Rich Dad Poor Dad Book Report Essay Example

AuthorRobert Kiyosaki
CountryUnited States
ReleasedApril 1, 2000
Media TypeHardback & Paperback
ISBNISBN 0446677450

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The book is the story of a person (the narrator and author) who has two fathers: the first was his biological father – the poor dad - and the other was the father of his childhood best friend, Mike – the rich dad. Both fathers taught the author how to achieve success but with very disparate approaches. It became evident to the author which father's approach made more financial sense. Throughout the book, the author compares both fathers – their principles, ideas, financial practices, and degree of dynamism and how his real father, the poor and struggling but highly educated man, paled against his rich dad in terms of asset building and business acumen.

The author compares his poor dad to those people who are perpetually scampering in the Rat Race, helplessly trapped in a vicious cycle of needing more but never able to satisfy their dreams for wealth because of one glaring lack: financial literacy. They spend so much time in school learning about the problems of the world, but have not acquired any valuable lessons about money, simply because it is never taught in school. His rich dad, by contrast, represents the independently wealthy core of society who deliberately takes advantage of the power of corporations and their personal knowledge of tax and accounting (or that of their financial advisers) which they manipulate to their advantage.

The book’s theme reduces to two fundamental concepts: a can-do attitude and fearless entrepreneurship. The author highlights these two concepts by providing multiple examples for each and focusing on the need for financial literacy, how the power of corporations contribute to making the wealthy even wealthier, minding your own business, overcoming obstacles by not fostering laziness, fear, cynicism and other negative attitudes, and recognizing the characteristics of humans and how their preconceived notions and upbringing hamper their financial freedom goals.

The author presents six major lessons which he discusses throughout the book:

  • The rich don’t work for money
  • The importance 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

Character Summaries

Rich Dad, Poor Dad revolves around three main characters: poor dad, rich dad (Kiyosaki’s second father) and the son (the author himself as narrator of the book). The essence of each character is:

  • Poor dad – educated but lacking the street smarts
  • Rich dad – very little education (eighth grade), tons of street smarts
  • Kiyosaki – the spectator who learns lessons from both but internalizes only rich dad’s traits

Poor Dad

The author compares his poor dad to the millions of fathers who encourage their sons to do well in school so they could get a good job with a good company. Poor dad believed in the traditional principles of working hard, saving money, and not buying material things that one cannot afford. He believed that having a good job with a solid company is what one should aspire for; hence he expresses disappointment when his son leaves the employ of a large, reputable corporation.

Poor dad looks to education as the passport to success. He held a doctorate degree, went to Ivy League universities, but was always struggling financially. He believed he would never be a rich man and the author points out that this became a self-fulfilling prophecy. Poor dad was more interested in a good education than the subject of money. The author wrote that his poor dad would always say things like, “I’m not interested in money” or “money doesn’t matter.”

The author points out that poor dad was preoccupied with things like job tenure and security, Social Security, vacation and sick leaves, company insurance and salary raises and promotions. The author felt that his poor dad was more interested in these factors rather than on the job itself. This is what the author calls being trapped in the Rat Race. His poor dad worked hard incessantly but somehow never made it ahead financially. Poor dad’s approach to the subject of money was based on working hard to have enough money to pay the bills (in contrast to rich dad’s approach to make one’s money work for him).

Rich Dad

The author wrote that it was when he was nine years old that he started realizing that his rich dad made much more sense than his poor dad. It was from rich dad that the author learned not to say, “I can’t afford it”, but instead to ask, “how can I afford it?” He explains this principle by relating an incident when he and his best friend Mike went to work for Mike’s father. Rich dad paid them very low wages deliberately so that would stir anger and a sense of injustice in them and eventually for them to realize that in order to get ahead, one must work for himself and not for others. For example, in that part of the book when the author complains to rich dad that he can hardly afford to buy anything with the wages he is paid, rich dad tells him that he shouldn’t dwell on the fact that his wages are low, but instead ask “how can I make more money” because this stimulates the brain to take action. His rich dad says that when someone says, “I can’t afford it”, his brain stops working. It therefore kills initiative and promotes passivity.

The author adds that while his poor dad invested time and effort in education, he did not have any knowledge on investing. His rich dad, by contrast, was very skilled in the investment game because that’s all he did. The attitude of his rich dad about money was manifested in the saying “the lack of money is the root of all evil” (his poor dad, on the other hand, believed that the love of money is the root of all evil).

According to the author, rich dad also nurtured the idea that taxes punished producers and rewarded the non-producers. He was the type who encouraged money talk at the dinner table and was portrayed by the author as someone who learned to manage risk, instead of not taking risks.

The Son (Robert T. Kiyosaki)

The author begins his book, Rich Dad, Poor Dad, by saying that he is fortunate in having had two fathers. He learned valuable lessons from both of them, but in Chapter One it becomes evident which father had the more sensible approach towards money. He compares and contrasts both fathers’ views about working hard, getting an education, saving and investing and realizing how habits of the rich and poor significantly differ. He attributes his financial acumen through the many conversations he carried out with his rich dad.

The author takes a common sense approach to the subject of money and emphasizes the need for accounting knowledge so that the reader clearly understands what assets and liabilities are. He makes simple diagrams that show the inflow and outflow of money and how the rich build up the asset column and the poor build up the liability column (expenses). It is obvious that the author places much importance on accounting knowledge – no matter how boring it is - because he says it is “the most important subject in your life.”

By using numerous examples and anecdotes, the author drives home his messages effectively, revealing his pro-capitalist stance.

The author also shows his understanding of the mechanisms employed by the government and the tax man and concludes that it is the middle class that actually pay for the poor. The rich are the ones who are hardly taxed because they have the knowledge to use tax legislation to their advantage.

Chapter Summaries

Chapter 1: Rich Dad, Poor Dad

The story of Robert Kiyosaki and Mike starts in 1956 Hawaii, when both boys were a nine years old. Their first get-rich scheme was a counterfeit nickel making company. They made plaster molds of the nickels and melted lead toothpaste tubes and filled the molds to produce the nickels. Their plan was foiled by Mike's father, who informed the boys of their illegal activity. After that day, the boys dedicated their free time to leaning about finance and economics from Mike’s father, the rich dad. The first lesson Mike’s dad made the boys experience was hatred of the “Rat Race”. He was able to achieve this by making the boys work in one of his grocery stores for three hours for ten cents an hour pay. Within a few weeks, Kiyosaki, tired of being exploited for labor, demanded that he receive a raise, but instead, Mike’s father cut his pay and told him to work for free. Eventually, both boys tired of being under appreciated (and unpaid) and they met individually with Mike's father. In their meetings with rich dad, he apologized for lack of pay and he offered them either the moral of the lesson or a pay raise. Both boys chose to learn the moral of the lesson, while rich dad offered them pay raises. He started at twenty-five cents, a dollar, two dollars, and even five dollars, which would have been considered a large amount of money for an hourly wage, but the boys still remained strong with their decision to learn the moral of the lesson. The lesson to get out of the “Rat Race” and instead of spending your whole life working to put a little money in your pocket and a bunch of money in someone else’s pocket, have people work hard to put money in your pocket. Out of all the lessons that were taught to the boys, this one was the most important. (Kiyosaki and Lechter 28-35)

Chapter 2: The Rich Don’t Work for Money

The author tells his readers to forget the notion that life teaches. He says “the only thing that life does is push you around.”

This chapter talks about people who are more comfortable in playing it safe because they were not taught early to take risks. The author develops the ideas that the poor and the middle class work for money, fear and greed cause ignorance and poverty, and the importance of using one’s emotions versus thinking with emotions. The author also stresses that opportunities in life come and go; the rich recognize them instantly and turn them into gold bullions. Others do not see these opportunities because they’re too busy seeking money and security. As the author says, well “that’s all they’re going to get.”

