5 Key Lessons From RICH DAD POOR DAD (2024)

Rich Dad Poor Dad is one of the first books I ever read. This small book has taught me more than I ever learned in school or college. It has led me to quit my job and go after things that matter to me.

I have read this book many times, and I recommend you to read it if you haven’t already.

Robert Kiyosaki — the author of the book — talks about the importance of financial intelligence to become rich. He says that you cannot become wealthy by working at a job. He points out the importance of learning instead of specializing and says that the rich don’t work for money.

Robert had two dads — a rich dad and a poor dad. He was fortunate enough to learn from both of them. From his rich dad, Robert learned financial intelligence and how to become wealthy. And from his poor dad, he understood what he should not do in life.

Everybody wants to be rich. If you ask any person if they wish to become rich, the answer is probably, “Yes.”

But, the sad part is that most people think they can become rich by working hard. Hard work is good, but you must do it for the right reasons. Put your hard work into obtaining financial intelligence, and you are sure to be rich.

This book will help to identify different ways you can gain financial intelligence. However, don’t be under the impression that you will magically become rich after reading it. You must understand the teachings in the book and apply them in your own life. It will show you the path to riches.

Society wants us to go to school, get good grades, find a high-paying job, work until old, and retire. Going to school and getting good grades is not a bad thing. But your goal should be learning, not getting a job. As Robert says, “JOB is an acronym for Just Over Broke.”

You must read this book to escape the rat race and understand that you don’t need to follow what society says. Going to school and getting a job should be a process to learn.

There are other ways to make money than getting a 9–5 job. These ways will not only make you money, but they will make you happier, independent, and free.

Here are some of the essential lessons from the book:

1. The rich don’t work for money

Most people work hard to receive their paychecks at the end of the week (or month). It means that they are working for money. Rich people don’t do that. Instead, they have money working for them.

Robert addresses the difference between assets and liabilities in his book. He says that assets put money into your pocket, and liabilities take money out of your pocket. Wealthy people invest in income-generating assets. So they have money working for them instead of them working for money. Poor people work hard for money and spend it on expenses instead of assets.

2. Focus on learning

Society tells us to specialize in a profession. But the rich don’t do that. Instead, they spend their time learning. Robert’s rich dad said we must know a little about a lot. So, you must look to accumulate knowledge instead of accumulating wealth.

Spend money on learning — buy books, take courses, and attend events that help you learn. Maybe the course is going to cost you $1000 (for example). But the knowledge you receive from it might be able to make you millions in the future. So, learn as much as you can.

3. Acquire financial intelligence

You must be financially literate to become rich. It does not mean that you must be an expert on finance or accounting. Instead, you need some basic financial skills. These skills will teach you to manage money.

For instance, what will you do if you win $1 million in the lottery? Will you spend it, save it, or invest it? How much of it will you have in the next five years?

Even lottery winners can go broke. That’s because they are not financially literate. Robert says;

“Money without financial intelligence is money soon gone. It’s not how much money you make; it’s how much you keep.”

How do you become financially literate? You need to know four things — accounting, investing, understanding the markets, and the law.

• Accounting is the ability to read numbers and understand financial statements and how they work.
• Investing refers to using the money you have to make more money. You can invest in stocks, real estate, bonds, index funds, and so forth.
• Understanding the markets means knowing about the supply and demand theory. It also includes the fundamental and technical workings of the market.
• The law represents an understanding of taxes and legal activities.

4. Invest in assets

If you want to become rich, invest in assets. Build your assets and reduce your expenses. Real estate, stocks, bonds, notes, intellectual property, and so forth are some income-generating assets.

Robert often uses diagrams to explain cashflows. Below is one from his book.

The poor spend all their income on expenses. The middle class has liabilities that they cannot avoid, so they have further expenses. The rich have assets that generate income.

The larger your assets column, the richer you will become.

5. Pay yourself first

Robert’s rich dad often taught him to pay himself first. What does it mean to pay yourself first? It means before you pay your taxes or bills, you must invest in assets. Why? Because assets generate more income.

You pay your bills only when you have to. Rich dad says that you will be motivated to make more money when you have bills and taxes to pay.

So you will find multiple ways to make money.

There are many other lessons you will find in the book. I’ve only discussed a few essential ones here. Once you read the book, you will have a completely different takeaway on money, jobs, learning, and society.

This book truly changed my understanding of money and life. It is worth reading multiple times. It will change your way of thinking, learning, and earning.