Rich Dad, Poor Dad – Awaken Your Financial Genius (Episode 310)
It's time for another book review on a book with a HUGE impact: Rich Dad, Poor Dad. Now, I'll have to be honest with this - it's a book I think everyone should read, and the first chapter really made me angry!
Robert Kiyosaki has got some pure brilliance - I've completely shifted my perspective on money due to his work, and the most powerful shift in my life was moving from this:
Can I afford it?
Is this a worthwhile investment?
What role does money play in your life? We've talked a lot about the importance of financial literacy, as I feel this is a critical piece of our functional education model. It's not my goal to ensure my children can make money. My goal is for them to understand how to make money work for them.
Robert Kiyosaki Makes Me Angry
This book was edgy back in its heyday (1997), and it's still edgy now. Kiyosaki was turned down by multiple publishers for this controversial book that challenged the status quo of making an income.
In the "about the author" section, here is a good summary of Kiyosaki:
With perspectives on money and investing that often contradict conventional wisdom, Robert has earned a reputation for straight talk, irreverence, and courage. His point of view (that old advice - get a good job, save money, get out of debt, invest for the long term, and diversify - is obsolete advice) challenges the status quo. His assertion that "your house is not an asset" has stirred controversy, but has been proven to be accurate in our economy's current financial crisis.
Rich Dad, Poor Dad, "About The Author"
Kiyosaki has co-authored a book with Donald Trump, and, like Trump, I am not a fan at all of his arrogant and uncaring attitude of others. As I started to read "Rich Dad, Poor Dad" aloud to our family, I was pissed off with the first chapter!
It seems it's a "my way or the highway" approach, there isn't much listening as barreling over people and taking control, and, basically, it's a high D-personality style on steroids.
Kiyosaki is smart. He gets the end results he wants. And, I believe he is leading with the bottom-line task in mind...sometimes at the expense of others along the way.
His focus is highly driven, and he is effective at that. And, in a culture full of greed, speed, and every person for themselves, he fits right in.
I, however, believe in another way that considers others. You can lead effectively, grow and succeed, without crushing the backs of others along the way.
One of my 48 Days Eagles friends, Nathan Magnasun, just shared this video he did on "servant leadership". I believe this whole book could be rewritten from the perspective of this model and make an even bigger impact on the world.
Kiyosaki speaks to the Trump model of business - every man for himself. I speak to the human side of the business. We are in this together, and when we can create a synergy of our strengths and collaborate, the uniqueness in each of us strengthens ALL of us.
Rich Dad, Poor Dad
So what is this book about? It's about Robert growing up with two different father figures in his life - his biological father and his friend's father. His biological father was highly educated and intelligent with all kinds of credentials and degrees behind his name. His friend's father never finished 8th grade.
Both dads were highly successful in their careers, and both were strong, charismatic, and influential in many lives. Yet one always struggled financially and left this world with bills to be paid, versus the other who became one of the richest men in Hawaii.
What was the difference between these two men? Well, it wasn't the degrees and credentials that helped him, as Robert's biological dad is who he deemed as "Poor Dad" in the book. "Rich Dad," his friend's father, opened the door to a whole new perspective and approach to money that equipped Robert to learn how to make it work for him versus him being a slave to it in his life.
Being "Rich" vs. Being "Wealthy"
There is a different perspective on what Kiyosaki sees as being "rich" vs. being "wealthy." He defines being rich as having a lot of money, while being wealthy is having a lot of assets that produce money for you.
In other words, being rich is about having a lot of cash flow coming in while being wealthy is about having a lot of passive income. Rich people often have to work hard to maintain their lifestyle, while wealthy people can afford to relax and enjoy their lives because their money is working for them.
Kiyosaki argues that the key to becoming wealthy is to focus on building assets, not liabilities. Assets are things that put money in your pocket, while liabilities are things that take money out of your pocket. For example, a house is usually considered a liability because it takes money out of your pocket in the form of mortgage payments, property taxes, and maintenance costs. However, a house can also be an asset if it appreciates in value over time, especially if you're looking at how a house may make passive income, like in a rental property, for example.
