Book Review: Rich Dad Poor Dad by Robert Kiyosaki

rich dad poor dadWithout a doubt, Rich Dad Poor Dad has become one of the most controversial personal finance books of modern times. Some people have praised it as the revolutionary how-to guide for creating ultimate riches through passive income. Others despised what they read because Kiyosaki challenged the conventional system for how people make a living and live their lives.

When was the last time you were told that going to college and becoming an employee for someone else for the next 30 years is a terrible plan? Or that the only reasons you became an employee in the first place was out of your own fear and greed of money? Or that your house is NOT one of your greatest assets?

Rich Dad Poor Dad is NOT a book that will explain to you what a 401k or an IRA is. In fact, it will try to discourage you from putting money in your retirement account at all. Instead, Rich Dad Poor Dad offers you something completely different – it will make you think! It will challenge you to reconsider what you’re doing with your money, life, and what you’re doing to reach your maximum earning potential!


The Beginning of the Rich Dad Poor Dad Dichotomy:

It is my belief that one of reasons why Rich Dad Poor Dad was such a success was due to the nature in which it was written. Most personal finance books read like an encyclopedia – they explain everything to you a series of facts. Rich Dad Poor Dad is more like a story. Most of it is a narrative told from Kiyosaki’s autobiographical perspective.

Chapter 1 begins in the 1950’s with Kiyosaki and his best friend Mike going to work for Mike’s Dad for 10 cents an hour. Despite being a high-school drop-out, Mike’s Dad is a very successful business owner. After only a few short weeks, Kiyosaki is angry, ready to quit, and confronts Mike’s Dad! Mike’s Dad is pleased by this discouragement, and thus begins Kiyosaki’s lessons from Rich Dad.

“Job is an acronym for Just-Over-Broke” (p. 122)

Rich Dad teaches Kiyosaki and Mike that most people never reach their full potential because of fear and greed. He makes an example of “Mrs. Martin” and several of his other employees by explaining how they live in ignorance fueled by their own fear and greed. Rich Dad’s lesson is simple: “The poor and middle class work for money. The rich have money work for them” (p. 22). Throughout the rest of Rich Dad Poor Dad, Kiyosaki will refer to this system of fear and greed as the “rat race” (p. 55) (He even creates a board game by the same name to use as a teaching tool).

Unfortunately, the “Poor Dad” in the story is Kiyosaki’s own real father. Poor Dad or Educated Dad as he sometimes calls him was an academic who worked for the government. Poor Dad encouraged young Kiyosaki to go the traditional route that most parents encourage their children to follow – do well in school, go to college, get a job, be a good employee, and maybe retire in 40 years.

This dichotomy between Rich Dad Poor Dad will be very instrumental throughout young Kiyosaki’s development and will shape the decisions he makes as an adult.


Lessons in Assets and Liabilities:

Unfortunately, Poor Dad goes on to lose his job, blame others for his failures, and die in debt. Rich Dad goes on to be even more successful than ever. The older Kiyosaki becomes, the more and more he chooses to live by the lessons of Rich Dad. Kiyosaki learns that the goal is not to become “rich” but to become wealthy as given by the definition of R. Buckminster Fuller, “Wealth is a person’s ability to survive so many number of days forward” (p. 70).

“There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.” (p. 5)

This is a pivotal lesson in Rich Dad Poor Dad. Kiyosaki teaches us:

• “Rich people acquire assets. The poor and middle class acquire liabilities they think are assets.” (p. 46)

The difference between these two things is paramount:

• Assets put money in your pocket. Liabilities take money out. (p. 48)

As common sense of an explanation as that may sound, Kiyosaki spends many pages in Rich Dad Poor Dad illustrating how the poor and middle class misunderstand this concept:

• The poor and middle class focus only on increasing their income. They then use it to buy more liabilities. And when they have too many expenses, they again try to make more money. This is the very essence of the rat race.

• By contrast, a wealthy person buys “assets”. Assets can be real estate, stocks, bonds, notes, intellectual properties – anything that will generate more income (Rental income, interest, dividends, royalties) for them each month. (p. 53)

• This is point in Rich Dad Poor Dad where Kiyosaki makes his infamous “a home is not an asset but a liability (p. 61)” claim. By his definition, your house does not put money in your pocket that you can physically use each month. Rather, it takes money out because of the mortgage. Thus it is a liability.


