
• Being technically specialized has its strengths and weaknesses. I have friends who are geniuses, but they cannot communicate effectively with other human beings and a result, their earnings are pitiful. I advise them to just spend a year learning to sell. Even if they earn nothing, their communication skills will improve.And that is priceless..
• In addition to being good learners, sellers and marketers, we need to be good teachers as well as good students. To be truly rich, we need to be able to give as well as to receive. In cases of financial or professional struggle, there is often a lack of giving and receiving.
• Learn to overcome the fear of losing money. I have never met a person who really likes losing money. And in all my years, I have never met a rich person who has never lost money. But I have met a lot of poor people who have never lost a dime…investing, that is.
• The fear of losing money is real. Everyone has it. Even the rich. But it’s not fear that is the problem. It’s how you handle fear. It’s how you handle losing. It’s how you handle failure that makes the differences in one’s life. That goes for anything in life, not just money. The primary difference between a rich person and a poor person is how they handle that fear. 
• It’s OK to be fearful. It’s OK to be a coward when it comes to money. You can still be rich. We are all heroes at something and cowards at something else. The solution to the phobia of losing money was this little rhyme: “IF you hate risk and worry…. Start early.” 
• If you’re going to go broke, go big!
• Texan’s attitude towards risk, reward and failure: They’re proud when they win and they brag when they lose. It’s how they handle life. They live it big.
• The greatest reason for lack of financial success was most people played it too safe. People are so afraid of losing that they lose.
• Winning usually follows losing. So for most people, the reason they don’t win financially is because the pain of losing money is greater than the joy of being rich. Another saying in Texas is, “Everyone wants to go to Heaven, but no one wants to die.” Most people dream of being rich, but are terrified of losing money. So they never get to Heaven.
• You can always turn a financial loss into a financial win. Failure should only make us stronger and smarter.  Have the courage to cross the line when others backed out. LET YOUR FAILURE INSPIRE YOU.
• FAILURE INSPIRES WINNERS. FAILURE DEFEATS LOSES. It is the biggest secret of winners. It’s the secret that losers do not know. The greatest secret of winners is that failure inspires winning; thus, they’re not afraid of losing. WINNING MEANS UNAFRAID TO LOSE.
• Playing it safe and going balanced on your investment portfolio is a lot better than no portfolio. But playing it safe and going balanced is not the way successful investors play the game. If you have little money and you want to be rich, you must first be “Focused”, not balanced. If you look at anyone successful, at the start they were not balanced. Balanced people go nowhere. They stay in one spot. To make progress, you must first go unbalanced. Just look at how you make progress walking where you were a child.
•  LOSERS AVOID FAILING AND FAILURE TURNS LOSERS INTO WINNERS.
• Overcome cynicism. “Noise” is either created inside our heads or comes from outside. Often from friends, family, co-workers and the media. Most people are poor because when it comes to investing, they get so much fear and doubt from what they hear from other people. It often takes great courage to not let rumors and talk of doom and gloom affect your doubts and fears. The point is that it’s those doubts and cynicism that keep most people poor and playing it safe. The real world is simply waiting for you to get rich. Only a person’s doubts keep them poor.
• Cynics never win. Unchecked doubt and fear creates a cynic. CYNICS CRITICIZE. WINNERS ANALYZE. Analysis allowed winners to see what critics were blind, and to see the opportunities that everyone else missed. And finding what people missed is the key to any success.
•  To beat laziness we need a little greed. Without that little greed, the desire to have something better, progress is not made. Too much greed however, as anything in excess can be, is not good. GREED IS BAD? BUT GUILT IS WORSE THAN GREED.   

•  Pay yourself first - it will force you to seek other forms of income. The pressure to pay becomes your motivation to work harder, to think and can make you smarter and more active when it comes to money.

•  Making money is like going to the gym and working out. The more you work you mental money muscle, the stronger it gets. You will never be afraid of the bullies: Government, Bill Collectors

•  Arrogance is ego plus ignorance. What you know makes you money. What you don't know loses you money. Every time you are arrogant, you lose money because when you are arrogant, you truly believe that what you don't know is not important .