Kiyosaki's definition of wealth is based on the idea that time is the most valuable asset of all. The more steady flow of money you have, the more time you can free up to do the things you enjoy. If you have enough money, you can even afford to retire early and live off your passive income. Again, not just accumulating all the wealth - looking at how it can continue to flow without trading time for dollars.
What is an asset? Here are some real asset categories shared in the book:
- Businesses that do not require your presence: you own them, but they aren't managed by you or require your daily presence.
- Income-generating real estate
- Notes (IOUs)
- Royalties from intellectual property such as music, scripts, and patents
- Anything else that has value, produces income or appreciates, and has a ready market (think in the online world of affiliate marketing, nurture sequences, eBooks, digital products...all that can potentially make SWISS dollars - Sales While You Sleep Soundly).
Can you think of any assets you already have, or ways to invest your money that would open any of these doors for you for passive income?
Of course, there is no one-size-fits-all definition of wealth. What constitutes wealth for one person may not be considered wealthy by another. However, Kiyosaki's definition provides a useful framework for thinking about wealth and how to achieve it.
Here are some of the key differences between being rich and being wealthy, according to Kiyosaki:
- Rich people have a lot of money, while wealthy people have a lot of assets.
- Rich people often have to work hard to maintain their lifestyle, while wealthy people can afford to relax and enjoy their lives.
- The key to becoming wealthy is to focus on building assets, not liabilities.
- Time is the most valuable asset of all.
If you want to become wealthy, Kiyosaki's advice is to start by learning the difference between being rich and being wealthy. Then, focus on building assets that will produce passive income for you. This will free up your time so you can enjoy the things you love.
"Wealth is a person's ability to survive so many numbers of days forward - or, if I stopped working today, how long would I survive?"
Invest In Financial Literacy
Money is only one form of power. And money power only goes so far if you lack the intelligence to manage it. Simply making money may imply power, yet there are many "rich" people who are stuck as cogs in a wheel, simply inputting for more money with no real insight as to how to step out and let it continue to flow without their hard work.
One of the things that I clearly resonated with the book was the unschooling approach to life teaching the lessons needed. When "rich dad" offered a lesson for Robert and his friend, it wasn't memorizing questions and taking a test. It was throwing them into real-life situations that challenged them to think outside of the box and innovate. He focused on showing them HOW to think, not WHAT to think.
That's a critical component. Are you looking at life trying to memorize the recipe, or are you recognizing ingredients and innovating what your unique perspective and approach could cultivate and create?
Life will throw us all kinds of opportunities to learn. Many will show up as obstacles and perceived "setbacks" in our lives as we gain more awareness. Are you looking at life as a growth opportunity, seeing what this makes possible, or are you simply looking for where to plug in for the expected outcome? That only goes so far - as unique individuals in this world, the outcomes that are interpreted as "success" can look very different from person to person.
And, the more we take personal responsibility for what we're learning and how we can adapt and grow, the more power we have. True power is in our personal ownership of the choices and lives we lead.
If you're feeling like a victim, pay attention to how much of your focus is outside of your control. Spending all your energy forcing others to change is an uphill battle that is met with resentment and resistance by all parties. Shifting your energy to the things truly within your control - your emotions, your reactions, your mindset - can be a total game changer for your overall perspective on life.
When you can learn to use your emotions to pause and think versus reacting from deep within them, you can start to gain power in how you use all those beautiful facets of who you are to propel you forward.
I am concerned that too many people are too focused on money and not on their greatest wealth, their education. If people are prepared to be flexible, keep an open mind, and learn, they will grow richer and richer despite touch changes. If they think money will solve problems, they will have a rough ride. Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.
Robert Kiyosaki, Rich Dad, Poor Dad (44)
And on that note, he goes on to say, "An untrained mind can also create extreme poverty that can crush a family for generations." Are you ready to break your family legacy of a "poor dad" mentality and see how money can work for the life you want to create?
What Is Your Financial Aptitude?
Robert lays it out in the book as, "what you do with the money once you make it, how to keep people from taking it from you, how to keep it longer, and how to make that money work hard for you."
As he shares, most people are looking at the money they have versus what cash is flowing. We want cash-FLOW. Money that continues to replenish versus us working from a finite basket.
And, again, a quick note that his approach is very defensive on protecting his money and claiming it all, while I prefer a more win-win and collaborative approach. I view money as an energy exchange and a way to invest. Sharing our minds is another energy exchange. So is serving others well. When we look at our money as an exchange of energy between two people, it can be mutually beneficial - them getting a service or support that helps them while they also have skin in the game. It's not a win-lose - both people can benefit from most money opportunities when done with integrity and seeking a collaborative approach.
Financial intelligence is simply having more options. If the opportunities aren't coming your way, what else can you do to improve your financial position? If an opportunity lands in your lap and you have no money and the bank won't talk to you, what else can you do to get the opportunity to work in your favor? If your hunch is wrong, and what you've been counting on doesn't happen, how can you turn a lemon into millions? That is financial intelligence. It is not so much what happens, but how many different financial solutions you can think of to turn a lemon into millions. It is how creative you are in solving financial problems.
Robert Kiyosaki, Rich Dad, Poor Dad (99)
The School of Life
Robert talks about how often we limit ourselves due to our own fear of losing. And we get programed for that in school, as we're tested on what we get right and wrong, and how well we can recite what someone else has laid out for us. We don't always get the challenge to innovate and think outside the box.
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. The same is true for learning to ride a bike. I still have scars on my knees, but today I can ride a bike without thinking. The same is true for getting rich. Unfortunately, the main reason most people are not rich is because they are terrified of losing. Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.
Robert Kiyosaki, Rich Dad, Poor Dad (112)
What we fear can become the enemy. So often our biggest fears and setbacks are those things we separate ourselves so far from that our fear is fostered in our insecurity. The more we know, the more we can discern, grow, and gain confidence in our perspectives, our approaches, and what we're going to do with the information.
10 Steps to Awaken Your Financial Genius
There is a lot of meat in this book and a lot to go through. For our unschooling family, it's our "economics class". We dig into these 10 tips deeper on the podcast, so listen at the link above to hear the full synopsis!
- Find a reason greater than reality: the power of spirit. What are your wants/don't wants? What is your passion and why that makes you want to be a "rich dad"?
- Make daily choices: the power of choice. Are you being a good steward of the small money choices on a daily basis?
- Choose friends carefully: the power of association. "You are the average of the five people you spend the most time with." (Jim Rohn) Are they inspiring and motivating you to do more, or are they black crabs stuck in survival mode?
- Master a formula and then learn a new one: the power of learning quickly. A growth mindset is lifelong. If your learning is finite, your bank account will be as well.
- Pay yourself first: the power of self-discipline. Being wealthy is not being a martyr. You cannot give from an empty cup.
- Pay your brokers well: the power of good advice. Who are your mentors and sounding boards? Do you have people who will help you see your blind spots?
- Be an Indian giver: the power of getting something for nothing. While I'm not a fan of the terminology, essentially the goal here is to look at whatever you are giving out/delivering and see that it's able to give you a return on that investment in a way that makes it a valuable investment in the first place.
- Use assets to buy luxuries: the power of focus. Staying focused on your bigger goals can help you to determine when you spend and when you hold.
- Choose heroes: the power of myth. Heros are your "proof of concept" that what you're striving for IS possible.
- Teach and you shall receive: the power of giving. This I'm clearly aligned on - the more you teach others to "fish", the more we all benefit.
Read through Rich Dad, Poor Dad yourself. Get serious about learning what an asset is over a liability, and take inventory in your own life on how many expenses and liabilities you have vs. your assets and cash flow.
Reframe your thinking from, "Can I afford it?" to "Is this a worthwhile investment?"
Be open with your children about how you are making financial decisions. That doesn't mean you have to divulge every bit of your bank account.
However, if all they are seeing is the stress around finances, expect them to mirror - and carry - some of that burden. Our kids often carry way more weight in the family than they are actually responsible for, and it comes through the heavy energy of their parent's stress.
Take a good look at where you are financially, and where you want to be. It can seem overwhelming, or you can choose now to do one thing today that can pave the way for a brighter future for you all.
And your family is hands-down the best investment you can make.
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