6 Principles of Financial Success: Lessons from Rich Dad, Poor Dad
Perhaps one of the best-selling personal finance book is the Rich Dad, Poor Dad, written by American author, investor and motivational speaker Robert Kiyosaki. The book compares the two fathers: the narrator/author’s biological father – the poor dad; and the father of his friend Mike – the rich dad.
This book doesn’t talk about those who were born rich or poor; it is all about the way they think when it comes to money and how they manage it. It tells us that the difference between the rich and the poor is not the amount of wealth they hold; it’s their mindset, habit, and philosophy.
Here are the six major lessons discussed throughout the book:
- Lesson #1 The Rich Don’t Work for Money
The rich dad says “Money works for me” – not the other way around. He wants you to work to let you learn how money works and how to have it work for you. But if you want to master how, first, you have to alleviate your fear.
According to the rich dad, fear is the primary emotion when the subject of money is discussed. It keeps most people to stay in their job because they fear of not being able to pay the bills or not having enough money. Greed is the second; if you offer more money, they also increase spending. If you don’t want to become slave to your money, you have to think about it logically, not through emotions.
- Lesson #2 Why Teach Financial Literacy?
The rich dad believes that money without financial intelligence is money soon gone. This is why he stresses the importance of financial education. Schools only teach people how to work for money. They are designed to produce good employees instead of employers. What’s lacking in formal education is the so-called financial aptitude – what you do with the money once you make it, how to keep people from taking it from you, how long you keep it, and how hard that money works for you. If you want to become financially independent, you have to know and understand your numbers.
- Lesson #3 Mind Your own Business
Your profession and your business are different from each other. You should not rely on your job to become financially secure; instead, focus on your own business and develop your assets. As Kiyosaki puts it, “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.” Acquire assets and use them to purchase income-generating, real assets. The rich dad further noted that real assets are anything with value – stocks, bonds, mutual funds, income-producing real estate, notes, royalties from intellectual property, etc.
- Lesson #4 The History of Taxes and the Power of Corporations
The idea of taxes started when people were made believe that it was intended to punish the rich. In reality, the poor and middle class, the very people who accepted and voted for it, were the ones disadvantaged. “Once government got a taste of money, the appetite grew,” said the rich dad. In the government, the larger his organization, the more he is respected. On the other hand, within my organization, the fewer people I hire and the less money I spend, the more I am respected by my investors.
The point is, the rich people are aware of how much they are being manipulated by this system, but they don’t let these hinder them. Having a good knowledge in four broad areas of expertise – accounting, investing, understanding markets, and law – make them understand how to protect and enhance their assets.
- Lesson #5 The Rich Invent Money
The one thing that holds all of us back is self-doubt. While most people wait around for luck and opportunity, the rich ones are creating opportunities out of obstacles. In the real world, it’s not the smart that gets ahead but the bold. If you don’t think big and take risks, you will spend your entire life waiting for something that is not bound to happen.
Kiyosaki reiterated here the importance of financial education. The rich doesn’t think that he can make more money just by working harder; he also strives to become financially literate to explore more options and have more power.
- Lesson #6 Work to Learn Don’t Work for Money
Kiyosaki thinks that there are people who are “one skill away from great wealth.” Aside from the things we learn in school, we also need to learn the skills needed to achieve financial success. The rich people seek work for what they will learn, more than what they will earn.
Some of the significant areas to focus on are management and communication. Kiyosaki also stressed the importance of sales and marketing skills. These are specific knowledge that people should acquire to help them reach the road towards financial freedom.
Rich people perceive money differently. They know that it is not enough to make money – you also have to grow it and learn how to manage it. It’s one thing to become financially independent, and another to become financially literate. Having knowledge when it comes to money matters is essential not just for investors, but for everyone. The financial decisions you face on a daily basis will have a major impact in your future so you should know how to be responsible for these.
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