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Although I am not fond of reading books but when this book was suggested by many Influencers and friends of mine then I started reading it. OMG! This book changed my life altogether. If you have not read this then I suggest you to read this amazing book. But if you are not fond of reading books like me then I suggest you to read this article instead. I am going to tell you what is in this book in simple language. Rich Dad Poor Dad in a nutshell.
Rich Dad Poor Dad is a book by Robert Kiyosaki and Sharon Lechter written in 1997. It tells the importance of financial literacy, financial independence and building wealth through investing in assets, real estate, owing and starting businesses, as well as developing one's financial intelligence
It is an old days story. Robert says when he was a school boy he had a friend named Mike. The school they study in was a school of rich kids. They are only two kids which are not as rich as others. Robert's dad was a well graduate and a teacher. Robert's dad had not a significant gap between income and expenses. So he was a poor dad. On the other hand Mike's dad was not highly educated but a successful businessman. So he was a rich dad. Hence the title of the book "Rich Dad Poor Dad".
Robert and Mike want to earn more money to be rich. They decide to go to Mike's dad to learn how to be rich. They arrange a meeting with Mike's dad. Mike's dad tells them to work on his departmental store every Saturday for 3 hours and earn 10 cents. They agreed and start working there. But soon Robert realizes that this is not what they came to learn. He asks Mike to arrange meeting again with Rich Dad.
Robert tells the whole thing to Rich Dad. Rich Dad gets angry and says: "you sounds like people who used to work for me Or the people I fired long ago". He says that these lectures only given by teachers not by life. Life never gives you lectures it only pushes you around and gives you lessons. And remember one thing "Poor work for money and Rich have money work for them."
Then Rich Dad replies that he likes Robert's objections and anger. I like anger because when anger combines with love it becomes passion. If you didn't do that I would not teach you anything. He says that playing safe is risky. The people who play it safe are drives by fear not by passion. Working for money is easy because there is no risk. Get a job and work for money as there is no risk.
Rich Dad says that: I earn more money than your dad but pay less tax than your dad. Because workers pay more tax then Investors. Robert is a kid so he is not understanding completely what Rich dad is saying. And now Robert asks them to get out and you will not earn that 10 cents from today. Basically he fired them. After these heavy dialogues Robert don't have courage to encounter. So he goes to home.
After some days the Rich Dad calls them again and says: work for me again and now your salery will be One Dollar... rather 2 dollars... Even I will give you 5 dollars but remember after this deal I will not teach you anything. (This is 1956 where 5 dollars values more than today's 100 dollars). Anyways both Robert and Mike look each other and they don't give any answer. Which means they are not accepting this deal. Because they want to learn to make more money.
Rich Dad says: I am happy as you didn't choose greed over learning. Now listen carefully. Human have two basic emotions and that are Fear and Greed. When someone becomes a slave of fear and greed then he can never be a successful man. There is a certain fear called fear of living without money Or fear of having no money which motivate you to earn more. And when you earn more there comes greed which make you to spend money on useless desires like having more cars, houses and electronic gadgets. After buying these things you became zero again. Then again you will work hard and again greed will come. So it becomes a cycle which called Rate Race.
Sometimes fear of having no money earns you a lot of money but there comes another fear instead of greed and that fear is fear of losing money. Fear of losing money makes you to earn more money and working more hard without having real pleasures of life. Rich Dad calls them highly paid slaves. The slaves who just have bigger salery.
Which thing increases the fear and greed..? That is ignorance. Ignorance intensifies fear and greed.
This donkey will stop running when will get knowledge about the carrot.
For example: when a doctor thinks that his expenses are increasing which is fear. After the fear there comes greed which makes him to increase his fees. Which creates a wealth gap because poor is not able to afford him now. By increasing this gap the rich get richer and the poor get poorer. Whenever wealth gap increases in a society then that civilization gets collapse.
Poor and middle class man always struggles for money because he don't even know the difference between Assets and Liabilities.
Assets are those things which you buy with your money and they work to make money for you. For example: You bought a flat and give it to someone on rent. Which automatically makes money for you.
Liabilities are the things which you buy with your money and then again you spend money to use those things. For example: You bought a car and to use that car you need gasoline which needs money again.
The biggest ignorance of the poor and middle class man is that he considers his liabilities as his assets. Let's see these diagrams to understand cash flow of different classes.
When a poor gets his salary, it goes all to the expenses and Assets and Liabilities remains zero.
A middle class' salery goes all into liabilities he have bought and then into expenses. Assets remains zero in this case too.
For the Rich, his assets make money for them.
That's the end of article but definitely not the end of books and topics the book have. This books teaches us many things from which few a have mentioned above. Apart from this, book teaches us many other things like:
A fool and his money is a big party.
Your academic success never defines your professional success.
Schools always teach us to be employees not employers.
Your house is not your asset but a liability.
Not only this but a lot of things this book has taught me. Maybe I can write another article to discuss those points too. Maybe a part 2?
Anyways, if you ever wanted to be rich then at least read this book once in your life. And if you like this article then: