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Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Updated: Apr 16, 2023

If you want to learn how to achieve financial freedom, you might want to read "Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!" by Robert T. Kiyosaki. This book is a personal finance classic that has sold over 32 million copies worldwide and has been translated into 51 languages. In this book, Kiyosaki shares his story of growing up with two fathers: his biological father, who was a well-educated and hard-working employee, but always struggled financially; and his best friend's father, who was a high school dropout, but became a successful entrepreneur and investor. Kiyosaki calls them his "poor dad" and his "rich dad", respectively.

The book is divided into nine chapters, each containing a lesson that Kiyosaki learned from his rich dad about money and investing. Here are some of the key takeaways from each lesson:

Lesson 1: The Rich Don't Work for Money

The poor and the middle class work for money, but the rich make money work for them. The poor and the middle class are trapped in the rat race of earning income, paying bills, and accumulating liabilities. The rich, on the other hand, focus on acquiring assets that generate passive income and appreciate in value over time. The rich understand that money is a tool that can be used to create more money, not an end in itself.

Lesson 2: Why Teach Financial Literacy?

Financial literacy is the ability to understand how money works and how to make it work for you. It involves knowing the difference between an asset and a liability, and how to use them to your advantage. An asset is something that puts money in your pocket, such as a business, a stock, or a rental property. A liability is something that takes money out of your pocket, such as a car, a house, or a credit card debt. The rich buy assets, while the poor and the middle class buy liabilities that they think are assets.

Lesson 3: Mind Your Own Business

Your business is not your job, but your personal financial statement. Your job is where you earn income, but your business is where you invest that income to create wealth. The rich mind their own business by building and maintaining a strong financial statement that consists of income-producing assets and minimal liabilities. The poor and the middle class mind someone else's business by working for an employer or the government, and spending their income on expenses and liabilities.

Lesson 4: The History of Taxes and The Power of Corporations

Taxes were originally created to punish the rich for being rich, but over time they have become a burden for the poor and the middle class. The rich have learned how to use corporations as legal entities that protect them from taxes and lawsuits. A corporation acts as a separate person that can own assets, incur liabilities, and pay taxes at a lower rate than individuals. The rich use corporations to reduce their tax liability, increase their cash flow, and leverage their investments.

Lesson 5: The Rich Invent Money

The rich are creative and opportunistic when it comes to making money. They do not rely on conventional wisdom or existing markets, but create their own opportunities and markets. They use their financial literacy, imagination, and courage to turn ideas into reality. They also use leverage to multiply their returns without increasing their risk. Leverage can be in the form of debt, other people's money, other people's time, or other people's work.

Lesson 6: Work to Learn - Don't Work for Money

The poor and the middle class work for money, but they often lack other skills that are essential for financial success. The rich work to learn, not to earn. They seek to acquire skills that can help them create more value in the marketplace, such as sales, marketing, communication, negotiation, leadership, management, accounting, investing, etc. They also learn from mentors who have achieved what they want to achieve. They do not let fear of failure or criticism stop them from trying new things and learning new skills.

Lesson 7: The rich invent money

The rich use their creativity and imagination to create money out of thin air. Kiyosaki says that money is not real, but an idea that people agree upon. He gives examples of how he and his rich dad created money by finding opportunities, solving problems, and adding value. He also warns against being greedy and dishonest, as they can destroy your reputation and trust.

Lesson 8: Work to learn — don't work for money

The importance of learning new skills and acquiring knowledge can help you increase your income and assets. Kiyosaki says that most people work for money because they are afraid of losing their jobs, their income, or their benefits. He advises that instead of working for money, you should work to learn things that can make you more valuable in the market. He also suggests that you should seek mentors who can teach you what they know and guide you along your journey.

Lesson 9: Overcome your fears and take action

You shall overcome your fears and take action towards your financial goals. Kiyosaki says that fear is the main reason why most people never achieve wealth or happiness. He explains that fear can be used as a motivator or a deterrent, depending on how you handle it. He advises that you should face your fears head-on and use them as a catalyst to take action. He also reminds you that failure is part of the learning process and that you should learn from your mistakes and move on.

These are just some of the valuable lessons from Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki. This book is a must-read for anyone who wants to improve their financial literacy and achieve financial freedom. If you haven't read it yet, I highly recommend that you do so as soon as possible.

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