Summary of Book “Rich Dad Poor Dad”
Get Free Audiobook Now
(Note: Amazon Audible may request payment information, but rest assured that no charges will be made as it is completely free.)
5 Life Changing Lessons From best selling book “RICH DAD POOR DAD”
Lesson 1.“Pay Yourself First”
Pay yourself first” is a golden statement of personal finance. It means when you receive your paycheck at the end of a month you should put about 10-20 percent of money into voluntary provident funds, banks, or any other saving tools before you spend on daily expenses, bill payments, paying debts, etc.
The advantage of paying yourself first out of your salary or paycheck is that you build adequate wealth and secure your future. It creates a shield against financial emergencies, such as car breakdown, financial crisis, or unexpected medical expenses. When people don’t save money before spending they experience a lot of stress.
Lesson 2: “The rich don’t work for money”
The rich don’t work for money. What does it mean? It means the rich don’t get paid for their hard work, but they are paid for their smart work. Okay, let’s understand this in a more precise manner.
You have seen many entertainers, singers, sports players today are income earners and most of them go broke after their performance days are over. They earn a lot but for a limited time. If you’re working for money you will become a high-income earner at best. That doesn’t make you rich.
If you’re rich then you have an income of a million-dollar per year without doing any effort. Warren Buffet, the CEO of Berkshire Hathaway says, “If you don’t find a way to make money while you sleep, you will work until you die”. So, you need to create a system of passive income that can generate a huge amount of wealth and assets for making you a true rich.
Lesson 3: ” Identify your assets and liabilities”
According to Robert Kiyosaki, an asset is something that puts money in your pocket while a liability is something that takes away money from your pocket.
Most of us think that our house is an asset. Besides, our financial planner, real estate agent, and accountant all call our house an asset. But, In reality, our house is not an asset, it’s a liability.
If you live in a house, paid for or not, then it isn’t an asset since it doesn’t put money in your pocket, instead, it takes money out of your pocket in the form of a mortgage, utility payments, taxes, maintenance, and more. That is what liability is.
Lesson 4: “Buy luxury last, not first”
Poor and middle-class people ( including myself) tend to buy luxuries first immediately after receiving their paychecks. I have observed many of my friends rush to shopping malls to buy expensive clothes, new smartphones, and many other liabilities immediately after they get a salary.
Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like. ~Will Smith
Most of us buy unnecessary things just to impress other people. We are unaware that wealth is created by maximizing earnings as much as possible, saving those earnings wherever possible, and maximizing returns.
When we invest our savings intelligently and apply the laws of compounding within few years we see our desired wealth growth.
The wealthy mindset saves now and spends later.
The middle-class mindset spends now and saves later.
Lesson 5: ” Read a Lot”
Just like eating a balanced diet every day keeps you healthy and fit, reading books keeps your mind sharp and makes you more skillful and knowledgeable. Successful people feed their minds every day by reading both fiction and nonfiction books. Besides, they solve many other kinds of brain games such as crossword puzzles and brain teasers.
The more you read and learn, the more you become wiser. Reading helps you to retain information and knowledge.
“I had a lot of dreams when I was a kid, and I think a great deal of that grew out of the fact that I had a chance to read a lot.”