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4 Life Lessons From Rich Dad, Poor Dad

If you were to lose your job today?

How long would you survive out in the wild?

Perhaps you might last a week or two.

After all, Americans have a median balance in their bank account of 53 hundred dollars.

But there are a few people out there who could go a thousand lifetimes without a job.

Rich Dad, Poor Dad changed my life for the better.

It’s the number one reason I became a freelancer and entrepreneur.

And here are the most valuable lessons I extracted from the author, Robert Kiyosaki.

Lesson #1: Mentality Between Classes

One of the biggest secrets behind those who have achieved an enormous amount of wealth is this:


Think about it this way, when it comes to building wealth, there are two strategies that are as old as humanity itself.

The first strategy is like building a fire out in the wilderness.

You gotta go out there in the darkness to gather wood, then you gotta spend hours trying to get the fire started without room for distractions.

After all that, you gotta keep the fire alive, make sure it has enough fuel.

It’s hard work, but in the end, that fire will last forever, as long as you keep maintaining it properly.

Then there is the second strategy, which is akin to blowing up a firecracker.

After the initial high of seeing it blow up, there is just an empty husk left behind.

You can’t really do much with it, it’s practically useless, the fire lasted less than a second, and there’s no way to bring it back to life.

Knowing the difference between these two strategies is one of the lessons that helped me see the world in a completely different light.

And it’s all thanks to the author, Robert Kiyosaki.

I know lately, he has been a rather controversial figure but despite his character flaws, his books have reached millions of people and he has helped many, like myself, improve their finances

Kiyosaki is a big believer that mentality can make or break a millionaire.

There’s a fundamental difference between people who think long term, and those who think in the moment.

This is what separates people like Warren Buffet, who built his empire through careful analysis and wise investments and now is one of the richest people in history with an estimated net worth of almost 120 billion dollars.

Then there are people who have achieved an incredible amount of wealth in a short time, but more often than not, end up broke in just a matter of years.

People like Mike Tyson, one of the most brutal and infamous boxers of all time, who at one time had an estimated net worth of 300 million dollars.

But now, he is only left with 3 million dollars.

This is nothing to scoff at,

But still, he only kept 1 percent of those 300 million by making poor decisions.

According to Robert, these situations are quite common because the poor, the middle class, and the rich have completely different mindsets.

And it all revolves around the way they all see assets and liabilities.

He defines an asset as cash flow that goes into your pocket, and liability as cash flow that goes out of your pocket.

And to keep things simple for you guys, a cash flow is simply the way money is being moved around.

If your income is higher than your expenses, then you would have a positive cash flow, and vice versa if your income is lower than your expenses, you have a negative cash flow.

Positive cash flows bring in money, while negative ones lose you money.

Poor people have very little room to breathe, their main source of income comes from their job, and they use that money to pay for all their expenses.

He shows us a very crude diagram of a poor person’s cash flow on page 68.

When they get their paycheck all their money goes into paying their rent, food, gas, debt, etc. They have very little money left to make any significant investments.

And data shows that almost 2 thirds of all Americans live paycheck to paycheck.

And a little over 50 percent of American adults have invested in the stock market in the first place.

The middle class is a little better off, and as Robert's cash flow illustrates, they have a higher income, but they also have a lot more liabilities.

They have to pay more for their mortgage, car insurance, taxes, etc.

He also believes that a mortgage is a liability, which is one of the reasons he is so controversial in the business world.

Most people see homes as an asset, after all, they increase in value over time, and owning a house is a staple of the middle class.

But Robert believes that it all depends on the cash flow.

If you take into account taxes, maintenance, and property taxes, more often than not, a home is a liability for most people.

But being unable to recognize this reality, is what differentiates the middle class from the rich.

The rich understand perfectly what are assets and what are liabilities.

And the majority of the income of the rich doesn’t come from their jobs, it comes from royalties, rentals, interest dividends, etc.

The rich also prioritize assets above all else.

Those assets increase their income and they use that extra income to purchase more assets and it goes round and round until you start making more money than you know what to do with.

These 3 diagrams, as simple as they are, are what made me understand how the rich were able to remain rich their entire lives.

Lesson #2: Don’t work for money

The second lesson from Poor Dad, Rich Dad is:

Never work for money.

