Part 1: The 6 lessons
There are some key lessons about money to be learned from the book Rich Dad Poor Dad by Robert T. Kiyosaki and Sharon L. Lechter. We at Launch Leadership Development believe strong personal money management skills are necessary for developing strong leadership and management skills in business.
This will be a three-part series, with today focusing on:
- An introduction to Kiyosaki’s two dads
- an overview of Kiyosaki’s six lessons he learned from his “rich” dad.
An Introduction to Kiyosaki’s two dads:
Kiyosaki’s real dad made good money working for the education system at the state level but had debt all his life and lived and thought like most people do about money: Get a good education, work hard, and get a secure job…hang on to it. This is who the author calls “poor dad”.
Kiyosaki’s best friend’s dad owned lots of area businesses and became very rich, leaving millions after his death to his family, charities, and church. This is who he called “rich dad”. This dad’s philosophy about money differed greatly from his real dad’s and is the source for the following 6 lessons.
Lesson 1 – The rich don’t work for money
Kiyosaki’s rich dad told him that the rich make money work for them. He explained what he called the “rat race” that most people fall into: get up, go to work, pay bills, get up, go to work, pay bills, get a raise, spend more, pay more bills as expenses rise, work harder for a promotion, get a raise, spend more, and on and on. He said fear of losing their job, fear of taking a risk when opportunities come, fear of change, all contribute to being stuck in the rat race.
The way out of the rat race is to make your money work for you. Invest in assets that make income for you. This could be real estate, or creative property such as music or patents, stocks, something that will produce income. The rich dad said most people do not invest in true assets. Look for my next article where I delve into what are true assets!
Lesson 2 – Why teach financial literacy?
Kiyosaki is very passionate about teaching people about how money works and believes this lack of financial education is the reason so many are stuck in the rat race. He says people need to understand:
- what a true asset is
- how to read and understand numbers
- not just rely on their job income.
Lesson 3 – Mind your own business
Kiyosaki says financial struggle is often the result of working all your life for someone else. Kiyosaki suggests thinking about YOUR business:
- There is a difference between your profession and your business
- I may be a teacher, but my “business” is educating people no matter how I do it, whether it is writing books, speaking, etc.
- Your business revolves around your asset column, not your income
- He gives the example of Ray Kroc, founder of the McDonald’s food chain saying his business was real estate, not hamburgers.
Lesson 4 – The history of taxes and the power of corporations
Kiyosaki gives a short history lesson on how taxes originated in the U.S. and how the rich learned to form corporations, which provides two tax advantages:
- the rates are less
- corporations can pay expenses first, then are taxed on what’s left
Lesson 5 – The rich invent money
Kiyosaki believes lack of self-confidence and courage is what holds most people back from making a lot of money. He says: Often, it’s not the smart that get ahead, but the bold.
- We learn by making mistakes, so don’t fear making mistakes
- Luck and money are created. Most people have the opportunity of a lifetime come to them and don’t recognize it. Look around and use your creativity!
Lesson 6 – Work to learn- don’t work for money
Kiyosaki advises that you want to know a little about a lot.
- He says becoming specialized pigeon-holes you
- Learn many things, and do many different jobs to learn
- Know about sales and marketing because they will help you no matter what field you are in
He says the main management skills for success are:
- Management of cash flow
- Management of systems (including yourself and time with family)
- Management of people
Lastly, he says We need to be generous and good teachers to others.
These are the Six Lessons Kiyosaki learned from his rich dad, however there is more to learn from his book. Join me next time to understand what true assets are and challenge yourself acquiring them!
Here is the audiobook: