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Submitted by Matthew Needham on 10 Comments

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Rich Dad Poor Dad

March is Money Month and the Wednesday Wisdom’s during the month of March are dedicated to the personal finance books which have shaped my life and will undoubtedly help you. In terms of return, these books have paid for themselves many times over and that’s why you should add these books to your reading list now.

The subject of this week’s Wednesday Wisdom is Rich Dad Poor Dad:

Rich Dad Poor Dad by Robert Kiyosaki has the subtitle ‘What the rich teach their kids – that you can learn too’. So that’s quite a big claim to live up to.

I don’t know if the lessons in Rich Dad Poor Dad are ones that rich do teach their kids, but there are some very useful lessons here for either the rich or those aspiring to be rich. The book tells the story of Kiyosaki as a young boy learning the lessons from two dads; a rich one and a poor one. The poor one of course is a regular parent, works hard all his life working as a University lecturer, whilst the rich father, the dad of his friend, runs his own businesses. It reads more as a novel rather than a stuffy personal finance book, which means you can read it in a couple of evening.s

The book focuses on 6 main lessons, which as they were being explained to a nine year old are incredibly simple, but don’t make the mistake of assuming they have no relevance to either a 12 year old or an 40 year old. The lessons learnt will change your life.

Here’s the 6 lessons;

The rich don’t work for money
Why teach financial literacy?
Mind your own business
The history of taxes and the power of corporations
The rich invent money
Work to learn – Don’t work for money

At face value these lessons don’t sound that sexy. Which I think is part of the appeal. These lessons are entirely practical and you can apply them quickly and simply.

For example, in lesson 1 Kiyosaki says;

“The pattern of get up, go to work, pay bills, get up, go to work, pay bills… their lives are then run forever by two emotions, fear and greed. Offer them more money and they continue the cycle by also increasing their spending. This is what I call the Rat Race.”

Sound familiar?

He then goes on to explain how he and his friend Mike set up their own comic book business and how rich dad was so pleased that by not getting paid for working in rich dad’s store, they were forced to use their imaginations to identify opportunities to make money. By starting their own businesses, the comic book library, they were in control of their own finances, not dependent on an employer. They had learnt that as their business generated money, even when they were not physically there, they learned the lesson of having money work for them.

The other key lessons explain the differences between assets and liabilities and explains the importance of cash flow. In other chapters he talks about the difference between earning money through corporations (LLC’s in the US and Ltd companies in the UK) and earning a salary via an employer. For example, in my work as an interim manager, my travel expenses to and from client premises are deducted from income, before I pay taxes. If I was an employee, then the travel expenses would be paid after I had taxes deducted.

This book makes you look at things in a completely different way to what you thought to be true and I changed a number of my behaviours as a result.

Read this book, it really will increase your wealth. If you have children lend them a copy, better still get them their own copy. The sooner you read this book you will singularly improve your finances. Quite simply the lessons here aren’t taught in school or University or professional accounting course so the sooner you learn them, the better off you will be.

You can buy the book from Amazon here at 39% off at only £5.46. Add it to your book shelf.

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10 Comments »

ami
Twitter: ami.kimmac.com
said:

I don’t usually feel a call to action after reading a book review – my stack of “must or should reads” is too high. But your review suggests that this book will cause a paradigm shift in our thinking about money, which could be priceless. So, on to the list it goes. thanks for the review.
ami´s last blog ..How to become good at anything – Try, Do, Experiment

[Reply]

ami
Twitter: amikimtweets
Reply:
March 4th, 2010 at 12:40 am

and by the way – the twitter address that appears next to my name on your comment feed is someone else’s my twitter id is actually amikimtweets, in case you have the power (and inclination) to fix this.
ami´s last blog ..How to become good at anything – Try, Do, Experiment

[Reply]

Matthew Needham Reply:
March 4th, 2010 at 9:11 pm

Hello Ami, many thanks for pointing this out. Sadly, this is something I’m unable to change (as far as I’m aware!) I believe it picks it up from a cookie on your computer. If you comment on another post (and I hope you do!) then I suggest you update the twitter box below the post, which will hopefully do the trick. Thanks again!

[Reply]

Matthew Needham Reply:
March 5th, 2010 at 8:34 am

Hi Ami

Thanks for the comment and taking the call to action! I buy a lot of books and I learn a lot from them. As a qualified accountant I knew a lot of the stuff the book talks about but the examples the book gives are so simple that I was often having lightbulb moments as I was reading it. In a week or two I will tell you why. Thanks for taking the time to comment.

[Reply]

- 4 March 2010 at 12:38 am

Eleanor Edwards
Twitter: heavenandel
said:

Thanks for the tweet about this review. Sounds great. My 7 year old has a real entrepreneurial (sp?) flair so will be getting a copy of this as much for her as for me and her dad.

Our main household income comes from a regular rat race job complete with police pension which it would be madness to give up. It frustrates me beyond words to see the life sucked out of my husband’s soul as he works hard to provide for us. I am determined to help free him from this. I just need another 12 hours in each day and a dazzling business plan

[Reply]

Matthew Needham Reply:
March 5th, 2010 at 8:54 am

Hi Eleanor thanks for sharing. Definitely start your 7 year old on this solid path to financial freedom. I agree you wouldn’t want to loose your pension, but you don’t want to be doing something you don’t enjoy either.

Most people stick at the ‘rat race’ job with the expectation something better will come along. It might not. Best thing will be to figure out what you both want and then plan a way of getting it. Good luck!

[Reply]

- 4 March 2010 at 9:26 am

Paul
Twitter: paulworswick
said:

I’ve heard a great deal, of good press, about this book and how it will help me. However, as yet I’ve not got round to buying it; why that is I don’t know. I guess hearing about it yet again, is telling me I need to go and buy it. Where’s that bookshop?

Thank you for sharing you thoughts about the book.

Regards

Paul
Paul´s last blog ..Rocky Road

[Reply]

Matthew Needham Reply:
March 5th, 2010 at 8:29 am

Hi Paul, thanks for your comment. I too often hear about great books but it’s only when I’ve heard of a book a few times do I seem to ‘get it’ and buy it. If you hop over to Amazon be sure to follow Ralph’s advice and get cashflow quadrant too! Cheers.

[Reply]

- 4 March 2010 at 6:47 pm

Ralph said:

This book has been the inspiration for trying to evolve from and employee to entrepreneur. When you finish Rich Dad Poor Dad then grab copy of the Cash Flow Quadrant. That one will really blow your mind.

[Reply]

Matthew Needham Reply:
March 5th, 2010 at 8:23 am

I’ve heard a few folks mention Cash Flow Quadrant, but thought it would be essentially a rehash of the Rich Dad Poor Dad stuff. Looks like I will have to check it out. Thanks for the tip Ralph.

[Reply]

- 4 March 2010 at 7:45 pm