Monthly Archives: March 2008

Rich Dad Poor Dad

rdpd.jpg Rich Dad Poor Dad is a book about what rich people teach their kids that poor people do not. The author Robert Kiyosaki has parents who teach him to “go to school, study hard and get a good job”. His father, the poor father, was highly educated and intelligent (with a PhD) who earned substantial income throughout his life but always seemed to struggle financially. Robert persuasively argues that this is the way most poor- and middle-class people are. They may be highly academically qualified, but remain financially constrained. He compares that to his other father, the rich father, who never finished eighth grade but went on to become one of the richest people in Hawaii. The difference between the two, Robert argues, is not that they had different incomes, but that they used their incomes differently. His poor dad, like most people in society, used his income to accumulate liabilities- a good car, expensive house, more credit cards etc. His rich dad, on the other hand, used his income to collect assets which generated more income- properties to rent out, real estate to invest and sell etc. The rich dad died rich, leaving behind millions of dollars for family, charities, and church. All his life, he never worried about money, but he also lived below his means. Richard’s message is clear- If you want to be rich accumulate assets; if you increase liabilities you will never be able to save enough to not have to bother about money anymore.

 

Though this book was written in the 1990s, the lessons of this book are equally applicable today too. To many people, the book may read like it is written for a younger audience. In some ways this is correct. As the title of the book suggests, it is about what young people around the country (and around the world) learn from their parents about money. However, if the reader is open-minded, s/he will realize that the lessons apply equally to more mature people too. Thinking about your own expenses in terms of whether you are accumulating assets or liabilities does not come naturally to most people. I recommend this book to readers of all ages.   

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