I am really happy that I got hold of this book somehow and was able to read it fully. If you need to know the tricks on how to become rich, you must read this book. I fully recommend you to read this book. Given below is the summary of the book.
Robert, who is the author of this book, was lucky enough to have 2 Dads! Obviously, only one Dad is his own and the other Dad is actually his friend Mike’s Dad. Mike’s Dad is the rich Dad and Robert’s own Dad has been depicted as the poor Dad in this book. Robert’s own Dad is highly educated and he works really hard for the Government whereas Mike’s Dad is a dropout from school and runs his own business. Even though Robert’s Dad has a high-paying job, he struggles financially as he does not have the money management skills. On the other hand, all the valuable lessons of money which Robert shared in this book were actually taught by his rich Dad. I will be sharing below the key points from this book.
1. Don’t work for money
One of the key things which Robert tried to explain is that one should not work for money. When a student graduates from a college, he or she joins a company and works hard to get a promotion and a pay raise. However, even if the person has a high-paying job, he or she will still struggle financially since the person does not know how to make money work for them. Once they receive enough money, they think of buying the luxury items which are not really required at that time and eventually they end up spending more and more and would even get into higher debt. That’s what happens to most people when they work for money. They think that increasing their income would be a solution. However, when their income rises, their spending also rises and therefore they still cannot resolve their financial crisis.
2. Make money work for you
The rich people make money work for them. They try to build their assets first instead of increasing their liabilities in the beginning. Assets add to the income of a person whereas liabilities will take the money out of your pockets. Rich people buy a house when their assets will generate the cash flow to pay for the house. Their expenses are covered by the income that is generated from the assets. If any money is still left from the income after paying the expenses, the balance is reinvested into the assets column of the balance sheet. This leads to even more income.
3. Financial literacy
Financial literacy is very much important in managing money. The poor and middle-class lack this education and that’s why they struggle their entire life. Financial education is not taught in school. People have to invest some time in learning this so as to lead a comfortable life in the future even if they do not want to be rich. The middle class thinks of their house as an asset whereas according to rich Dad, a house is a liability. The value of a house may depreciate over time and instead of investing in a house, they could have invested in income-producing assets. However, Robert did not mean people should never buy a house. They can buy when they have enough income generating from their assets. The more a person invests in assets that generate income and the more they keep their expenses on a lower side, they are on the right path to become rich.
4. Develop the entrepreneurial spirit within you
Robert stated that most people spend their lives working for the Government or other business owners and doing that eventually makes the business owners richer. How many people do you know who is a millionaire or billionaire who worked for others? There are really few. On the other hand, you will find that the majority of the billionaires such as Bill Gates, Elon Musk, Jeff Bezos are business owners. Even if people do not start a business, they can keep their normal job and in the free time, they should start buying real assets which generate income for them and not any liabilities. Some of the real assets are stocks, bonds, businesses that are owned by you and managed by other people, etc.
5. Never stop learning
Learning is a never-ending process. One should not be arrogant enough to learn something valuable from others. Take up courses on how to invest in stocks that can generate income in the future, how to invest in income-producing real estate. Invest in enhancing your financial knowledge which will ultimately reap huge benefits in the longer run.
Conclusion
If you need to know the trick of how to become rich, this book is for you. I really liked the way Robert explained the concepts of the various financial terms like assets, liabilities, cash flow, etc. in the book and how all of these play a vital role for one to become rich. This book really changed my perspective of how to manage money and I hope to implement all the lessons I learned from this book.
Happy reading !!
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