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Rich Dad Poor Dad: What Schools Don't Teach You About Money

Why do the rich get richer and the poor get poorer? Hint: it's not due to government. Being rich or poor isn't about how much money you have.

Jerry Zhang
Jerry Zhang

7 min read

I first read Rich Dad Poor Dad back when I was in college and didn’t know a single thing about finance or money. Never have I ever read a book that involved the words “rich” and “poor” so often. One might even think it’s offensive to call someone “poor”, but Robert Kiyosaki is not in the business of taking care not to offend his readers.

Rich Dad Poor Dad is a mash-up on the subjects of personal finance and self improvement. Robert Kiyosaki starts with educating us about money in a way never taught to us in schools, and ends with self improvement tips that equips us to start the journey.

Spoiler alert: the author doesn’t actually have 2 biological dads. His poor dad (biological) has a PhD and works a stable high-paying government job. His rich dad (close friend’s dad) graduated middle school but owns businesses and real estate.


Before embarking on the journey to becoming rich, one must begin with the right mindset.

Here’s a comparison between a poor person’s thoughts and a rich person’s thoughts:

What Poor Dad SaysWhat Rich Dad Says
I can’t afford it.How can I afford it?
When it comes to money, play it safe.Learn to manage risk.
Study hard so you can find a good company to work for.Study hard so you can find a good company to buy.
The reason I’m not rich is because I have you kids.The reason I must be rich is because I have you kids.
Our home is our largest investment and our greatest asset.My house is a liability, and if your house is your largest investment, you’re in trouble.

Notice how poor dad takes a passive approach to money while the rich dad takes an active approach. Becoming rich isn’t done overnight—it requires hard work, initiative, active engagement, and taking risks.

Robert Kiyosaki doesn’t believe in get-rich-quick schemes. If you’re not prepared to put in the blood, sweat, and tears, you cannot hope to become rich.

Assets vs Liabilities

Wealth is a person’s ability to survive so many number of days forward—or, if I stopped working today, how long could I survive?

An asset puts money in my pocket. Examples include:

  • Real estate
  • Stocks
  • Bonds
  • Intellectual property

A liability takes money out of my pocket. Examples include:

  • Student debt
  • Credit card debt
  • Car loans
  • Mortgages

Cash flow tells the story of how a person handles money. Take a look at the below cash flow charts:

The poor only have expenses. Their primary income comes from their job, which is mostly used to pay for expenses, such as rent, food, and transportation.

The middle class buys liabilities they think are assets. Again, their primary income comes from their job. While they may own a car and a home, they might have had to take out loans to pay for them, which are liabilities. Robert Kiyosaki strongly emphasizes that if your home is your greatest investment, then you’re in trouble. Unless it’s income-generating real estate, your home is actually a liability since it takes money out of your pocket.

The rich buy assets. Their primary income comes from their assets, which puts money in their pocket. Real estate that generates rental income, stocks that appreciate and/or pays dividends, intellectual property that pays royalties are all but a few ways assets put money in their pockets. Rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.

Developing Financial IQ

In order to become rich, one needs to hone their financial IQ. Here are the 4 broad areas of expertise:

Accounting—the ability to read numbers. Are you making money or losing money? Being able to read balance sheets, financial statements, and anything quantitative. You don’t need to have a CPA. Just know the basics so you can make informed data-driven decisions, and if things get complicated, consult an accountant.

Investing—the science of “money making money.” This involves some creativity with managing risk. Look into the future. What do you see? Investing is putting your money into the future. And if you played your cards right, the money you put in now will grow by the time the future arrives.

Understanding Markets—the science of supply and demand. Every market is different. While it’s impossible to understand every market, just knowing a few niches can provide you with the basis to identify unique opportunities.

The Law—the rules by which to play the game. What are you allowed and not allowed to do? How do you take advantage of tax breaks and protect yourself from lawsuits? You don’t need a JD, but knowing some basics can help you make informed strategic decisions. Don’t hesitate to seek out professional legal advice if needed.

Without understanding these basics, it’s difficult to breakthrough and become rich. Unlike academics, however, a financial education is not something necessarily learned in school. It happens constantly in real time with each and every life decision you make. Learn from everything—and you’ll be on your way.

Understanding Taxes and Corporations

My rich dad just played the game smart, and he did it through corporations—the biggest secret of the rich.

From the government’s view, employees and corporations are entities that need to pay taxes. However, they pay taxes differently. Take a look at the below chart:

Business Owners with CorporationsEmployees Who Work for CorporationsEarnEarnSpendPay TaxesPay TaxesSpend

Employees are taxed on their wages. They do not get to write off business expenses (unless they are contractors, which work similar to a 1-man business) because their wages are for personal use. Employees pay taxes first to the government and spend what they have left.

Businesses, on the other hand, can write off business expenses. Want to vacation in Hawaii? Expense it as a board meeting. Want to take someone out to a nice fancy dinner? Expense it as a client dinner. Business get to spend first and pay taxes last to the government. Corporations can technically spend all of their income (usually investing into more assets) and get taxed on zero dollars. That’s why companies like Amazon don’t pay taxes.

Inventing Money

Often in the real world, it’s not the smart who get ahead, but the bold.

Robert Kiyosaki says there’s actually plenty of money to be made. Investors are at the heart of the economy because they are the engine that funds growth. They take risks, and while many endeavors fail, the one that succeeds usually generates enough returns to more than cover for all the failures. Without risk, there is no gain.

Find an opportunity that everyone missed. Use your experience, niche and financial IQ to identify opportunities. Opportunities range from the completely novel—ideas nobody has ever thought about—to pre-existing businesses that need an improvement.

Raise money. Of course we could go to the bank to ask for a loan, but there are several other ways to get funded. Be creative—make some unconventional deals. Don’t only consider what is “standard.” Partnering with an investor who provides the money while you do the work and splitting the proceeds is simply one way.

Organize smart people. This involves meeting smart people and building a team where everyone works in synergy. Make sure you are not the smartest person in the room, and strive to hire only people who are smarter than yourself.

Work to Learn, Not to Earn

Great opportunities are not seen with your eyes. They are seen with your mind.

If you work for money, then that will be your only reward. Employees work for money. The rich work to learn.

For example, you might be a real estate agent with plenty of experience buying and selling homes. And you might even get paid pretty well. Let’s say that one day you decide to buy a fixer-upper home, but you don’t have any knowledge of construction or home improvement. How does the idea of working as a construction worker sound?

If your answer is “they don’t get paid even a fraction of what I get paid right now”, then you have the wrong mindset. What’s far more valuable than the money you get paid for your work is the knowledge that you learn, which will end up making you far more money than the wages you earn. The mind sees opportunities that your eyes do not.

Essential Business Skills To Learn

Sales. The final customer-facing step in any business. If you spent tons of effort designing the product, manufacturing the product, but cannot sell the product, all your effort will have been for naught. Sales is about persuading the customer to spend money on you or your product.

Marketing. The first part of the customer journey. If you have a fantastic product that people would buy but nobody knows about it, then nothing will matter. Marketing is about generating awareness about you or your product.

Essential Management Skills To Learn

Management of cash flow. Bring out the accounting side of your financial IQ to make sure that your revenue is greater than your expenses. Learn how to do book-keeping and how to analyze the numbers. Data doesn’t lie. Stick to it as your source of truth.

Management of systems. Each system should have a distinct and unambiguous purpose. Understand how each system works and how to combine them to work together. Know a little about a lot.

Management of people. You might have heard company recruiters say the phrase “the greatest assets are our people.” Quite frankly, I’m skeptical of most companies who say that and don’t show it. Leadership is about developing your people and engaging them to work collectively. Make sure you can truthfully make that statement.


I thoroughly enjoyed the unconventional perspective offered by Rich Dad Poor Dad on money. Robert Kiyosaki’s bold writing confronts many things that are uncomfortable for most to talk about. While most people prefer to shy away from the subject of money, the truth is that our lives are affected by our finances, whether we like it or not.

I don’t necessarily agree with everything in the book, but there are enough lessons for me to apply to my life. The end goal is to become financially independent and get out of the Rat Race. I don’t want to rely on my employer’s money for my livelihood, and I want to have the option of not needing to work until retirement.

Rich Dad Poor Dad

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Jerry Zhang

Programmer, YouTuber, and amateur musician. I like to write too!