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Review of Rich Dad Poor Dad - Robert Kiyosaki | Important Lessons from Rich Dad to be Rich

Review of Rich Dad Poor Dad - Robert Kiyosaki (Important Lessons from Rich Dad to be Rich). If you were not born to or belong to the 1% rich family or conglomerate and you want to know how to get rich, then Rich Dad Poor Dad will give you a rich guide to the way to financial freedom.
Review of Rich Dad Poor Dad - Robert Kiyosaki
This book is about what a rich father teaches his son who is not taught by a poor father or one from the middle class. In this book, Robert Kiyosaki shares and directly compares the teachings of his two fathers, namely his biological father (which he calls "poor dad" or poor dad) and his adoptive father ("rich dad" or rich dad).

    This legendary book has become the mentor of thousands of young entrepreneurs, especially “self-made billionaires” around the world, so that it also brings its author, Robert Kiyosaki, to achieve financial freedom and young retirement. 

    However, because of his love for the field he lives in, teaching financial intelligence, he continues to share his knowledge to this day.

    This Rich Dad Poor Dad book tells about the teachings of his two fathers, namely a biological father who has a PhD and is also a respected teacher in the state of Hawaii, has a decent income but still has to struggle to save it every month, especially to pay bills. 

    The other is the father of his best friend who is a drop out but is one of the richest multimillionaires in Hawaii who is financially free.

    Robert Kiyosaki found that there are many different teaching principles from his two fathers about money. In fact, our current education system doesn't teach about money, about how to become financially literate and get rich. 

    If you were born into a wealthy family, then you will be taught by your parents about how to manage money. However, most of the population in this world who are born in poor families to the middle class are not taught this way, and there is no guidance in school lessons.

    Here are lessons that can be taken or the essence of the book Rich Dad Poor Dad by Robert Kiyosaki.

    Differences in the Views of Rich Dad and Poor Dad

    Here are 10 fundamental concept differences between what rich dad and poor dad taught in Rich Dad Poor Dad.

    Poor Dad: Money is the root of evil
    Rich Dad: Lack of money is the root of evil

    Poor Dad: Study well and find a good, high paying job after graduation
    Rich Dad: Own a company and hire smart people in it

    Poor Dad: Save money
    Rich Dad: Invest

    Poor Dad: I can't afford it.
    Rich Dad: How can I afford it.

    Poor Dad: Working for money
    Rich Dad: Make money work for you

    Poor Dad: My house is my asset
    Rich Dad: My house is a liability

    Poor Dad: Play it safe with money, don't take risks
    Rich Dad: Manage risks well

    Poor Dad: Need more money to solve financial problems
    Rich Dad: It's financial lessons that will solve financial problems. It's not how much money you can make, it's how much you can save and manage, and how long you can save.

    Poor Dad: Pay all obligations, bills, and living expenses first then save the rest last
    Rich Dad: Pay yourself first and then pay others. If there is not enough, you will be forced to seek more.

    Poor Dad: I can't be rich because I have many dependents
    Rich Dad: I have to be rich because I have many dependents

    What's wrong with managing money from the lower and middle class?

    Most of the people, especially the middle class, are stuck with the "rat race". The higher their salary, the greater their taxes and expenses. 

    Usually it is said that salary is directly proportional to expenses. Therefore, to meet more and more needs, they will work even harder, only to pay higher taxes, more bills, and various liabilities that support their lifestyle (mortgage, car, new cellphone, and so). 

    The cycle of the "Rat Race" or the rat race continues throughout their life as a result of mismanagement of their finances, and their salary is directly proportional to their expenses.

    Therefore, Rich Dad teaches you to pay yourself first before paying all bills, obligations, and expenses. It means paying yourself first is investing a portion of your income in assets that generate money, then the rest is used for your various expenses.

    The difference with ordinary people is that they first spend their income for various purposes and bills, then the rest is saved or invested. Paying or prioritizing yourself first is one of the basic concepts of financial planning practiced by the rich. 

    By increasing your financial intelligence, it will be easier for you to get out of the Rat Race and achieve financial freedom with it. The way to improve your financial intelligence is to learn the concept of cash flow, learn how to build assets, and how to manage assets.

