Rich Dad Poor Dad is one of the best-selling personal finance books of all time, written by Robert Kiyosaki. It has sold over 32 million copies in over 47 countries and is translated into 51 languages. In the book, Kiyosaki shares the lessons he has learned from his “two dads”: his biological father and his best friend’s father, who was his mentor. The book offers financial advice from both Rich Dad, who was successful in business, and Poor Dad, Kiyosaki’s traditional middle-class father.
The book has become an incredibly popular source of financial advice and has served as a source of inspiration for many readers. In this article, we will discuss the top finance lessons from Rich Dad Poor Dad that can help you make smarter money choices, build your wealth and achieve financial success.
Lesson 1: Learn the Difference between Assets and Liabilities
The must-know finance lesson from Rich Dad Poor Dad is the concept of asset versus liability. Kiyosaki explains that, traditionally, most people have been taught to “buy things they need and think they can afford,” but that this isn’t always the best financial strategy. Instead, he encourages readers to start building assets, which are investments that make money for you. Assets include things like real estate, stocks, bonds, etc. Liabilities, on the other hand, are expenses that take money from you. These includes mortgage payments, car payments, student loans, credit card debt, etc. Rich Dad Poor Dad teaches readers that, rather than spending all their hard-earned money on liabilities, they should be building assets in order to really build their wealth.
Lesson 2: Build Real Wealth by Developing Multiple Streams of Income
Rich Dad Poor Dad also focuses heavily on developing multiple streams of income as a way to build real wealth. Kiyosaki stresses the importance of having more than one source of income, pointing out that having a job is not enough if you want to achieve financial freedom. He encourages readers to become more entrepreneurial and invest in their own businesses, as long as they are making educated choices. Kiyosaki also explains the advantage of passive income: income that is generated through investments that require minimal input. This includes things like rental income, stocks and dividends, royalties, and much more. Having multiple streams of income is one of the easiest ways to build real wealth in the long-term.
Lesson 3: Take Calculated Risks
The third finance lesson from Rich Dad Poor Dad is to take calculated risks. Kiyosaki encourages readers to take risks but only if they are educated and informed risks. Taking risks can be scary, but they can also be incredibly rewarding, especially when it comes to building your wealth. He encourages readers to take risks that they have thoroughly researched and that they can understand and control. This could include investing in stocks, taking out a loan to start a business, or otherwise venturing out of your comfort zone to build something that can make you money.
Lesson 4: Focus on Investing, Not Saving
Kiyosaki also emphasizes the importance of investing, rather than focusing on savings. While saving money can have its benefits, Kiyosaki stresses the importance of putting aside money in investments that can make money for you, instead of just sitting in a savings account. He explains that, in order to build real wealth, you need to move your money from savings accounts to investments in order for it to really work for you.
Lesson 5: Diversify Your Investments
Finally, Rich Dad Poor Dad stresses the importance of diversifying your investments. This means investing in a variety of asset classes, such as stocks, bonds, mutual funds, real estate, and more. Kiyosaki explains that diversifying your investments means minimizing your risk and increasing your chances of a positive return. Diversification is essential for any long-term investment or savings plan.
Rich Dad Poor Dad is an incredible book that offers invaluable financial advice and lessons. From learning the difference between assets and liabilities, to taking calculated risks, to diversifying your investments, the financial advice from this book is valuable, relevant and timeless. By following the five finance lessons from Rich Dad Poor Dad outlined in this article, you can be well on your way to financial success.
