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Rich Dad Poor Dad by Robert Kiyosaki

Cameron Nuckols
5 min read
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Rating: 10/10
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High-Level Thoughts

Rich Dad Poor Dad opened my eyes to how wealth is truly created. Robert tells the story of lessons he learned from his poor father and compares them to lessons learned from his friend’s father. This book will get you started on a path towards building wealth.

Key Takeaways

  1. Acquire assets. Limit liabilities.
  2. A house or a fancy car is not an asset.
  3. Start building wealth now.

Summary Notes

How to make money isn’t taught in school. But poor parents encourage their kids to stay in school and to study hard. They don’t realize that there is education outside of the classroom. You can still graduate with good grades, but with a poor person’s mindset.

Just as it’s important for your health that you exercise, proper mental exercises will increase your ability to become wealthy.

The Power of Mindset

Robert’s poor dad had the habit of saying, “I can’t afford it.” His rich dad forbade that language and would ask, “How can I afford it?” He would then make the changes necessary to be able to afford what he wanted.

People really do shape their lives through their thoughts.

Differences Between His Poor Dad and Rich Dad

Poor DadRich Dad
The rich should pay more in taxes to take care of the less fortunate.Taxes punish those who produce and reward those that don't produce.
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 kids.The reason I'm rich is because I have kids.
Forbade th esubject of money to be discussed over a meal.Encouraged talking about money and business at the dinner table.
When it comes to money, play it safe. Don't take risks.Learn to manage risk.
Our home is our largest investment and greatest asset.My house is a liability, and if your house is your largest investment, you're in trouble.
Pay your bills first.Pay your bills last.
A company or the government should take care of you and your needs. Be concerned about pay raises, retirement plans, medical benefits, sick leave, vacation days, and other perks.You should be financially self-reliant. Be financially competent.
He struggled to save a few dollars.He created investments.
Taught how to write an impressive resumé so one could get a good job.Taught how to write strong business and financial plans so one could create jobs.
"I'll never be rich.""I'm a rich man, and rich people don't do this."
"I'm not interested in money.""Money is power."
Uses the word can't oftenHates the word can't.

1. The Rich Don’t Work for Money

The poor and middle class work for money. The rich have money work for them.

Many people say, “I don’t care about money.” Yet they work at a job for eight hours a day. A job is a short-term solution to a long-term problem.

It’s fear that stops most people from progressing beyond working for someone else. They fear being fired, they fear not having enough money, and they fear starting over. Then they blame their bosses for the situations they find themselves in.

You’re only poor if you give up. Most people only talk and dream of getting rich.

2. It’s Not About How Much You Make—It’s About How Much Money You Keep

Money without financial intelligence is money soon gone. If you don’t have a financial education then it won’t matter how much money you earn because you’ll never be able to keep it.

  • You have to know the difference between an asset and a liability, and buy assets. Assets put money into your pocket while liabilities take money out of your pocket.
  • His rich dad hated the word “can’t”. If you wanted him to do something, you would tell him that he can’t do it and he would.
  • Intelligent people hire people who are more intelligent than they are.

Reasons to Invest Instead of Buying a Home That Is Too Expensive

The end result of owning a house that is too expensive instead of starting an investment portfolio is threefold:

  1. Loss of time - your assets could have grown in value
  2. Loss of capital - more money that could have been invested
  3. Loss of education - you'll never learn from never trying

3. “Work Hard”

Reasons Not to Be an Employee

  1. Employees make their bosses rich, not themselves.
  2. You're working for the government which takes its cut of your paycheck before you ever see it.
  3. You work for the bank. Most people have a big mortgage and credit card debt.

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

Differences Between the Rich, Middle Class, and Poor

The rich buy assets. The middle class buy liabilities and think they are assets. The poor only have expenses.

“What Is Your Business?”

He often asks people what their business is. Businesses do not require your presence or else they become your job. A business is something that has value or produces income without you working there.

How Richard Kiyosaki Invests

He likes to be out of small stocks within a year. He tries to start small and trade up for bigger properties to delay paying taxes on the gains. He generally holds real estate for less than seven years.

Rewards Come From Assets

True rewards come from the gains you get from having your assets work for you. For example, he shares how his wife, Kim, bought a Mercedes after waiting for four years for the apartment houses to produce enough income for her to do so.

4. The History of Taxes and the Power of Corporations

Taxes began by everyone believing that you should take from the rich and give to the poor. Eventually taxes trickled down to the lower classes and the rich found ways to avoid being taxed as much.

1031 Exchange

Section 1031 of the Internal Revenue Code allows a seller to delay paying taxes on real estate that is sold for a capital gain through an exchange for a more expensive piece of real estate. Real estate is the only asset with that tax advantage.

If you work for money, you give the power to your employer. If money works for you, you keep the power and control it.

Four Pillars of Business Everyone Should Understand

  1. Accounting - it's key to financial literacy
  2. Investing - your money needs to make money
  3. Understanding markets - does an investment make sense given current market conditions?
  4. The law - understand tax advantages and protections of corporations

Corporations vs Employees

Employees earn and get taxed. Corporations earn, spends everything that it can, and is taxed on what’s left.

To learn more about corporations, read Garret Sutton’s book Start Your Own Corporation.

5. The Rich Invent Money

If you can understand that money isn’t real, you’ll grow rich faster.

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

There are two kinds of investors:

  1. The person who buys a packaged investment. i.e., [index funds](, a REIT, or stocks and bonds
  2. The person who creates investments. They assemble deals on their own.

6. Work to Learn — Don’t Work For Money

His rich dad taught him that you want to know a little about a lot. He often recommends joining a network-marketing company to learn sales skills. Education is more valuable than money in the long run.

Management Skills Needed For Success

  1. Management of cash flow
  2. Mangement of systems
  3. Management of people

7. Overcoming Obstacles

The most important skills you can gain are selling and marketing. That’s because they are the most difficult for people to achieve because of fear. Sales will also teach you to overcome obstacles that get in your way.

Reasons Why Some Financially Literate People Won’t Win

  1. Fear
  2. Cynicism
  3. Laziness
  4. Bad habits
  5. Arrogance

His rich dad loved Texas because he said, “When Texans win, they win big. And when they lose, it’s spectacular.” Most people won’t win financially because the pain of losing money is greater than the joy of being rich.

The Lesson From Colonel Sanders

When he was 66 years old, he lost his business and was living on his Social Security check. Then he decided to travel the country selling his recipe for fried chicken. He was turned down 1,009 times before someone said yes.

“How Can I Afford It?”

The words “I can’t afford it” close the door whereas the question “How can I afford it?” open up dreams.

8. Getting Started

  • You need to find a reason greater than reality to motivate you to push forward. When you are driven by the power of spirit, there is nothing that can stand in your way.
  • Make good daily choices. You have the power of choice so use it wisely.
  • Choose friends wisely. The power of association is real. The people you spend time with will influence how you think and behave.
  • Master a formula and then learn a new one.
  • Pay yourself first and learn good self-discipline.
  • Pay brokers well and be willing to take good advice.
  • Choose heroes and follow in their footsteps.
  • Be charitable and giving.
  • Stop what you’re doing. Don’t be afraid to stop and assess what you’re doing and to make changes.
  • Shop for bargains in all markets.
  • Make lots of offers.

Action always beats inaction.

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