About The “Lessons From” Series
The “Lessons From” series are bite-sized summaries of books about financial literacy for parents raising money-smart kids.
Today we start with a book called Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki, Sharon L. Lechter
The big idea behind this book is articulated well by the son of one of the authors:
“Mom,” he continued, “I don’t want to work as hard as you and dad do. You make a lot of money, and we live in a huge house with lots of toys. If I follow your advice, I’ll wind up like you, working harder and harder only to pay more taxes and wind up in debt. There is no job security anymore; I know all about downsizing and rightsizing. I also know that college graduates today earn less than you did when you graduated. Look at doctors. They don’t make nearly as much money as they used to. I know I can’t rely on Social Security or company pensions for retirement. I need new answers.”
The old answer is the Rat Race, “where you work for the owners of a company, for the government paying taxes, and for the bank paying off a mortgage and credit cards. We advise our children to ‘study hard, get good grades, and find a safe job or career’ but the author says this is old, risky advice. “That is old advice, and it’s bad advice. If you could see what is happening in Asia, Europe, South America, you would be as concerned as I am.” It’s bad advice, he believes, “because if you want your child to have a financially secure future, they can’t play by the old set of rules. It’s just too risky.”
“That’s why it is foolish to simply say to a child, ‘Get a good education,’ ” he said. “It is foolish to assume that the education the school system provides will prepare your children for the world they will face upon graduation. Each child needs more education. Different education. And they need to know the rules. The different sets of rules.”
How can the education system teach a subject that it does not know?”
The author claims that the rich teach their children differently.
Chapter 1 – Rich Dad, Poor Dad
“Money is not taught in schools. Schools focus on scholastic and professional skills, but not on financial skills. This explains how smart bankers, doctors and accountants who earned excellent grades in school may still struggle financially all of their lives. 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.”
The author’s “Rich Dad” was actually his friend’s dad that taught him lessons about money for over 30 years. He noted, “Although both dads worked hard, I noticed that one dad had a habit of putting his brain to sleep when it came to money matters, and the other had a habit of exercising his brain.”
One dad recommended, “Study hard so you can find a good company to work for.” The other recommended, “Study hard so you can find a good company to buy.”
One believed, “Our home is our largest investment and our greatest asset.” The other believed, “My house is a liability, and if your house is your largest investment, you’re in trouble.” Both dads paid their bills on time, yet one paid his bills first while the other paid his bills last.
One dad taught the author how to write an impressive resume so he could find a good job. The other taught him how to write strong business and financial plans so he could create jobs.
Even when the author’s “Rich Dad” was “flat broke after a major financial setback, he continued to refer to himself as a rich man. He would cover himself by saying, “There is a difference between being poor and being broke. Broke is temporary, and poor is eternal.”
The author’s Rich Dad encouraged him to study to be rich, to understand how money works and to learn how to have it work for him. “I don’t work for money!” were words he would repeat over and over, “Money works for me!”
And when it was all said and done, there were only six main lessons, repeated over 30 years.
Coming Next Time… LESSON ONE: THE RICH DON'T WORK FOR MONEY
Or dive right in yourself:Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!
P.S. This book summary has been completely rewritten and published on the Kindle platform. If you'd like to have this summary available at any time on your Kindle app or device, it's available here.