Financial education doesn’t just happen in school. Through reading and engaging with mentors and the world around you, you can gain valuable financial skills that will help you get ahead financially in life. Robert Kiyosaki’s book, Rich Dad Poor Dad, teaches valuable lessons about money that every individual needs to know if they want to be successful in life. In this article, we’ll examine 10 of the most important lessons from his famous book, so you can begin applying them immediately to your life.
1. Understanding Tax
Robert Kiyosaki, who wrote Rich Dad, Poor Dad wants you to understand tax. Tax is one of those things that people choose to ignore because it’s complicated and they don’t want to deal with all of that paper work. Understandably, who wants to read a book on taxes? It doesn’t sound like fun but you should still read it. Why would someone want you to pay attention to something so boring and mundane? Because tax can make or break your business in more ways than one. Understanding tax and how to avoid them could save you a lot of money and ensure that your company stays afloat and doing well for years to come. It can also help you think about business in general in an entirely new way too!
2. Invent Money
With a basic understanding of financial education, you’ll be in a much better position to manage your money and start inventing your own. For example, say you have $5 to spend on lunch. You could either choose to buy one $5 meal or five $1 meals. The choice is clear: You can get more for less money by buying in bulk. Be smart with your money and you’ll quickly notice how inventing your own money will really pay off over time and boost your savings rate as well!
3. Be A Financial Literate
Robert Kiyosaki’s thoughts on financial literacy will challenge you to think differently about saving and spending, work and play, risk taking and investing. This was one of my favorite parts of Rich Dad Poor Dad because Kiyosaki has a way of explaining money that makes sense; he truly understands what it means to manage your finances. Whether you are trying to save up for a big purchase or looking for ways to get out of debt, these lessons can help you live on more than just dollars in your pocket. By following his advice, you’ll become a more financially literate individual who is able to balance income with life’s other important priorities.
4. Acquire Assets not Liabilities
The main idea of rich dad poor dad is that we should be working and building assets (money, businesses, investments) to make us financially secure. If you have a lot of liabilities (debt, bills) then you are very susceptible to be broke at any time. Financial education allows us to see that people aren’t successful because they are born into wealth or special privileges but rather because they take responsibility for their finances and take active steps towards building assets. While your friends might be paying off student loans or car payments it’s important to remember that these are just liabilities which will result in them being more reliant on an income source which could disappear tomorrow.
5. Make money work for you
One of Robert Kiyosaki’s best-known quotes is, If you want to be rich, you must learn to make money work for you. This means investing your income and savings in such a way that they earn you money. While investments can mean different things for different people—some people choose stocks or bonds, others real estate or cryptocurrency—they all have one thing in common: They take risk and turn it into potential returns.
6. Your mind is your best asset
While money is essential, it’s your financial education that will allow you to increase your assets and your income. One of my favorite quotes is by Thomas Jefferson: Educate and inform the whole mass of people… They are the only sure reliance for preservation of our liberty. When I decided to become financially free, I began educating myself on investing, finance, and all other aspects of financial education—I would continue to learn every day. Knowledge is power!
7. Mind Your Own Business (Stay Focused)
Robert Kiyosaki is a firm believer in minding your own business. In Rich Dad Poor Dad, he writes: The rich don’t work for money. They have so much of it that they don’t need to work for it anymore, but they do it because they enjoy what they are doing and because they can get paid a lot more to do what they love. Their primary goal isn’t to make money, but to acquire assets that will generate passive income forever.
8. Manoeuvre Your Thoughts
Robert Kiyosaki says one of his favourite books is Sun Tzu’s The Art of War. A good portion of Rich Dad, Poor Dad is about manoeuvring thoughts and expectations—about redefining what it means to be rich and providing ideas for how to get there. With a great deal of financial education, you can learn how to manoeuvre your own thoughts so that you will make better decisions with your money. This can help steer you toward greater financial freedom.
9. Take Risks and Become Smart With Experience
In his bestselling book, Rich Dad, Poor Dad, author Robert Kiyosaki explains that taking risks and learning through your experiences—even if it means failing—are necessary to becoming successful. Risks are much more difficult to take when you’re young, though. As a teen or twentysomething, you’re just beginning to build a financial foundation for yourself; why would you want to do anything risky that could jeopardize what you have?
10. Control Emotions
Kiyosaki also touches on emotions and how they can affect our overall financial picture. Emotions, he writes, are what drive investors to make poor decisions with their money. When we allow our emotions to control us, he writes, we lose control of our personal finances. Acknowledging your feelings when making financial decisions is important—but not allowing those feelings to overwhelm you is key.