•  Many people use arrogance to try to hide their own ignorance.  Many people in the money industry are just spouting off sales pitches. When you know you are ignorant in a subject, educate yourself by finding an expert in the field or find a book on the subject.

•  Each of us has a financial genius within us. The problem is, our financial genius lies asleep, waiting to be called upon. It lies asleep because our culture has educated us into believing that the love of  money is the root of all evil. It has encouraged us to learn a profession so we can work for money, but failed to teach us how to have money work for us. It taught us not to worry about our financial future, our company or the government would take care of us when our working days are over. Our culture is teaching us to work hard, earn money and spend it, and we run short, we can always borrow. Most people think that it is easier to find a job and work for money.

•  There is gold everywhere, Most people are not trained to see it.

•   Find a reason greater than reality. Power of spirit.  A reason or purpose is a combination of "wants and don't wants".

•  I have lost money and been set back many times, but it was the deep emotional reasons that kept me standing up and going forward. Without strong reason or purpose, anything in life is hard.

• Use the power of choice daily. With every dollar we get in our hands, we hold the power to choose our future to be rich, poor or middle class. Our spending habits reflect who we are. Poor people have poor spending habits.

•  Most people choose not to be rich. For 90% of the population, being rich is "too much of a hassle". The problem with these kind of thoughts  is that they rob the person who chooses to think such thoughts of two things: One is TIME, which is your most precious asset, and two is learning. Just because you have no money, should not be an excuse to not learn. But that is a choice we all make daily, the choice of what we do with our time, our money and what we put in our heads. That is the power of choice. All of us have choice. I just choose to be rich, and I make that choice every day.

•  INVEST FIRST IN EDUCATION: In reality, the only real asset you have is your mind, the most powerful tool we have dominion over. Each of us has the choice of what we put in our brain once we're old enough. You can watch MTV all day, read magazines, Play computer games, or go to Business seminars, financial planning class . You choose. Most people buy investments rather than first invest in learning about investing.

•  Arrogant or critical people are often people with low self-esteem who are afraid of taking risks. You see, if you learn something new, you are then required to make mistakes in order to fully understand what you have learned.

•  There are so many "intelligent" people who argue or defend when a new idea clashes with the way they think. In this case, their so-called "intelligence" combined with "arrogance" equals "ignorance". Arrogant or critical people are often people with low self-esteem who are afraid of taking risks. You see, if you learn something new, you are then required to make mistakes in order to fully understand what you have learned.
  A truly intelligent person welcomes new ideas, for new ideas can add to the synergy of other accumulated ideas. Listening is more important that talking. If that was not true God would not have given us two ears and only one mouth.  Too many people think with their mouth instead of listening to absorb new ideas and possibilities. They argue instead of asking questions.
  

•  Don't listen to poor or frightened people. I have friends, and I love them dearly, but they are the "Chicken Littles" of life. When it comes to money especially investments, "The sky is always Falling". They are always afraid, always ask "what if's" and they always tell you why something won't work. These friends who have no money have never come to their rich friends to ask how they did it that they earned so much , but they do come asking for one of these two things: LOAN or JOB. LOL I learn from friends who struggle financially . I find out what not to do. :)

•  I would say that one of the hardest things about wealth building is to be true to yourself and be willing to not go along with the crowd. For in the market, it is usually the crowd that shows up late and is slaughtered. Smart investors don't time markets. If they miss a wave, they search for the next one, wait patiently and get themselves in position for the next big swell.

• Master a FORMULA and then Learn a New One: The power of learning quickly. You become what you study. In other words, be careful what you study and learn, because your mind is so powerful that you become what you put in your head. For example, if you study cooking, you then tend to cook and you become a cook. Choose what you study carefully. When it comes to money, the masses generally have one basic formula they learned ins school and that is to WORK FOR MONEY. IF youa re tired of doing what you are doing and if you're not making enough, it's time to change that formula via which you make money. Search for a faster formula.

