Rich Dad, Poor Dad: Revolutionizing Personal Finance

I think it’s safe to say that reading this book has forever changed my view of money and personal finance. I refused to read it for a long time because I’d heard a lot of negative things about it’s author, Robert Kiyosaki. Namely, that there was no “real” rich dad, or poor dad. I’m glad that I did finally read it though, because I learned so much that it’s going to be difficult to fit it all into one review.

You see, I spend a lot of time reading personal finance blogs. The big ones, the small ones, the in-between and bite sized ones. I always do my best to absorb, and walk away with something that will help me manage my money, and be a little better off at the end of the day.

It’s funny; when I finally got ahold of something that did make an impact, it was like finding a shiny new nickel in the middle of a bunch of lead slugs! No offense to my fellow pf writers is intended here. It’s hard to write truly revolutionary articles day in and day out, we do the best we can.

It’s just that I see a whole lot of articles focusing on how to spend less, cut back, or how to do without. In other words: how to be frugal. After reading Rich Dad, Poor Dad, I now understand that being frugal is not at all the same as acquiring and building wealth. Being frugal and managing your money are two different things as well. Living within a frugal mindset can actually help to keep you poor. To paraphrase a line from the book here;

Do not think “I can’t afford it.” Instead think “How can I afford it?” The one is an admission of failure, the other, a challenge.

We are constantly bombarded with articles about why we should not spend $6 on a cup of coffee, and how to live on a shoestring budget. Well, let me tell you that I am tired of living on next to nothing. I’m tired of eating beans and rice, and doing everything I can to be frugal. Because you know what? It’s not working. For all the doing without, I’m not a penny better off.

I want those six dollar coffees. I want a nice car that I don’t have to worry about breaking down when I take my child to school. I want more than I have, and I don’t think that’s such a bad thing. That’s what we read all these articles for, isn’t it? We want an answer, a way to make things better. I did find that answer in this book, and I hope you will too.

The Rich Don’t Work For Money – They Have Money Work For Them
In his book, Kiyosaki recounts his first job. His rich dad paid him ten cents an hour to take cans off of store shelves, dust them, and put them back. The young Kiyosaki quickly grew angry with the situation. It was mindless work, and he was paid a pitiful wage. When he took his complaints to his rich dad, he told him this:

He also goes on to say that most people allow life to push them around, and instead of learning from it, they get angry. Angry with their boss, for not paying them enough, angry with their spouse, angry with everyone but themselves.

His advice? “If you realize that you’re the problem, then you can change yourself, learn something, and grow wiser. “

It is easy to blame someone – anyone else for our money problems. Just like it’s easy to sit back and expect to collect a pension, or a social security check, or even a welfare check. But if we never take responsibility for our own financial problems, then we never really have control of our own lives. It will be necessary for us to go to work every day, mindlessly doing what we have to do to get our next paycheck – which will almost certainly not be enough to meet our needs.

Pay Yourself First

Pay yourself first is a concept that I have seen many times around the personal finance blog-o-sphere. Nearly everyone, it seems, agrees that you should pay yourself first, but they don’t have too many suggestions as to what you should do with the money that you pay yourself. Me? My first inclination is to go a new TV, or an iPod. I’m not really getting ahead that way though, am I?

Kiyosaki puts it better:

The “rat race” as he defines it, goes something like this: Go to work. Get paid. Pay bills, food, possibly save a little. Buy on credit, pay it back, rinse, repeat.

Breaking out of the rat race: Go to work. Get paid. Invest money. Pay bills. Rinse, repeat; until you no longer have to go to work unless you want to, because your investments are paying your bills.

Now this isn’t a revolutionary idea, but it is certainly one that I have never been taught. I was told to go to school, study hard, get a good job, work hard, save money. Nowhere in that picture was investing even mentioned.

Even to this day, my parents do not invest in the stock market (other than through employer controlled and sponsored retirement accounts.). When I asked them why they said, “We just don’t have the money right now.”

Never mind that with the economy down it’s been like dollar days at the stock market. They aren’t investing in themselves first. They don’t own any income generating real estate. They have no money coming in every month that they did not have to work a 9-5 job for, and neither do I. But I can tell you this, after reading this book I am certainly going to figure out a way to make that happen.

I wish that I could tell you that this book lays bare the complete path to wealth – but it doesn’t. What it does do is challenge every basic assumption that I have ever had about money and how to manage it. I think that I have finally reached a point in my life where I am adult enough to look at my finances and say, “Hey, this isn’t working. I’m no better off from one week to the next, and it’s going to be that way forever unless I change things.”

Kiyosaki does have other books that look like they go into much more detail on how to acquire wealth, but it all starts with Rich Dad, Poor Dad. This book is the one that taught me a new way of thinking about money, work, and building wealth.

I am very excited to read his other books soon, and I will review them here for you. Rich Dad, Poor Dad is a book that I will keep for years. I will read it, and re-read it until it’s message has completely sunk in for me. I will keep it around to turn to when I need a reminder about what my motivations should be, versus how I am living my life.

If you are at a point in your life where you have realized that what you are doing is not working, then Rich Dad, Poor dad might be able to help you make some sense out of things too. It is certainly different, and more straightforward than a lot of the information out there.

If you have read Rich Dad, Poor Dad (and it’s a #1 New York Times Best Seller, so I know you’re out there!) please leave me a comment and tell me what you thought. Did he challenge the way you thought about money and wealth? Did you learn anything you did not already know? Have you managed to break free of the rat race? Leave me a comment and tell me about it!

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