    Getting out of the rat race cycle means your passive income (from your assets) is greater than your expenses so you no longer have to work for money. You only work because you love the job.
    House is a liability

    Assets Vs Liabilities

    One of the different concepts of rich dad and poor dad is about assets and liabilities. In his book, Robert Kiyosaki explains in simple terms about assets, which is something that gives money to your pocket. 

    Meanwhile, a liability / obligation is something that takes money from your pocket. This is quite different from the concept of assets and liabilities in accounting lessons in general.

    Why is your house a liability even though in accounting it is an asset? 

    The house where you live is an obligation because you take money from your pocket in the form of monthly bills, namely electricity, water, taxes, insurance, maintenance, and all kinds of expenses for the house. 

    When people buy a house that is getting bigger, the obligation will be even greater. On the other hand, property or real estate investment, especially for lease, is an asset because it will generate cash flow for you.

    As such, an asset is something that generates cash flow to you, for example rental property, shares (dividends), business, book royalties, and so on. Meanwhile, cars and houses are obligatory because you have to pay a fee for their ownership. 

    The rich man who gets money will focus on building up his assets so as to make more money for him; middle class people who get money indirectly will increase their obligations / liabilities; while the income of the poor is usually used up to pay for their expenses.
    Financial statements ordinary people and rich people
    From the illustration of the financial statements above, you can see the differences in financial statements between ordinary people and rich people.

    As soon as you get income in the form of a salary, ordinary people will immediately spend it on various liabilities (seen in the liabilitis column on the balance sheet). This liability will generate expenses such as car payments, credit card bills, loan interest, home installments, and so on. 

    On the other hand, the rich generate income from the assets they have built up. If you don't have enough assets, with the rich mindset, you will set aside income (pay yourself first) to build these assets so that later income from these assets will pay all your bills.

    Rich Dad's Guide to Financial Freedom

    One way to get rich is to start your own business and build a portfolio of assets. You may be able to build an asset portfolio while working, but even if we look at it from a tax perspective, entrepreneurs get more benefits. 

    When you get a monthly salary, it is immediately deducted from taxes. The bigger your salary, the bigger the withholding tax. So before you have the chance to invest it or even pay your mandatory bills, your income is already taxed. 

    On the other hand, a new company will pay taxes after its income is deducted by all expenses / expenses (only net profit is taxed). This means that a company can spend anything first, including for its assets, then the rest will be taxed last.

    If you have to work first, then work to study, don't work for money. When you improve the skills you need, then you will make more money from your business later than when you only work with the aim of earning money.

    In his book, Robert Kiyosaki tells the story of working for the copier company Xerox as a salesperson to learn how to be the best in sales. At first, he became the lowest-selling salesperson because of his fear of rejection. 

    When he conquered his fear by being forced to sell door to door, he finally managed to become the number 1 salesperson in the company. After succeeding in being successful in sales, he left the company and built his own business.

    Apart from building a business, become a professional investor who can identify opportunities. You are also advised to study accounting so that you can understand reading the financial statements of a company, especially when it comes to business deals later. 

    Many people don't understand the numbers in a financial statement at all (so many numbers are listed). In addition, management skills are also important, especially cash flow management, systems management, and resource management. 

    To build a business, you need a system that can run itself, because you will own the business, not work in it. Meanwhile, to hire smart people in your company, you will need resource management skills.

    Personal Opinion and Conclusion

    Guys, this is really the most recommended book especially for people who want to be financially successful, because this book is the basis of all business and finance books, especially the mindset of having the right rich mindset. 

    Rich Dad Poor Dad, first published in 1997 in America, has been on the New York Best Seller list for several consecutive years.

    Robert Kiyosaki's book made fall in love with the world of business and investment. You can even learn more "practical" finance concepts here than you can learn from years of studying finance.

    In the financial education system, you will learn a lot about the concept of finance academically, which basically prepares you to become a professional or employee working in finance. 

    Meanwhile, the Rich Dad Poor Dad book will open up insights and the financial mindset that is actually needed to be rich, namely how to manage finances in the style of the super rich, building assets, the difference in mindset between rich and poor, and a simple definition of assets and liabilities that are different from general accounting concepts, which will also affect the way you manage these assets and liabilities.

    May be useful!

    Cheers to Good Life!