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In short
Nearly 25 years ago, Robert Kiyosaki's Rich Dad Poor Dad caused a stir in the field of personal finance.
It has since become the number one personal finance book of all time... translated into dozens of languages and sold around the world.
Rich Dad Poor Dad tells the story of how Robert grew up with two dads - his real father and the father of his best friend, his rich dad - and how these two men shaped his ideas about money and investing. The book debunks the myth that you have to earn a high income to be rich and explains the difference between working for money and making money work for you.
In the 20th anniversary edition of this classic, Robert takes stock of what we've seen over the past 20 years in terms of money, investment, and the global economy. Boxes throughout the book will allow readers to move quickly - from 1997 to the present - as Robert assesses how the principles taught by his wealthy father have stood the test of time.
In many ways, Rich Dad Poor Dad's messages, which were criticized and contested twenty years ago, are more meaningful, relevant, and important today than they were twenty years ago.
Detailed review
From the start, Rich Dad, Poor Dad surprised me with its style and storyline. I expected more technical knowledge and investment calculations, but the book is essentially composed of anecdotes that contain (supposed) nuggets of wisdom that the reader absorbs as if by osmosis.
Kiyosaki's stories revolve around and contrast the lessons he received from his biological father (the poor, educated but financially ungifted father) and his friend's salesman father (the uneducated but intelligent rich father).
The book traces Kiyosaki's life and the reader sees him learning from his rich father and rejecting the advice of his poor father (representing rising above the typical working-class mentality).
The book explains the basic principles of wealth creation in an understandable and inspiring way, and is a fairly solid introduction to these concepts (at least for the time). However, it has problems that make its current relative value questionable.
❗️ Important note: Do not consider the recommendations in this book or my views on them as investment or tax advice.
Robert Kiyosaki's top tips
I am going to start this review of Rich Dad, Poor Dad because I think Kiyosaki is doing well. Primarily, it makes solid fundamental financial suggestions in a way that is easy to digest.
The ideas may seem a bit superficial and obvious to anyone who is already involved in entrepreneurship or investing, but they can be profound if this is the first time you are exposed to them. Let's take a look at it.
1. Learn personal finance (and teach it to your kids)
While this suggestion is fairly obvious, it is no less important. The book shows the reader very well how important it is to learn how to manage money. This means saving a high percentage of your income and investing that money in profitable investments.
Kiyosaki said, “This It's not how much money you make that counts. That's how much money you keep. “You need to cut expenses as your income increases and invest the difference in assets, not liabilities.
While its definitions of assets and liabilities may not be in line with generally accepted accounting principles, they are practical: assets put money in your pocket, and liabilities take money out of your pocket.
He advocates learning how to reduce taxes, studying accounting, and saving, and then teaching all these skills to his children. I love all of these ideas, and I am happy that the way he presents them resonates with so many people.
2. Find ways to escape the mad rush (make your money work for you).
Not only does Kiyosaki discuss fundamental personal finance best practices, but he also paints an inspiring picture of the end goal: financial independence, retirement, security, wealth, and more.
I've always believed that people really start to understand the importance of their personal financial decisions when they realize that they are a journey that can lead to owning enough wealth to make work optional.
For Mr. Kiyosaki, escaping the “rat race” through investments or an independent business can seem fascinating and inspiring. I am thankful for anything that inspires people to plan for a better future.
3. Control your emotions about money
It's not a personal finance message that you usually see today, but I really like it. Money is a very sensitive subject for many people, and we would all benefit from understanding why it makes us feel the way we do.
People often let their emotions sabotage their finances or let their finances upset their emotional state. They may be afraid to invest, feel insecure about their jobs, or need the latest and greatest gadgets.
He urges readers to confront their fears, cynicism, laziness, bad habits, and arrogance when it comes to money. It seems like an arbitrary list of emotional issues, but I like the feeling.
4. Develop a broad and valuable skill set
In a capitalist society, the key to making money is having a set of practical and marketable skills. If you can provide tangible value that people are willing to pay for, you will always be able to provide for yourself.
Kiyosaki recommends learning how to manage money, lead teams, set up systems, and close deals. Even more, he suggests that people get into the habit of continuing to learn throughout their careers so they never stagnate.
He argues that people can improve their situation more effectively if they keep an open mind, learn from mistakes, and keep improving. It's a valuable lesson and one of the best in the book.
Robert Kiyosaki's worst advice
Now that we've covered the good stuff, what follows is my review of Rich Dad, Poor Dad. I hate to say it, but there is more to say here than I would like.
