I remember reading Rich Dad Poor Dad because it was such a popular book among a lot of people I knew and everyone recommended it.
After the first couple of chapters I wanted to abandon the idea of reading it because it had that vibe of an empty motivational book. I continued to read it tough and one thought that stuck with me long after reading it was: “Do people really not know these things? Most of it is common sense.” I found out years later that indeed most people are not financially literate. I took for granted what I learned growing up and things that were pretty much second nature to me were actually not known by the majority of the population. In fact I would say that that was the most important thing I learned from reading Rich Dad Poor Dad. Information, even common sense information sells. Especially if you package it a bit different. The main ideas of the book are the same ones found in The Richest Man in Babylon but packaged slightly different for a more contemporary audience.
Also, one controversial thing that this book stated was that people’s houses are not assets. And this was before the Great Recession. It made and still makes perfect sense. If something does not make you money it’s not an asset it’s a liability. It doesn’t get more common sense than that.
In a nutshell strive to build assets that produce new income streams instead of liabilities in order to get in the investor quadrant as that’s the place to be.
teach them to play it smartp. 10
financial skills and communication skillsp. 11
people really do shape their life through their thoughtsp. 19
‘The difference between being poor and being broke. Broke is temporary, and poor is eternal.’p. 19
Money is power.p. 19
I don’t work for money! . . . Money works for me!p. 20
most will spend the best years of their lives working for moneyp. 39
learning takes energy . . . Anger is a big part of that formula . . . When it comes to money, most people want to play it safe and feel secure. So passion does not direct them. Fear does.p. 41
it’s fear that keeps most people working at a jobp. 42
Their lives are then run forever by two emotions, fear and greed.p. 49
Money is in control of their emotions and hence their souls.
. . .
desire . . . So people also work for money because of desire.p. 50
A job is really a short-term solution to a long-term problem.p. 53
not simply let your emotions run you by controlling your thinking.p. 54
What intensifies fear and desire is ignorance.p. 55
schools focus only on teaching people to work for money, not how to harness money’s power.p. 57
I guess it means freedom.p. 65 at the start of the third chapter entitled Why Teach Financial Literacy?
Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.
. . .
If you want to be rich, you need to be financially literate.p. 67
Rule One. . . . buy assets.p. 69
The rich acquire assets and the poor and middle class acquire liabilities.p. 71
The No.1 expense for most people is taxes.p. 80
If you find you have dug yourself into a hole . . . stop digging.p. 82
The power of money is used against them.p. 82 referring to the poor and middle class
An intelligent person hires people who are more intelligent than they are.p. 84
1. Loss of time, during which other assets could have grown in value.
. . .
When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.p. 88
Their primary income is through wages.p. 90 referring to the middle class
concentrate your efforts on only buying income-generating assets.p. 92
Buckminster Fuller . . . Wealth is a person’s ability to survive so many number of days forward . . . or if I stopped working today, how long could I survive?p. 94 a definition for wealth by Rich Dad partly inspired by the american architect Buckminster Fuller
If I want to increase my expenses, I first must increase my cash flow from assets to maintain this level of wealth.p. 95
Mind your own business.p. 100
In my world, 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.
4. Mutual funds.
5. Income-generating real estate.
6. Notes (IOUs).
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.p. 104-105 types of assets
A true luxury is a reward for investing in and developing a real asset.p. 107
the people who lose are the uninformedp. 116
knowledge was power. And with money comes great power that requires the right knowledge to keep it and make it multiply.p. 118
financial IQ is made up of knowledge from four broad areas of expertise.
No. 1 is accounting. […]
No. 2 is investing. […]
No. 3 is understanding markets. […]
No. 4 is the law. […]p. 121-122
Financial intelligence is simply having more options.p. 134
The single most powerful asset we all have is our mind.p. 135
yet it is worth repeating – financial intelligence is made up of these four main technical skills:
1. Financial literacy. […]
2. Investment strategies. […]
3. The market. […]
4. The law. […]p. 141
I know there will be market booms and market crashes.p. 142
Of course, there is always risk. It is financial intelligence that improves the odds.p. 146
Great opportunities are not seen with your eyes. They are seen with your mind.p. 148
It is important to learn how to put the pieces together because that is where the huge wins are
. . .
These skills are in addition to those required to become financially intelligent:
1. How to find an opportunity that everyone else has missed. You see with your mind what others miss with their eyes.
2. How to raise money.
3. How to organize smart people.
. . .
It is what you know that is your greatest wealth.
. . .
There is always risk, so learn to manage risk instead of avoid it.p. 149-151
less than 5 percent of Americans earn more than $100,000 a yearp. 157 I doubt this is still the case
financial intelligence is a synergy or accounting, investing, marketing and law.p. 157
If you’re not a good leader, you’ll get shot in the back, just like they do in business.p. 160
I keep seeking the emerging nations.p. 161
Education is more valuable then money, in the long run.p. 164
The management skills needed for success are:
1. The management of cash flow.
2. The management of systems (including yourself and time with family).
3. The management of people.p. 167
There are five main reasons why financially literate people may still not develop abundant asset columns.
. . .
4. Bad habits.
5. Arrogance.p. 173
It’s how you handle losing.p. 174
He would take a loss and make it a win.
. . .
Quoting John D. Rockefeller, ‘I always tried to turn every disaster into an opportunity.’p. 177
If you have any desire of being rich, you mus focus.p. 179
The real world is simply waiting for you to get rich. Only a person’s doubts keep them poor.p. 182
The power of choice. That is the main reason people want to live in a free country.p. 198
All of us have choice. I just choose to be rich, and I make that choice every day.p. 199
Listening is more important than talking.p. 200
Smart investors don’t time markets. If they miss a wave, they search for the next one and get themselves in position.p. 202
The power of learning quickly.p. 203
You become what you study.p. 203
In today’s fast-changing world, it’s not so much what you know anymore that counts, because often what you know is old. It is how fast you learn.p. 204
The three most important management skills necessary to start your own business are:
1. Management of cash flow.
2. Management of people.
3. Management of personal time.p. 205-206
A broker is your eyes and ears to the market.p. 212
Remember, the easy road often becomes hard, and the hard road often becomes easy.p. 217
God does not need to receive, but humans need to give.p. 220
your world is only a mirror of you.p. 220
All you need to be is generous with what you have, and the powers will be generous with you.p. 221
I love new ideas and I love action.p. 223
Make offers.p. 225
All the big companies on the stock exchange started out as small companies.
. . .
Action always beats inaction.p. 228
Money is only an idea. If you want more money simply change your thinking.p. 231