Rich Dad, Poor Dad- A guide to become financially literate

Rich Dad, Poor Dad is the autobiography of Robert Kiyosaki. He has placed strong emphasis on the importance of financial wisdom in this book. In order to educate his audience about finance, he has provided various tactics and steps. The book covers examples from kiyosaki’s personal life that claim that right financial education can lead to successful career and early retirement.

This book also works as a guide to attain financial independence at an early age. It is loaded with information and experiences to achieve the goals. The author has specifically shared the teachings that only rich people impart in their kids that help them become wealthier and more successful.

The teachings mentioned below by Robert Kiyosaki forms the basis of Rich Dad, Poor Dad investment guide:

- Do not let the fear of judgment suck you into the rat race

Robert Kiyosaki begins the book by urging the readers to discord the mantra ‘Go to school, study hard and get a job.’ He states that a person can go to school, study hard and even get a job but will still be stuck in a rat race. Also is there a guarantee that following this mantra will make a person good at managing money? In today’s day and age, it is super important to impart financial literacy in the school itself.

There is a notion that rich people are talented and full of financial wisdom while the low-income group are untalented and lack financial wisdom. Then there are people who think being rich and financial wisdom goes hand in hand but it is completely untrue. The low-income group people are stuck in the rat race which prevents them from becoming wealthy despite their financial knowledge. There are lots of rich people who know nothing about finance. Therefore, it is super important to treat financial literacy as a necessary subject.

The author states that the people who fear disapproval are always stuck in their comfort zone. Even if they want to leave it, the fear will pull them further down. If you want to step out of the rat race and make a decision for yourself, then you can read book summaries available on various book summary apps.

- Begin self-financial education journey

The second lesson that the author talks about is self-education about finances. The earlier you start the journey of self-education and setting financial goals, the better! All this boils down to looking at your income and setting goals based on that income. The author also wants the readers to work for what they learn rather than working for what they earn.

- Conquer your fear and take risks

Develop risk taking abilities. Eliminating fear and taking calculated risks can actually help a person achieve his/her financial goals. The author mentions investing in shares, mutual funds and bonds instead of depositing all the money in fixed deposits or saving accounts. Higher the risk, higher the chance of becoming wealthy.

- Let the laziness take a back seat

The next lesson mentioned Rich Dad, Poor Dad is avoiding laziness and arrogance. The author mentions that laziness is not always stated as lying around and doing nothing. Rather laziness is about not doing what is important and devoting all your precious time and energy to only one thing. Let’s understand it with an example. If a person devotes all his time to business, he is neglecting his family. That person is showing laziness in spending quality time with his family by devoting all his time to his business. This step can make his wife head out for an expensive divorce.

- Identify the difference between an asset and a liability

One of the most important lessons imparted in Rich Dad, Poor Dad is understanding the difference between an asset and a liability. Identifying the difference between the two things is crucial to run a successful business. Some entrepreneurs mistake asset liabilities as assets and as a result invest in them. Treating your assets as employees who work for you to produce income is the right way to invest in assets.

- Understand the difference between your profession and business

Treating your profession and business as different entities is the sixth lesson imparted by Robert Kiyosaki. He states that profession is something you do for 40 hours a week that helps you to pay your bills and bear expenses while business is something that helps you make money on your assets. You can call yourself financially independent when your profession bears the expenses and your business makes you rich.

- Find out the legal loopholes to reduce tax

The seventh lesson mentioned in the Rich Dad, Poor Dad is to find out the legal ways that can help you reduce or minimize taxation. The author explains this by giving multiple examples. One of the examples mentioned in the book is- If a person invests his/her money through their business, it is taxed lower than when they invest in their own name. In order to understand tax reduction is another one of the reasons to financially educate yourself.