This book by Robert T. Kiyosaki one of the best books to start learning about Money.
This book explains the financial literacy that is lacking among us when it comes to Money. The author explains two different views, one of a Rich man and one of a Poor man.
Both are educated but had different perceptions about money. While the rich man says “The love of money is the root of all evil.” The poor man says, “The lack of money is the root of all evil.”
One of the reasons why the rich get richer, the poor get poorer, and the middle class struggles in debt is that the subject of money is taught at home, not in school. Most of us learn about money from our parents.
But still what do poor/middle class parents tell their child about money?
Go to college, study hard, get some good grades and get a decent pay and so you can settle in life. No where we are taught about financial education. Sadly our educational institutions focus only on scholastic and professional skills, but not on financial skills.
In this book, the author explains through Rich dad’s perspective on financial literacy
#1 .THE RICH DON’T WORK FOR MONEY
Rich Dad explains that the poor and the middle class work for money and the rich have money work for them.
When it comes to money, the poor and the middle class says “play it safe. Don’t take risks” while the rich man says “Learn to manage risk.”
Rich dad says learning how to have money work for you is a lifetime study. Most people go to college for 4 years and their education ends. Once they get a job, they go to work and start earning lot of money. One day they wake up with big money problems, and then they can’t stop working. That’s the price of only knowing how to work for money instead of studying how to have money work for you. They think more money will solve their problems but don’t realize that it’s their lack of financial education that is the problem.
“People’s lives are forever controlled by two emotions: fear and greed.”
Most people have a price. They have a price because of human emotions named fear and greed. First, the fear of being without money motivates us to work hard, and then once we get that paycheck, Greed or desire starts us thinking about all the wonderful things that money can buy. This pattern is then set. The pattern of getting up, going to work, paying bills. As soon as we get more money, We continue the cycle of increasing our spending. This is what the Rich dad calls as Rat Race. Rich dad wants us to avoid this life’s biggest trap.
#2. WHY TEACH FINANCIAL LITERACY?
It’s not how much money you make. It’s how much money you keep. Most people fail to realize this in life.
Rich dad mentions that Rich people acquire assets. The poor and middle class acquire liabilities and they think are assets.
The first rule is we must know the difference between an asset and a liability, and buy assets if we want to be rich, this is all we need to know. It’s the rule number one and it is the only one. Most of us really struggle financially because we don’t know the difference between asset and liability.
Rich dad explains that an Asset is something that puts money in our pocket whereas a liability is something takes money out of our pocket. This is all we need to know. If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities.