“In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk.”
Rich Dad Poor Dad is the story of a young boy, age 9, from a working class family who is driven by the desire to fit in with his rich peers. He finds mentorship from a friend’s father. This mentorship turns out to be a confusing-at-first but eventually unforgettable early-life learning experience.
The book was recommended to me by a friend who is about five years older than me. He is exactly where I want to be in five years. When you get a book recommendation from someone like that (especially one that you’ve heard of several other times, yet never read) you read it. So that’s what I did last weekend. I ended up devouring the entire book in 6 hours. It’s short, it’s really practical, and it’s a very entertaining read. It was written in 2000, and has since become one of the most popular personal finance books in the world.
The author shares the narrative of his adolescent mentorship in a beautifully-told story which walks you through the excitement and disappointment of each lesson along the path to his eventual discovery: “You can make money work for you instead of working for money.”
The first chapters are a walk through his childhood and teenage experiences learning about money, followed by an account of how he determined which advice to take from his “poor dad” and which advice to take from his “rich dad” – decisions that shaped the eventual path of his life. He goes on to challenge the way different classes think about “assets” and “liabilities” – specifically challenging the common idea that home-ownership is an asset. The final chapters include simple steps to begin your own journey of financial re-discovery, and encouragement to keep learning in every way you can.
Common critiques of the book include the fact that it is presented as a true story, but is told in a very fable-like way. Also, the financial advice in the book represents a significant deviation from “typical” results, but the book has thorough legal disclaimers. It’s not meant to be taken as finance consultation, it’s meant as inspiration and entertainment. If you read it that way, it presents a valuable perspective.
I would say that the most significant value of the book is not found at all in the financial anecdotes, but rather in the comparison of attitudes between classes. The “Rich Dad Vs. Poor Dad” narrative fable is the real strength of the book because many of us get plenty of exposure to one of the viewpoints presented, and little or no exposure to the other. I would encourage you to read the book for yourself (at least the first chapter, which you can get as a free sample from Amazon) because it is one thing to think about such stories, and another thing altogether to be walked through them from a first person perspective.
Like anything, it’s up to you to decide what parts of each new viewpoint you encounter can be integrated into your own life. I’d say the biggest problem with the book is the fact that the author failed to use a plain and simple “these are not your typical results, these are extra-ordinary examples” disclaimer with many of his investing stories. That said, his entire life is an extraordinary example so perhaps that is implied.
The core idea of the book is: “make sure the assets you buy are actually assets.” That is sound advice indeed, and the way he presents it is fascinating and fun.
A good rule of thumb with ultra-successful people is that they are usually very good at telling you what they have done, and very very bad at telling you why they were able to do it and how to do it yourself. This is because natural human bias fairly well prevents us from ever seeing our own privileges, the countless factors outside of our control that lead to success. Because of that bias, this inability to properly determine the “why and how” of success is a pretty typical place of failure for self development books. Learn from the story and the unique perspective, if not from the instructions.
My favorite aspect of the book his the authors intense enthusiasm for learning quickly. He emphasizes the skill of quick learning above all other practice.
This is the best of times for those willing to study, learn quickly, work hard. Learn from the past to succeed in the future.
This book presents a rare opportunity to learn from a very personal personal story in the form of an affordable 6-hour read. As you read, you have the chance see how one thinks after having been an ultra successful real estate investor born and bred from a fairly average middle class family. It’s not the end-all-be-all of life advice, but it’s definitely a great starting point to begin thinking differently about your finances.
The essential advice is this: Rich people spend their income on assets, while poor people buy liabilities. Assets put money in your pocket, liabilities cost money to maintain. Clearing up the confusion in your own mind between asset and liability is often (perhaps surprisingly) enough to completely revolutionize your bank statement.
If your finances are something you’re not absolutely thrilled about, thinking differently about money is the first step to meeting new financial goals. This book will help you start, and I can assure you that by buying this book you are buying an asset.
You can get the book here on Amazon.