SDG 4: Quality Education- Book Summary of Rich Dad Poor Dad
By: Global Sdg Foundation
Tags: Sdgs, Finance, Personality, Education, Growth

Rich Dad Poor Dad is one of the fundamental books in the field of developing personal financing knowledge written by Robert T. Kiyosaki. Robert’s fathe is the poor dad here who has been well educated man but struggled financially whereas his Rich dad was his friend’s dad who just passed 8th grade but was one of the riches man in Hawai. Let us start with the key takeaways from this book:

Assets v/s Liabilities- Robert has distributed our possessions into assets and liabilities and these categories are a little different from general financial assets and liabilities sense.In general, these are defined as collateral but he defines assets as something which helps us generate wealth eg- investments in stocks or mutual funds, getting revenue from services or rents, etc and liabilities as something which is costing us wealth eg- house you live in, car you drive, daily expenses , etc. Education- The book has highlighted a fundamental difference in the mentality of poor/ middle class and rich in terms ofeducation. A poor person mentality is focused on getting good education so that they can get a good job whereas a rich mentality is focused on getting good education so that we can learn something and create a business out of it. A rich mentality will focus on developing financial education and take education as a means to meet ends rather than just seeking a job to sustain themselves but rather to create an impact. Work for money or money working for you- This is one of the fundamental way of how we can make money work for us. Poor mentality always focus on working for the money as everything they do is to generate money. Poor mentality is generally driven by greed and fear. Whereas if we talk about a rich mentality, they make the money work for them. Rich acquire assets, provide financial solutions and generate constant revenue out of it. This revenue then they utilise for their expenses Methods of investing/ spending money- Based on the assets and income, we can categorize society into poor, middle class and rich. You might have seen many people who have high income still they end up being poor and their are people with meagre income yet they have a sufficient amount of wealth. Here is the analysis to understand why that happens based on their financial utilisation:

Poor- Income → Expenses → Liabilities. Poor people spend their income to pay off expenses and then focus on spending money on objects which do not generate additional revenue streams (liabilities). They do not pay themselves.

Middle Class- Income → Expenses → Liabilities → Assets (few). Middle class people have the same expenditure behaviour like poor people but they invest a few of their proportion of income towards assets. They pay themselves last.

Rich- Income → Assets → Expenses → Liabilities (few). Rich prioritize investments first. They pay themselves first in form of generating revenue generating assets. Then they focus on their expenditures and liabilities (few).

I hope this summary would help us develop better financial understanding in our life so that we can move from a life of poverty and liabilities to riches and assets.