The lowdown: Rich people make better financial decisions than poor people. Start to make rich people decisions with this Rich Dad Poor Dad Summary.
Have you wondered why the rich stay rich and the poor stay poor?
It is due to increased financial literacy along with some mindset tricks that you can learn.
While it has been over twenty years since Rich Dad Poor Dad first hit shelves (
Part autobiography and part finance masterclass, Rich Dad Poor Dad gives you the tips to start thinking and acting like a rich dad.
The three key lessons from the book are:
- Fear and greed result in crappy financial decisions
- Your profession pays the bills, your business makes you rich
- Invest in assets, even if you have to take risks
Lesson One: Fear and greed result in crappy financial decisions
On the rare occasion when a financially ignorant person gets leftover money, fear or greed tend to take control of their decision making.
The fear of losing money is so strong that it actually stops you from investing in stocks or bonds. The reason is that your fear of not having money magnifies the risks involved with investing. This limiting belief will ensure you never become financially independent.
Likewise, greed also takes over a lot of decision making.
Rather than invest, a greedy person would rather increase their immediate quality of life, believing it is more ‘real’ or tangible than investing.
However, with that bigger house comes larger electricity bills and a bigger mortgage.
Instead of letting fear and greed dictate your decisions, increase your financial literacy and learn more about stocks, bonds, and other investments.
Lesson Two: Your profession pays the bills, your business makes you rich
You may think of your profession and your job as the same thing. But let’s make something very clear.
A job is the 40 hours a week you get paid to do something and a business is what you invest in to generate wealth.
You might want to have a side business where you freelance (cheeky plug here), you may have an ecommerce site, or you may invest in real estate or shares.
Your profession only covers your expenses and in turn, will not make you wealthy.
That is why it is important to start your business -whatever that is, while staying in your professions.
Basically, you can have your profession fund your business.
While that means sticking in your day job, if you stick with it, eventually your assets will become your main sense of income, not your profession.
Lesson Three: Invest in assets, even if you have to take risks
When you start investing, you need to know the difference between a liability and an asset.
To be blunt… an asset makes you money while a liability costs you money.
Sadly, too many of us mistake a liability for an asset.
For example, we all see a house as an investment. So maybe you upgrade as a way to invest.
However, a house is a huge liability; it takes a large portion of your pay every month, every month…. for thirty years!
Instead, invest in stocks, bonds, or even an investment property, where someone else is paying the mortgage.
Instead, when you invest in an asset, your dollars become little employees working their butts off to make you money. From there, you invest the excess and keep building.
My Personal Takeaway
I 100% still think with a poor man’s mindset. Growing up without a lot of money means that you treat it differently than someone who is properly financially literate.
However, I am looking to invest more and go from there.
Which is scary, but I guess that’s the point!
Put it into action
Find out what you want your ‘business’ to be. Perhaps you want to invest in stocks. If so, what do you need to read? Who are the gurus you should be looking at? What online courses should you take?
You can even go local… who can you connect with that you can learn off?
Shout them a coffee and explain that you want to improve your knowledge in their area of expertise.
You’ll be surprised how much people like talking about themselves.
You should consider buying this book if…
This book is perfect for anybody looking to start investing. Also recommended for anybody looking to escape the rat race.
🤙 Your Next Step… 🤙
Head across to one of the following pages for more goodies
🍕 Read our list of the best business books of all time
🍕 Read some more of our book summaries
🍕 See our top book summary apps