Chapter 3: Why Teach Financial Literacy

The story of Kiyosaki and Mike continues later in life, 1990, and both of the now adults have made incredible leaps and bounds with regards to their finances and their socioeconomic status. Mike was able to take the lesson from his father and apply them to his life. He took control of his father’s large business and increased every aspect of the empire and he is currently raising his son to take control of the company once he retires. As for Kiyosaki, he was able to retire at the age of 47 with his wife Kim. At a business meeting at the Edgewater Beach Hotel in Chicago, Charles Schwab, Samuel Insull, Howard Hopson, Ivar Kreuger, Leon Frazier, Richard Whitney, Arthur Cotton, Jesse Livermore and Albert Fall met to talk about different investments and money schemes. Twenty-five years later, a report stated that a large majority of those extremely wealthy people that met in Chicago either ended up in jail, dead or penniless. The major idea to take from the results of these unfortunate entrepreneurs is that you need financial literacy to be and stay safe. The idea that was represented with the big 1920’s entrepreneurs is still prevalent today with some of the professional athletes making poor financial decisions and ending up with next to nothing. This specific lesson is meant to teach people not to be wise with your money once you have it, but rather be smart with your money before you have it. In a way, don’t try to build a skyscraper or even a house without building a strong foundation first. According to Kiyosaki, there is one rule, and only rule that can help a person to build a strong foundation; know the difference between an asset and a liability, and make sure that you only control assets. (Kiyosaki and Lechter 56)

When it comes to beliefs about money buying freedom and the ability to enjoy retirement without fear of outliving one’s money, this chapter catches the essence of the author’s advocacy for financial independence. He says, “Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.”

The author believes that financial literacy begins with a working knowledge of accounting. It is essential to know the difference between assets and liabilities. To make these two terms understandable to readers, the author makes a rudimentary diagram of these two concepts to motivate them to purchase assets in order to solidify the asset column, while keeping the liabilities (expenses) to a bare minimum. The author states that poor people remain poor because they do the opposite. They pile up on their liabilities and have zero assets so that their balance sheets and income statements look out of kilter. People have to understand that it’s not how much they make, but how much they keep according to the author, and this is an essential principle that this chapter focuses on.

Chapter 4: Mind Your Own Business

In this chapter, the author slowly introduces the concept of real estate investing and uses McDonald’s as an example. He points out that McDonald’s may not make the best hamburgers in the world, but owns the “most valuable intersections and streets in America.” The author remarks that individuals need to mind their own business if they wish to become financially self-sufficient. They shouldn’t mind their employer’s business, they should strive for ways to become their own boss and nurture their own businesses.

The author continues his discussion on building assets. To him, real assets are anything with value – stocks, bonds, mutual funds, income-producing real estate, notes, royalties from intellectual property, etc.

This chapter also reveals the author’s investment preferences: real estate and stocks. For real estate, he says he starts small, and trades his properties for bigger ones and then delays paying taxes on capital gains through one IRS mechanism.

Chapter 5: The History of Taxes and the Power of Corporations

The author states that the poor let the big machinery (corporations) manipulate them whereas the rich know how to use big machinery. This means that the rich possess the knowledge and savoir faire to use the power of the corporation to protect and enhance their assets. The advantage of a corporation versus that of the individual lies in how corporations pay taxes, according to the author. He makes this point clearly: individuals earn money, pay taxes on that money, and live with what’s left. The corporation, on the other hand, earns money, spends everything it can, and is taxed on anything that’s left. The author adds that individuals may not be aware of how much they’re being manipulated; they work from January to mid-May to enrich the government by paying taxes on their income. In the meantime, the rich are hardly taxed.

The author recommends developing one’s financial IQ as one way of leaving the humdrum of daily existence. This is accomplished by gaining knowledge of accounting, investing, understanding the markets, and the law. He says being ignorant gets you bullied whereas being informed translates into “you have a fighting chance.”

Chapter 6: The Rich Invent Money

The author develops the concept of self-doubt. He says that each person is born with talent but that talent is suppressed because of self-doubt and fear. He remarks that it’s not necessarily the educated smart people who get ahead but the bold and adventurous. People never get ahead financially even if they have plenty of money because they have opportunities that they fail to tap, he stresses. Most of them just sit around waiting for opportunity to happen. The author’s idea is that people create luck; they should not wait around for it. He says it’s the same with money. It has to be created.

In this chapter, the author discusses the importance of an education (although some critics say that he appears to downplay its importance). The author is clear by saying, “a trained mind is a rich mind.” In his analysis, there are two types of investors, each with a different mind set: those who go for the packaged investment, and those who customize investments to suit their objectives.

The author encourages people to hire people more intelligent than they because by capitalizing on the knowledge of others, an intelligent individual builds his own knowledge base and therefore has more power over those who don’t know.

Chapter 7: Work to Learn, Don’t Work for Money

This is the chapter where the author talks about the skills individuals need to develop for financial success.

The reader is given an example of a young woman who had a Master’s Degree in English Literature and who was offended when it was suggested that she learn to sell and do direct marketing. After all the hard work for her degree, she didn’t think she would have to stoop so low to learn how to be a salesperson, a profession she didn’t think very highly of. The author uses this example to emphasize that there are other skills people need to cultivate to help them on the road towards financial freedom.

The author mentions management skills. He says individuals need to know how to manage cash flow, systems, and people. To that he throws in selling and marketing skills. He puts equal emphasis on communication skills. He says there are many people who have the scientific bent and hence have a powerhouse of knowledge, but they fail miserably in communications. These are the people who are “one skill away from great wealth.”

The author calls attention to one outstanding trait of great wealthy families: they give money away – plenty of it – unlike the poor who feel that charity begins at home.

Chapter 8: Overcoming Obstacles

The opinion of the author is that five personality traits hamper human beings: fear, cynicism, laziness, bad habits, arrogance. He explains that while it’s normal to have fear, what matters is how one handles it. The author shares his sentiment about his particular fondness for Texas and Texans: “When they win, they win big and when they lose, it’s spectacular.”

The author maintains that it’s not merely a question of balance but also FOCUS. He recommends that the Chicken Littles of the world be ignored. They’re only concerned about the sky falling, spending the rest of their lives in pessimism. He says he constantly hears people saying they want to be rich, but when it’s suggested that money can be made from real estate, their initial reaction is “but I don’t want to fix toilets.” The author believes it’s ironic that they’re more concerned about trivia like fixing toilets rather than what lies ahead in real estate. As a final point, the author states that it is healthy to be greedy, so when faced with a decision, a person must always ask, “What’s in it for me?”

Chapter 9: Getting Started

This chapter serves as a section on tips to create and build personal wealth. His first tip is, find a reason greater than reality to motivate you. What he means by this is to wake up the financial genius in oneself by empowering the mind. He says that people must have a strong /purpose for living.

The next tip is to feed the mind. By feeding the mind, the author contends that people acquire power of choice.

The author also advises people to choose friends carefully. He says to avoid people who proclaim incessantly that the sky is falling and instead encourages readers to spend time with people who enjoy talking about money because they may have valuable lessons to share. The author also believes that people should study one field, and then go out and learn a new one, although it is important to choose what one studies.

Here is another tip that the author observes most people don’t practice: pay yourself first. Even if short of cash, people must pay themselves first. This goes in tandem with managing three things efficiently: cash flow, people and personal time.

Another tip the author gives is being generous. He thinks it makes a lot of sense to pay one’s broker well as he’s an ally, and “your eyes and ears to the market.”

The author suggests having heroes. They are indispensable in life because they not only inspire, they also make it seem so easy. They stimulate the human mind into thinking, “If they can do it, why can’t I?”

“Teach and you shall receive” is another tip that the author shares. His words are eloquent concerning this idea: “There are powers in this world that are much smarter than we are. You can get there on your own, but it’s easier with the help of the powers that be. All you need to be is generous with what you have, and the powers will be generous with you.”

Chapter 10: Still Want More? Here are Some To Do’s

This chapter is sort of a supplement to the previous chapter. It gives readers additional tips to help them reach for financial rewards. One tip is to stop doing what you’re doing – that is, if it’s no longer working or viable. The author encourages readers to look for new ideas, to pick the brains of individuals who have the experience and who have already done what one aspires to do. He advises on keeping the learning curve alive, taking courses, buying tapes, attending seminars.

In looking for real estate investment opportunities, the author recommends looking in the right places. One way of doing this is to jog around the neighborhood one is interested in. People can acquire real estate even if they don’t have sufficient funds for the down payment. In fact, with a bit of cleverness, the author says people can even make money with no capital.

Themes in Rich Dad, Poor Dad

One theme that’s apparent in this book is that for an individual to be wealthy, he must aim to own the system or means of production, rather than work for another individual. The author stresses that there is obviously something confining about being an employee; it shuts the mind to other possibilities and it stunts initiative.

Financial intelligence is THE most powerful asset. By studying the precepts of accounting and investing, the author believes that individuals will be able to see the difference between an asset and a liability; in fact it is the more concrete application of learning what’s right and what’s wrong. Generating a string of expenses is wrong, building assets is right.

Unlike individuals who earn and then pay taxes on what they earn, corporations earn, spend what they want to spend, and pay taxes on what’s left. Corporations, therefore, hold a certain degree of power. The rich know how to use this power, the poor don’t.

The author also believes that true luxuries are experienced when they are the outward manifestations of intelligent investing and asset building. He cites the example of his wife purchasing a Mercedes Benz because it was the car she liked and worked hard to be able to purchase it. The author cautions however about keeping up with the Joneses and getting into debt because of this human frailty.

Fear, laziness, cynicism and arrogance are to be blamed for most of human inaction.

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Shvoong Review

Rich Dad Poor Dad by Robert Kiyosaki summarises the lessons learned from two different perspectives, that of a poor man, and that of a rich man. Drawing on his own experiences, Kiyosaki discusses how to create financial independence through investing, property ownership and building businesses.




“Look around; the richest people didn’t get rich because of their educations. Look at Michael Jordan and Madonna. Even Bill Gates, who dropped out of Harvard, founded Microsoft; he is now the richest man in America, and he’s still in his 30s.”

Getting a good education and making good grades no longer ensures success, and nobody seems to have noticed


  • “The love of money is the root of all evil.”
  • “The lack of money is the root of all evil.”

One of the reasons the rich get richer, the poor get poorer, and the middle class struggles in debt is because the subject of money is taught at home, not in school. Most of us learn about money from our parents. So what can a poor parent tell their child about money?

Money is not taught in schools. Schools focus on scholastic and professional skills, but not on financial skills.

Our staggering national debt is due in large part to highly educated politicians and government officials making financial decisions with little or no training on the subject of money.

Two perspectives:

  • “I can’t afford it” vs. “How can I afford it?”
  • “Study hard so you can find a good company to work for.” vs. “Study hard so you can find a good company to buy.”
  • “When it comes to money, play it safe, don’t take risks.” vs. “Learn to manage risk.”

Money is one form of power. But what is more powerful is financial education. Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth.


“If you want to be rich, you have to learn to make money…use your head.”

When you fail… “You’re only poor if you give up. The most important thing is that you did something. Most people only talk and dream of getting rich.

Being able to know when to make quick decisions is an important skill.

If you learn life’s lessons, you will do well. If not, life will just continue to push you around. People do two things. Some just let life push them around. Others get angry and push back. But they push back against their boss, or their job, or their husband or wife. They do not know it’s life that’s pushing.

If you realize that you’re the problem, then you can change yourself, learn something and grow wiser. Most people want everyone else in the world to change but themselves. Let me tell you, it’s easier to change yourself than everyone else.

Lesson No.1.

“The poor and the middle class work for money.” “The rich have money work for them.”

True learning takes energy, passion, a burning desire. Anger is a big part of that formula, for passion is anger and love combined. When it comes to money, most people want to play it safe and feel secure. So passion does not direct them: Fear does.

Most people, given more money, only get into more debt. Simply because it’s easier to learn to work for money, especially if fear is your primary emotion when the subject of money is discussed. Just know that it’s fear that keeps most people working at a job. The fear of not paying their bills. The fear of being fired. The fear of not having enough money. The fear of starting over. That’s the price of studying to learn a profession or trade, and then working for money. Most people become a slave to money… and then get angry at their boss.”

Most people have a price

And they have a price because of human emotions named fear and greed. First, the fear of being without money motivates us to work hard, and then once we get that pay check, greed or desire starts us thinking about all the wonderful things money can buy. The pattern is then set.

The pattern of get up, go to work, pay bills, get up, go to work, pay bills… Their lives are then run forever by two emotions, fear and greed. Offer them more money, and they continue the cycle by also increasing their spending. This is the Rat Race.

People also work for money because of desire. They desire money for the joy they think it can buy. But the joy that money brings is often short lived, and they soon need more money for more joy, more pleasure, more comfort, more security. So they keep working, thinking money will soothe their souls that is troubled by fear and desire. But money cannot do that.

The sooner you forget about needing a pay check, the easier your adult life will be. Keep using your brain, work for free, and soon your mind will show you ways of making money far beyond what you could ever get paid. You will see things that other people never see. Opportunities right in front of their noses. Most people never see these opportunities because they’re looking for money and security, so that’s all they get. The moment you see one opportunity, you will see them for the rest of your life.


Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.

So when people ask, “Where do I get started?” or “Tell me how to get rich quick,” the only answer is; “If you want to be rich, you need to be financially literate.”

Now, accounting is possibly the most boring subject in the world. It also could be the most confusing. But if you want to be rich, long term, it could be the most important subject. The question is, how do you take a boring and confusing subject and teach it to kids? The answer is, make it simple. Teach it first in pictures.

Rule One.

You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is Rule No. 1. It is the only rule….Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets.

“You mean all we need to know is what an asset is, acquire them and we'll be rich?”

What defines an asset is not words but numbers. And if you cannot read the numbers, you cannot tell an asset from a hole in the ground. “In accounting, it’s not the numbers, but what the numbers are telling you. It’s just like words. It’s not the words, but the story the words are telling you.

“If you want to be rich, you've got to read and understand numbers.”

Here is how to tell the difference between an asset and a liability.

An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.

This is really all you need to know. If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. It’s not knowing the difference that causes most of the financial struggle in the real world.

There is a flaw in the thinking of so many people. The flaw is that money will solve all problems. More money will often not solve the problem; in fact, it may actually accelerate the problem. Money only accentuates the cash flow pattern running in your head. If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spending.

Because students leave school without financial skills, millions of educated people pursue their profession successfully, but later find themselves struggling financially. They work harder, but don’t get ahead. What is missing from their education is not how to make money, but how to spend money-what to do after you make it.

Is a house an asset or a liability?

When it comes to houses, I point out that most people work all their lives paying for a home they never own. In other words, most people buy a new house every so many years, each time incurring a new 30-year loan to pay off the previous one.

Even though people receive a tax deduction for interest on mortgage payments, they pay for all their other expenses with after-tax dollars. Even after they pay off their mortgage.

The greatest losses of all are those from missed opportunities. If all your money is tied up in your house, you may be forced to work harder because your money continues blowing out of the expense column, instead of adding to the asset column, the classic middle class cash flow pattern.

Owning a house

The end result in making a decision to own a house that is too expensive in lieu of starting an investment portfolio early on impacts an individual in at least the following three ways:

  1. Loss of time, during which other assets could have grown in value.
  2. A lack of additional capital, which could have been invested instead of paying for high-maintenance expenses related directly to the home.
  3. Loss of education. Too often, people count their house, savings and retirement plan as all they have in their asset column. Because they have no money to invest, they simply do not invest.

LESSON # 3 Mind Your Own Business

Most people work for everyone else but themselves. They work first for the owners of the company, then for the government through taxes, and finally for the bank that owns their mortgage.

Secret No. 3 of the Rich: “Mind your own business” Financial struggle is often directly the result of people working all their life for someone else. Many people will have nothing at the end of their working days.

  • Most people think… Your Profession -> Your Income
  • The Rich think… Your Assets -> Your Income

The education system

Our current educational system focuses on preparing today’s youth to get good jobs by developing scholastic skills. They study to become engineers, scientists, cooks, police officers, artists, writers and so on. These professional skills allow them to enter the workforce and work for money.

There is a big difference between your profession and your business. When ask people, “What is your business?” And they will say, “Oh I’m a banker.” Then I ask them if they own the bank? And they usually respond. “No, I work there.”

A problem with school is that you often become what you study. So if you study, say, cooking, you become a chef. If you study the law, you become an attorney, and a study of auto mechanics makes you a mechanic. The mistake in becoming what you study is that too many people forget to mind their own business. They spend their lives minding someone else’s business and making that person rich.

Mind your own business

To become financially secure, a person needs to mind their own business. Your business revolves around your asset column, as opposed to your income column. The rich focus on their asset columns while everyone else focuses on their income statements.

Start minding your own business. Keep your daytime job, but start buying real assets, not liabilities or personal effects that have no real value once you get them home. A new car loses nearly 25 percent of the price you pay for it the moment you drive it off the lot. It is not a true asset even if your banker lets you list it as one.

For young people who have not yet left home, it is important for parents to teach them the difference between an asset and a liability. Get them to start building a solid asset column before they leave home, get married, buy a house, have kids and get stuck in a risky financial position, clinging to a job and buying everything on credit.

Real assets fall into several different categories:

  1. Businesses that do not require my presence. I own them, but they are managed or run by other people. If I have to work there, it’s not a business. It becomes my job.
  2. Stocks.
  3. Bonds.
  4. Mutual funds.
  5. Income-generating real estate.
  6. Notes (lOUs).
  7. Royalties from intellectual property such as music, scripts, patents.
  8. And anything else that has value, produces income or appreciates and has a ready market.

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LESSON # 4 The History of Taxes and the Power of Corporations

The real reality is that the rich are not taxed. It’s the middle class who pays for the poor, especially the educated upper-income middle class. Although it was intended to punish the rich, in reality it wound up punishing the very people who voted for it, the poor and middle class.

The rich, do not play by the same set of rules. It is the knowledge of the power of the legal structure of the corporation that really gives the rich a vast advantage over the poor and the middle class. Every time people try to punish the rich, the rich don’t simply comply, they react. They do not just sit there and voluntarily pay more taxes.

Financial IQ is made up of knowledge from four broad areas of expertise:

  • Accounting.
  • Investing.
  • Understanding markets.
  • The law.

LESSON # 5 The Rich Invent Money

Your financial genius requires both technical knowledge as well as courage. If fear is too strong, the genius is suppressed. Urge students to learn to take risks, to be bold, to let their genius convert that fear into power and brilliance.

LESSON # 6 Work to Learn. Don’t Work for Money

Most people need only to learn and master one more skill and their income would jump exponentially. I have mentioned before that financial intelligence is a synergy of accounting, investing, marketing and law. Combine those four technical skills and making money with money is easier. When it comes to money, the only skill most people know is to work hard.

You want to know a little about a lot.

The hardest part of running a company is managing people. If you’re not a good leader, you’ll get shot in the back.

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.

If you are unwilling to work to learn something new and insist on, instead, becoming highly specialized within your field, make sure the company you work for is unionized. Labor unions are designed to protect specialists.


Many corporations find a young bright student out of business school and begin “grooming” that person to someday take over the company. So these bright young employees do not specialize in one department; they are moved from department to department to learn all the aspects of business systems. The rich often “groom” their children or the children of others. By doing so, their children gain an overall knowledge of the operations of the business and how the various departments interrelate.

The main management skills needed for success are:

  1. Management of cash flow
  2. The management of systems (including yourself and time with family).
  3. And te management of people.

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.



Fear of losing money, or fear of failure?

It takes guts, patience and a great attitude toward failure. Losers avoid failing. And failure turns losers into winners.


“Cynics never win, unchecked doubt and fear creates a cynic. Cynics criticize, and winners analyze”

Cynicism blinds you while analysis opens your eyes.


How do you beat laziness? The answer is a little greed. Without that little greed, the desire to have something better, progress is not made.


Arrogance is ego plus ignorance. What you don’t know loses you money. When you know you are ignorant in a subject, start educating yourself by finding an expert in the field or find a book on the subject




  1. You need a reason greater than reality
  2. Use the power of choice, invest first, in education
  3. Choose friends carefully
  4. Master a formula and then learn a new one
  5. Pay yourself first
  6. Pay your brokers well
  7. Be an ‘Indian Giver’, the power of getting something for nothing
  8. Assets buy luxuries
  9. The need for heroes, embrace the power of myth.
  10. Teach and you shall receive

This summary is not intended as a replacement for the original book and all quotes are credited to the above mentioned author and publisher.

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