•  In todays fast-changing world, it's not so much what you know anymore that counts, because often what you know is old. It is how fast you learn that counts. That skill is priceless. WORKING HARD FOR MONEY is an old formula born in the day of cave men.

•  PAY YOURSELF FIRST- The power of self-discipline. If you cannot get control of yourself, do not try to get rich. it is the lack of self-discipline that causes most lottery winners to go broke soon after winning millions. It is the lack of self-discipline that causes people who get a raise to immediately go out and buy a new car or take a cruise. Lack of self-discipline is the #1 delineating factor between the rich, the poor and the middle class.

•  The three most important management skills necessary to start your own business are: MANAGEMENT OF THE CASH FLOW, MANAGEMENT OF PEOPLE, MANAGEMENT OF PERSONAL TIME. Each of these skills is enhanced by the mastery of self-discipline.

•  Don't get into large debt positions that you have to pay for. keep your expenses low. Build up assets first. Then, buy the big house or nice car. Being stuck in the rat race is not intelligent.

•  When you come up short, let the pressure build and don't dip into your savings or investments. use the pressure to inspire your financial genius to  come up with new ways of making more money as well as your financial intelligence. Poor people have poor habits. A common bad habit is innocently called "Dipping into savings". The rich know that savings are only used to create more money, not to pay bills.

•  ASSETS BUY LUXURIES: The power of focus. The process of developing cash flow from an asset column is theory is easy, it is the fortitude of directing money that is hard. Too often today, we focus to borrowing money to get the things we want instead of focusing on creating money. One is easier in the short term , but harder in the long term. It's a bad habit that we as individuals and as a nation have gotten into. Remember, the easy road often becomes hard and the hard road often becomes easy. The earlier you can train yourself and those you love to be masters of money, the better.

•  Money is a powerful force/. Unfortunately , people use the power of money against them. If your financial intelligence is low, money will run all over you. It will be smarter than you. If money is smarter than you, you will work for it all your life.  To be the master of money, you need to be smarter than it. The money will do as it is told and it will obey you. Instead of being slave to it, you will be the master of it. That is financial Intelligence.

•  Teach and you shall receive: THE POWER OF GIVING: Whenever you feel short or in need of something, give what you want first and it will come back in buckets. That is true for money, a smile, love, friendship. I know it is often the last thing a person may want to do, but, It has always worked for me . Just trust the principle of Reciprocity. You give what you want. If you want money, give money, and it comes back in multiples. If you want sales, help someone else sell something and sales will come to you. Give to church tithing, donations to foundations etc. GOD DOES NOT NEED TO RECEIVE, BUT HUMANS NEED TO GIVE.

•  Stop doing what you are doing. In other words, take a break and assess what is working and what is not working. The definition of insanity is doing the same thing and expecting a different result. Stop doing what is not working and look for something new to do. Look for new ideas. Find someone who has done what you want to do. Learn from that someone ( a friend, acquaintance , book author).

•  Action always beats inaction. You must take actions before you can receive financial rewards. ACT NOW! 

•  It's what is in your head that determines what is in your hands. MONEY IS ONLY AN IDEA. There is a great book called THINK AND GROW RICH, the title is not Work Hard and Grow Rich. Learn to have money work for you and your life will be easier and happier. Today, don't play is safe, play it smart. Many of you were given two great gifts: Your Mind and Your Time. It is up to you to do what you please with both. With each dollar bill that enters your hand, you and only your have the power to determine your destiny. Spend it foolishly, you choose to be poor. Spend it on liabilities, you join the middle class. Invest it in your mind and learn how to acquire assets and you will be choosing wealth as your goal and your future. The choice is yours and only yours.

 

Thanks for visiting my blog and reading this post. I hope you learned something financially. I encourage you all to read the whole Rich Dad, Poor Dad book because it is really an interesting and a remarkable book. 

I would love to read comments from you, so kindly leave a comment before you go and also Share this page to your friends, so they too can also gain financial literacy. ^_^

Sources: 

Rich Dad, Poor Dad book by Robert Kiyosaki

http://en.wikipedia.org/wiki/Rich_Dad_Poor_Dad