"Rich Dad Poor Dad" Book Review
One of the best-selling personal finance books in recent memory is “Rich Dad Poor Dad”, by Robert T. Kiyosaki. The cover even proclaims that it is “The #1 personal finance book of all time!”. First published in 1997, it is estimated to have sold over 40 million copies. It is currently the 6th best-selling book at Amazon in that category.
The poor dad in the title is Kiyosaki’s real father. He went to college, valued safe investments, and encouraged Robert to work for others for the salary and benefits. The rich dad is his friend’s father who took Robert under his wing. He didn’t want to work for money. He wanted his money to work for him.
Kiyosaki explains that his poor dad is poor and his rich dad is rich because of these exact attitudes and philosophies about money. He sprinkles examples of each dad’s financial moves throughout the book.
Kiyosaki answers what is probably the most popular financial question of all time: “How do I get rich?” His answer is to first understand the difference between assets and liabilities, and then buy assets. In his view, poor people are poor because they spend their money on liabilities such as houses, cars, and furniture. These are all things that cost money to maintain or go down in value over time.
Rich people buy income-generating assets that pay their bills, like stocks, bonds, and real estate and businesses, for example.
It’s clear that one of Kiyosaki’s favorite assets to buy is real estate, and he dedicates a large section of the book to explaining how to invest and profit from it.
He writes how he bought and sold property in a matter of days without spending a cent. He also explains how he made money flipping houses and finding good real estate deals for other people, as well as how he legally avoided or delayed paying taxes on his profits.
One of his observations I thought worth mentioning is that many people “trade-up” houses as soon as they can afford to. According to Kiyosaki, “This pattern of treating your home as an investment, and the philosophy that a pay raise means you can buy a larger home or spend more, is the foundation of today’s debt-ridden society.”
Whether or not you agree with him, it’s worth examining your current housing situation. Did you buy a house that is much bigger than your needs simply because the bank said you could? Is your mortgage payment so large that it keeps you from meeting other financial goals?
What if, by selling and moving to a smaller and less expensive home, you freed up $400 every month? Would it be worth moving for that extra bit of monthly savings? It’s something to consider.
While I agreed with most of his philosophies about money, I was a little disappointed in the book because I felt misled by the subtitle: “What the rich teach their kids about money- that the poor and middle class do not!”.
Even though much of the book revolves around the financial lessons Kiyosaki learned from his two “dads”, I feel this book’s target audience should not be parents, but adults interested in investing in real estate.
Learning how to invest in real estate and how to lose less of your profits to taxes is not what today’s kids need to learn about money.
Let’s make sure the younger generation first learns how to budget, save and invest, live within their means, and avoid drowning in debt. Once they have a solid understanding of those financial skills, then it might be fine to move on to more advanced and complicated subjects like tax laws and buying real estate.
So if you’re looking for help in teaching your kids about money, I would pass on “Rich Dad Poor Dad”. There are more suitable books for you. If you are interested in buying and selling real estate, however, this would be a good book to start with.