I know this is not popular, when we hear the idea of working for free, all clutch our pearls, but hear me out.

I don’t actually mean working for free, of course, we all gotta pay our bills, what I mean is don’t take a job based on money.

Instead, you should choose the job that could help you improve your skills.

In the book, Robert goes back and forth with the advice between his own father, who has a Ph.D. and has a great stable job with the government, and his best friend’s dad, who dropped out of school and is one of the most successful businessmen in Hawaii.

His poor dad, worked for a paycheck his entire life, while his rich dad, sometimes worked for weeks without making any money.

This lesson was so fundamental to Robert’s development, that it’s literally lesson number one in his book.

The rich don’t work for money, they work to gain experience, network, make connections, and learn about business models.

The poor remain poor because they’re trapped by 2 emotions.

The first is fear, they’re afraid of losing their job, losing their home, and going hungry.

This motivates them to go to their job for hours at a time, come home exhausted and do it all over again the next day.

When they get their paycheck, another emotion pops up.


Once they have some money left after their expenses, they start to think about all the things they could buy, a better truck, a wider TV, etc.

And once they run out of money, the fear sets in once again and they are motivated to work longer and harder, and they become trapped in the all-familiar rat race.

There is a really cool anecdote in the book where Rich dad helped Robert detach his feelings from money.

Robert and his friend started working for Rich dad for free, eventually, Rich's dad offered them 25 cents an hour, which was a lot of money for a kid in 1956, then he kept asking them for their price, going up and up until he offered them 5 dollars an hour, which was completely ridiculous.

Most adults didn’t make that amount of money back then.

This is where Robert started to see how arbitrary the connection between time and money is and realized how important it was to work to gain experience rather than money.

This is why Robert, in his early adulthood, joined the marines to learn about leadership and worked in the oil industry to learn the ins and out of the business.

Rich dad molded Robert’s entrepreneurial spirit.

He taught them not to be controlled by money, and to look for opportunities to bring value to people where no one else was looking.

Later in the book, Robert writes about one of his first side hustles, where they asked a lady who owned a comic book store if they could keep the comics she was going to throw away.

She said yes, as long as they didn’t resell them.

This is where an idea sparked.

Robert and his friend collected a bunch of these comic books and opened a makeshift library in their basement, charging kids 10 cents to read as much as they want for 2 hours.

They started making over 9 dollars a week, which was a lot of money back then, so they hired his friend’s younger sister to run it paying her a dollar a week, and they were able to bag the rest.

Lesson #3: Fear of Failure

Despite all the wisdom this book or any other could offer, there is a reason the majority of people fail to make it out of the rat race.

And that reason is…


We all have struggled at some point in our lives.

Our very own insecurities, fears, arrogance, bad habits, and laziness are what keep us from achieving our goals, whether they’re personal or financial.

This is why Robert believes is vital that we retrained our minds into thinking about failure in a completely different way.

No matter what you try to do, chances are you won’t make it on your first, second, third, or a hundredth try.

Failure defeats losers, but it also inspires winners.

That is why every defeat you face should be turned into an opportunity.

The problem is that not a lot of people are out there looking for these opportunities because of one reason:

The fear of losing money is far greater than the joy of being rich.

Financially, most people play it safe.

They put all their money in safe indexes, like the DOW Jones or the S&P 500.

This is a great strategy if you have a significant amount of wealth.

But if you don’t have a lot to spare, chances are investments like these won’t get you anywhere.

And as Robert brilliantly explains later in the book:

If you don’t have a lot of money and you want to be rich you should not be balanced, you should be focused.

Don’t do what the majority of the poor and the middle class do.

Where they put the little money they have into different baskets.

If you have a thousand grand, maybe investing in the stock market might not yield you the best returns, instead, you should take that money and invest it in yourself.

Take some classes, hire a mentor, and start a side hustle.

Most of us are taught to be like Poor dad.

Go to school, get good grades, get a fancy degree and go get the job of your dreams.

This might have worked back when in the day.

But today jobs are much more competitive.

Some studies have shown that only 27 percent of college graduates in the US actually get a job in the field they studied.

If you want to avoid being another statistic how can you become more like Rich dad?

There is another lesson inside the book that I will take to my grave.

Robert briefly talks about how laziness keeps most people from moving forward in life. T

It sounds like pretty generic advice at first.

But Robert has such a unique and interesting take on what it means to be lazy that has completely changed the way I look at the world.

When you think of a lazy person what usually comes to mind?

Probably someone laying on the sofa in their pajamas, watching some reality tv with a beer in their hand and Cheeto dust all over their clothes.

But according to Robert, this is not the only way people display laziness.

Most people are lazy by staying busy.

Most of the time, when people are afraid to face a harsh reality they neglect them as much as possible.

And keeping themselves busy is a great excuse to do so.

If a husband is having marital issues and spends 16 hours at the office, how can anyone call him lazy?

Well, he is lazy when it comes to his relationship.

He isn’t working long hours because he enjoys doing so.

The number one reason people work so hard is because of deep anxieties outside of the work environment.

This would probably explain why rich people are not necessarily happier than the rest of us.

Studies like the Journal Nature of Human Behavior discovered that once a house reaches around 105 thousand dollars a year in the US, the correlation between happiness and money becomes less relevant.

Studies have also shown that children that come from affluent families are far likelier to suffer from depression, substance abuse, and anxiety.

In some cases, children from upper-middle households were three times more likely to report significant levels of depression.

The study concluded that the reason children from wealthier homes suffered more emotionally, was because they had higher expectations of success.

And because they were on average much more isolated since their parents worked significantly more hours than those from lower-income households.

Just like Robert said in his book, people often overlook the fact that the rich often have very unorganized lives.

And while they are great at making money, the unintentional consequences of their busy lifestyles are paid for by their immediate families

Lesson #4: How to become a rich dad

In Chapter 4, Robert talks about how virtually anyone could build wealth if they improve their financial IQ.

He explains that the financial IQ consists of 4 broad areas of expertise.

The first one is Accounting.

Being able to understand numbers on a balance sheet will allow you to make better decisions about potential investments, identify areas for growth, and minimize wasted potential.

The second is investing.

You need to be more creative when you’re investing your money, almost like a third eye you need to develop your spidey senses and understand when an opportunity opens.

The third is understanding the market.

Basically knowing the fundamental mechanics of demand and supply.

Mastering this will help you see where the winds are headed, and make better investments in the long run.

And lastly, you should understand the law.

There are plenty of ways to legally avoid taxes.

If you study your local laws, you are automatically at a huge advantage against those who just sign a check to the IRS without a thought.

Once you’re able to improve your financial IQ, you can start implementing some of the more complex lessons in the book.

For example, in chapter 8 he talks about a strategy he calls “paying yourself first”.

This chart on the right shows what most people do once they make enough money.

They get their income and they pay for the expenses first, and then they buy assets with whatever is left.

Robert suggests that instead, you should allocate a fixed amount of money from your income and buy some assets, and you should use what is left to pay your expenses.

That means that some weeks you might have to go out to eat less, or maybe those vacations you had planned all year could be on the back burner for another month or two.

With this strategy, your assets will grow and grow with time, while your expenses are more flexible.

Of course, this might sound insane but you would be surprised how flexible you can become if you put some arbitrary limit on the money you spend in a given month.

Once you get accustomed to paying yourself first, now you gotta start putting that money is very specific types of assets.

And Robert defines very clearly which types of assets you should put your money into.

Number one is businesses that do not require your presence.

Think back to Robert’s comic book library.

He hired his friend's sister to manage it, and he was able to make good profits without having to lift a finger.

Number two is investing in bonds and stocks.

Once you improve your financial IQ, knowing where the market is headed can take your investments to a completely new level.

Number three is income-generating real estate.

It could be an apartment complex or a business space, as long as you can collect rent on the property you’re headed in the right direction.

This is the secret to getting out of the rat race, becoming rich, especially in a first-world country like the US is not impossible.

The difference between a poor dad and a rich dad boils down to your mindset.

The poor are trapped in an endless cycle of fear and greed, while the rich are able to see beyond that.

Rich Dad, Poor Dad is the book that should have been front and center at the school libraries.

Imagine how many of us would be in a much better place financially if we had absorbed the wisdom of people like Robert Kiyosaki back in grade school?

But sadly, the system wants you to remain ignorant and afraid of money.


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