The Lessons I Learnt From Rich Dad Poor Dad Book
Before I get started on writing the book review, I would like to talk about why I decided upon this book. I find the lessons taught from this book to be relatable and insightful. This book provides views that are not popular but reflect the harsh reality that our eyes averted from. This book teaches us financial literacy from the perspective of the author Robert Kiyosaki.
Keeping up with recent news; an article published by The Straits Times “NTU ‘regrets’ holding career fair aimed at top-performing students”, this shows that a huge emphasis is still placed on academic achievement despite government efforts to reduce focus on it. In Singapore, we spend most of our childhood in education institution studying and hoping to achieve good grades in hope of finding high-paying job after graduation and entering the work force. I feel that most parents believe that for their children to succeed in life, required them to enter ivy league school and obtain exceptional academic results. However, the lessons taught in this book will challenge the notion of what define success set by society especially in an academic driven society like Singapore. What if I told you that the underlying reason why so many people are struggling financially is because of school. This is one of the important lessons taught in the book. People may disagree with this statement but let me share with you what the book taught. School put people in debts through student loans and taught people how to work for money instead of allowing money to work for you. Therefore, the phrase “the rich get richer, the poor get poorer” is so prevalent. School produced highly educated employees but lack financial knowledge meaning these people do not know how to handle money and spend their life chasing high pay check and paying bills. Most people will fall into this trap set in stone by society and following these footsteps leading to mediocracy compared to what they can achieve more. Although, if you enjoy the safer path and satisfied with the middle class then by all means continue to do so. However, if you desired greater things then don’t just focus on academic achievement but rather the learning process. I can still vividly remember asking my prof on his views toward money and I was shaken by what he said. Since young, I was obsessed with getting a high paying job and earning lots of money. My prof said this to me: “Money can be a double edge sword and that money does not really buy you experience”. From his words and the book, I slowly learn to change my thinking as I find myself stuck in the rat race. My moral of the story is that don’t be stuck in the rat race for high paying job and focus on things like perhaps starting a business or pursing other interests. Once again, I would emphasize on the book teachings and one of them is if you want to be rich learn to be financial literate and that school does not financially educate you.
This book came from the perspective of the author Robert Kiyosaki. As the name itself implied, it’s about the author’s rich dad and poor dad. The author had two dad which both played a vital role in his life. The rich dad referred to his childhood best friend dad and the poor dad referred to his biological dad. The author in his books compared both of his dad fared according to their principles, ideology and financial literacy. The author talked about his poor struggling but highly educated dad. His poor dad was remarkable in the field of academic with a doctorate degree in ivy league school. His poor dad viewed education as a passport to success in life and believe traditionally the idea that people should study hard work hard and obtain employment in a good company with high pay will lead to financial freedom. The author pointed out that his poor dad was preoccupied with thoughts such as social security, job tenure, pay raise and promotion instead of the job itself. In his book he mentioned that at a point of time his poor dad returned to school to further study in hope of achieving even higher pay. Although his poor dad is highly educated but his dad always mentioned stuffs like why I couldn’t succeed, and I could never afford this. The author further mentioned in his books that his poor dad was struggling financially and never account to much success financially wise. On the contrary, his rich dad is not at all educated but instead is street smart. The author in his book shares with us his experience working for his rich dad and how he benefitted from it. He mentioned in his book that his rich dad underpaid him and his childhood friend on purpose with the intention to make them realized that to succeed in life and get ahead one must not work for others but for themselves. His rich dad wanted to invoke his thinking by instead of his poor dad “I couldn’t afford it” to how could I afford it instead. By comparing the difference in his poor and rich dad through their views about saving, definition of an education and how the different in thinking can empower individual, the author can attribute most of his success today to the teaching of his rich dad. I am not saying that education is unimportant and that you should dropped out of school but rather once again to focus on the more important things apart from academic results. Academic achievement can only bring you to so far. From what the author had mentioned, we can also learn that our thinking and belief will empower us and taught us not to follow in the footstep of his poor dad but to learn to be like his rich dad. In summary a person can be highly educated but financial illiterate.
Moving on, another key important lesson from the book is that it’s not a matter of how much money you make but rather how much you keep and what you do with it. The book stated that everyone can be rich even if you don’t earn a high income. The book further stated that money should be invested in assets and not liability. The author defined in simple layman terms that assets as things that put money into your pocket and that liability as things that take money out of your pocket. The author stated that most rich people invested their money into assets and that middle-class people invested their money into liabilities that they mistake for assets while poor people spend their money on expenses. Liabilities that middle-class people mistake for assets are like houses. Middle-class people believed that by purchasing houses, they are investing wisely their money as their property increased in value means their net value increases. Although their net value increases, it is still considered a liability in the author context as their home is still taking money out of their pocket until they rent it or sold it for a profit. Most people would not agree with this statement as well until they are hit with the reality. As mentioned in the book, when the author tried to convince people that their home is a liability nobody believed him at first until recession hit whereby people started losing their jobs and unable to pay for their home that where it became true to them. The book mentioned some aspects which the author considered to be ‘’real assets” such as stocks, bonds, income-generating real estate, IOU and royalties. In summary, the author advised us that if we want to learn to be financially free, we should learn to invest in assets and allow money to work for us instead of us working for money in the rat race.
Another area that has pique my interest that the book mentioned is the four quadrant that the author used to illustrate for the working life. The four quadrants basically are made up of E, B, I and S. The E stands for employed, S stands for self-employed or small-medium enterprise, I for investors and B for big business. The author further divide the 4 quadrants into 2 whereby S and E are group together under active income which means in short if you don’t work you don’t get paid and for B and I will be group under passive income, it means that even if you do not work, the money will still continue generating for you. Looking at this illustration, which quadrant will you be more inclined towards. In LTB, during the case study of MIT swim or sink, I learnt that risk is an inescapable part of every decision and the question is whether you will dare take on great future for the hope of greater reward. From the illustration and what I learn from my case study, it further propels my interest toward entrepreneurship as although the risk is high but can be very rewarding.
The last area that I would like to mention in this book would be on the tax. During LTB, my prof asked us on our views regarding government salary whether is their salary justifiable. One thing leads to another and somehow the topic lead to taxes whereby the prof shared with me that a smaller percentage of people in Singapore paid taxes. I believe in this aspect my prof was referring to “taxing the rich” which is the smaller pool of people. Although there is truth to it but I had a different view with regards to this statement. I might be wrong, but I learn from this book that with this concept most taxes will fall upon the shoulder of middle-class and poorer people. Although the concept is to tax the rich as they earn the most money however most taxes came from your income which is your salary. Rich people have lots of financial knowledge and power which is why they tend to be in a more favorable position, perhaps through hiring smart attorney and accountant to protect themselves or influencing politician to adjust their policies into their favor. Rich people can hide their assets in their corporation etc. with multiple layer of protection and thus they control everything and own nothing. As a result, they can take advantages of the loophole in the law legally while poor and middle-class are unable to protect themselves with little knowledge or ability to influence changes. Therefore, this book further emphasize the importance of financial literacy through areas such as tax and learning to take advantage of the system legally.
To summarize the review of the book: I believed the book had covered an intriguing aspect which is financial literacy that was not commonly covered in school. Good academic achievement does not equal to financial freedom. I personally feel that education is becoming more of a money milking industry instead of focusing on the learning process. I feel that the best part about this book is that its understanding of assets, liabilities and the effects of tax it has on the individual earning. Well-equipped with the knowledge from this book, hopefully it will be able to help you gain financial freedom and achieve the dreams you wanted.
I will highly recommend this book as it offer a different perspective like your house is not an asset and academic success does not grant u success in life that is contrary to the popular belief that people in general had. The importance of perspective so that we can have a better unbiased and educated view. The rat race is like a bottomless pit hole and people in today society are mostly stuck in there trying to climb the corporate ladder. If you are interested in escaping the rat race and on the path to achieve financial freedom, I once again strongly urge you to try out this book.
