8 Life Lessons From “Rich Dad Poor Dad” That Can Change Your Life

There are some must-read books on personal finances that will help you develop good saving and investing habits.

One of them is Robert Kiyosaki’s Rich Dad, Poor Dad, a must-read if you want to learn about personal finance.

Rich Dad, Poor Dad is one of the best-selling personal finance books of all time for its ability to teach the secrets of wealth building through an interesting narrative. The book tells the story of the financial lessons a young Kiyosaki learned growing up with the contrast between his own dad who was a state employee and the father of his best friend who was a business owner.

This book does a great job of filling the gap for young people that never received a financial education in school or from their parents. Most people learn only two financial lessons in their early years, got to college and get a good job. The author explains that this is not always the best path for financial success, financial independence, or wealth building. Readers must understand cash-flowing assets, business building, and the power of asset ownership if they ever want to escape the rat race.

Here are some key ideas from the book that can change your life.

1. The rich make their money work for them
Broke people stay broke by spending all their money. Middle-class people stay middle-class by saving all their money. Rich people stay rich by laboring all their money.

If you work for money, you will run out of time to make enough money.

The most common problem is people don’t want to learn about money. They study their subjects, go to work, get paychecks, and die.

Buy real assets:

stocks
bonds
real-estate
Businesses

2. Know the difference between assets and liabilities
“An asset is something that puts money in your pocket and a liability is something that takes money out of your pocket,” the book explains.

In this sense, rich people acquire assets (securities and investments) and poor people add liabilities (commitments and obligations).

This is the main difference that can punctuate the future development of an individual’s personal finances.

3. Reduce your spending as much as possible
The author advises having as little debt load as possible because, in the end, it hinders the financial freedom you want to achieve.

“Reduce your liabilities” is one of the most repeated phrases throughout the book.

You have to keep in mind, however, that there is “positive” debt, like a mortgage, and then “negative” debt, like quick loans.

4. Learn to manage risk
In his book Kiyosaki teaches us that “Investment is not risky, not knowing the investment is risky. If you want to reduce the risk, then increase your knowledge.”

He explains that this type of knowledge will not come from going to college; it will come from reading books or sitting with people who understand “the investment.”

5. Mind your own business
Kiyosaki also encourages his readers to start a business.

He says, if you have a job, keep your job and start a part-time business and work it.

Never leave your job until you build your own business.

Don’t struggle all of your life for someone else.

Start your own business and grow it.

6. Find a reason
Everyone wants to be rich, but many of us don’t want to struggle.

Kiyosaki tells us we must have a clear purpose in mind.

“Why do you want to earn more passive income?”

Write down your “why” because it will keep you motivated.

If you don’t have a reason, then it is difficult to stay on the path to wealth.

Remember…it’s not your fault if you were born poor, but it will be your fault if you die poor.

7. Pay yourself first
If you can’t get control of your own finances, then it’s difficult to get rich.

If you lack financial discipline, then it is impossible to become rich.

So, pay yourself first.

Each month, first invest a certain amount of money into income-generating assets before you pay your bills.

If you pay yourself last, you would feel no pressure, but you would probably not come up with new sources of income either.

8. Reinvest the profits you make
The profitability created by your assets should be reinvested in other assets, according to the book.

“Don’t think about how to earn more income; look for more valuable assets — that’s how you should repeat the cycle,” says Kiyosaki.