Honestly, Kiyosaki seems to me to be a fairly typical guru. I don't like his attitude and tone throughout the book. For example, he comes across as a bit too obsessed with the stereotypical image of a rich and powerful man.
He describes his wealthy father as a charismatic man of few words, with power behind his statements and smiles. The rich dad is tall, outspoken, and always makes deals. He doesn't do things like the others, and he's quite proud of his superior knowledge.
The rich dad and his lessons also seem manipulative to me. He is pulling the strings of the protagonists, ostensibly to teach them esoteric lessons that are too complex to be expressed in words.
The book feels like it's selling me something, and the selling gurus are by far my least favorite. Here are some of the specific ideas that the book is trying to sell to the reader that I don't like.
1. You should start a business and get rich because the employees are broke and unhappy.
As someone who really enjoys working for themselves, I hate to admit it, but it's not the way to go for everyone. If you prefer not to start your own business, that's perfectly normal. There are a lot of people who love their work, make a good or very good living, and save responsibly.
But Kiyosaki has a history of bashing anyone who works for someone else and suggesting that employees are generally broke and unhappy. They just don't get it.
His poor father (an already insulting title), who had a traditional job, could not understand what his rich father understood thanks to his commercial success.
Not only does Kiyosaki not address the risks and disadvantages of owning a business, but he also suggests tax strategies that are absolutely not correct using business entities. For example, he proposes using a company to write off vacations as board meetings or deduct health club expenses. These strategies can get you in a lot more trouble than they're worth.
2. Academic learning has no value (rich people don't need it)
Kiyosaki also has a bad habit of downplaying the value of academic education and traditional learning. He seems to believe that people who follow general wisdom end up just like his poor father: highly educated but inefficient and stressed out about their money. Rich people only learn through practice or by living their lives.
For example, the rich dad says:”All too often, business schools train employees to become sophisticated accountants. Above all, a cost meter should not take control of a business. All they do is look at the numbers, fire people, and kill the business. “
Ironically, he quickly contradicted this claim, saying later:” Accounting may be the most confusing and boring subject in the world, but if you want to be rich in the long run, it could be the most important subject. “
As an officially chartered and certified accountant, he may have simply hurt my feelings, but I don't think so. Kiyosaki also praises her rich father's cruel and unusual teaching methods, which included giving children silent treatment for weeks while making them work below the minimum wage until they couldn't take it anymore.
Because that's how life teaches:”It just pushes you all over the place. “
3. Invest in real estate! It's the best way to get rich!
By this point, you've probably noticed that many of his “worst lessons” have something to do with getting rich. This is an important part of what I thought was wrong with this book.
Getting rich isn't really the purpose of personal finance. Maybe I need to “get over my cynicism,” but I don't usually trust gurus who throw that word around. Kiyosaki does it a bit too much for my comfort, and the strategies he suggests for creating that wealth aren't always great either.
Mostly, it bothers me how much he insists on real estate. Investing in real estate can be a great way to build wealth, but (like self-employment) it's not for everyone. Nor is it mandatory for a successful and diversified portfolio.
There are benefits to investing in real estate, but Kiyosaki suggests that it's a sure way to get rich quickly or inevitably. In reality, it is an activity like any other. There are unavoidable risks, and it takes knowledge, experience, and luck to succeed.
4. Jump off cliffs and build parachutes to get back down.
Finally, we have one of my biggest pet peeves in the entire book. Kiyosaki legitimately suggests that you pay yourself (i.e. your savings) first even if it requires you to pay your creditors, even if one of those creditors is the Internal Revenue Service!
The rich dad says:”You see, after paying myself, the pressure to pay my taxes and other creditors is so strong that it forces me to look for other forms of income. The pressure to pay became my motivation. I've done extra jobs, started other businesses, traded on the stock exchange, anything, just to make sure these guys don't start yelling at me [...] If I had paid myself last, I would have felt no pressure, but I would be broke. “
Don't get me wrong, I'm all for saving, but paying yourself first shouldn't mean risking swindling people you owe money to, destroying your credit score, and racking up fees and interest. First, you pay your creditors and essential living expenses, then you put aside your savings, and finally you reorganize your remaining budget.
Is it worth reading Rich Dad Poor Dad?
I don't want to upset those who consider this book to be the holy grail of personal finance, but I couldn't recommend Rich Dad, Poor Dad to someone who would ask me how to start managing their money better, let alone someone who already has some experience.
The book has a handful of positive lessons, but there's nothing more profound than what can be found in the average personal financial blog these days. It's mostly about inspiration, and now there are places where you can find inspiration without being confronted with Kiyosaki's most disturbing ideas.
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