Introduction to the Concept of Passive Income:

Introducing the World to the theory of collecting assets that will create income is how Kiyosaki became associated with the concept of passive income. He goes on to describe how he especially focuses upon assets that do not require his presence (p. 77):

• Stocks

• Bonds

• Income generating real estate

• Notes (IOU)

• Royalties

• Anything of value that is market ready

Since Rich Dad Poor Dad’s publication, a legion of other websites and books (including more from Kiyosaki) have expanded upon this concept and these methods.

“My highly educated Dad always encouraged me to work your way up the corporate ladder. My rich Dad said why not own the ladder?” (p. 88)


Leveraging Taxes:

Kiyosaki considers taxes to be one of the ultimate expenses; so much so that he devotes the entire chapter to the subject. Kiyosaki explains how taxes have evolved over the years and how they are used to exploit those who do not understand them properly.

One of the differences between the rich and the middle class / poor is that they use the legal corporate structure to their advantage when it comes to taxes (p. 85). In summary, they use the laws as follows (p. 92):

• Business owners = Earn money, spend their money, then pay taxes on what’s left

• Individuals = Earn money, pay taxes on that money, and then spend what’s left


Kiyosaki Encourages Us to Learn:

A re-occurring theme in all Robert Kiyosaki books is to develop your Financial IQ and to continue learning the traits that will make you wealthy. He opens Chapter 5 by discussing how developing your Financial IQ will help you proposer greatly (p. 95). The reason for this is because Kiyosaki feels the most powerful asset we have it our mind (p. 100)”. He says that to get rich, we have to evolve beyond the “old ideas” and recognize new paths to wealth. To develop our Financial IQ, we must concentrate in 4 areas (p. 106):

1. Accounting – Our ability to read and understand financial information

2. Investing – The science behind finances

3. Understanding the markets – The science behind supply and demand

4. The law – The rules of the game and how they apply to what we do

In Chapter 6, Kiyosaki continues this discussion with one of my favorite stories from Rich Dad Poor Dad:

• A young female reporter from Singapore tells Kiyosaki she wants to be a best-selling author like he is.

• Kiyosaki recommends she take a course on selling. The reporter is appalled! Why should she “lower herself” to becoming a salesman when she is a well-educated writer?

• Kiyosaki points out that he is not a best-“writing” author. He is a “best-“selling” author. The girl is not amused by the lesson. (p. 121)

Kiyosaki goes on to talk about how your employment should be used to help you acquire the skills you need to run your own business someday. The most reason why is to learn how to lead other men.

“If you’re not a good leader, you’ll got shot in the back, just like they do in business” (p. 122)

Rich Dad Poor Dad explains that you don’t need to be highly technical or specialize in any one specific thing. You just have to know a little bit about a lot. There are plenty of other smart people you can hire to work with you and make a part of your team (p. 129).


Overcoming Obstacles and Getting Started: 

Rich Dad Poor Dad concludes with Chapter 7, 8, and 9 discussing some of the common complaints and excuses people have about going down this path. Kiyosaki summarizes them as fear, cynicism, laziness, bad habits, and arrogance (p. 131). He then gives us some words of wisdom and 10 tips for implementing these lessons into our own lives.


What Rich Dad Poor Dad Means to Me:

I was luck. This book came out at just about the same time I was finishing college and beginning life as a young adult. And like most young adults, I thought that the goal was to become “rich”. I thought that having a big house, nice car, a boat, vacation homes, etc all were signs of being rich. And like most people, I was wrong.

I remember referring back to the section on assets and liabilities many times. The concept was so simple. All those things I thought you get when you’re rich were really only trophies – they were things Kiyosaki would consider to be liabilities.

What I really should be focusing on are things that will make me money, especially those things that could generate wealth while I sleep – passive income!

As I started my first job out of college, my goal would not be to get promotion after promotion so I could simply increase my income. My goal should be to learn! Learn how to lead other men, learn how to work with customers, and learn how to run a business.

Developing my own Financial IQ and understanding of money would become a lifelong passion. I found myself naturally gravitating towards reading anything financial – knowing good and well that it would benefit me to learn more about the subject.

To this day I still screen most of my purchases according to the lessons of Rich Dad Poor Dad. Will this purchase be for an asset that will make me more money, or will it simply be just another liability that will take money out of my pocket. To live by such criteria not only helps keep your expenses low, but it also shows you just how frivolous most of our wants really are.

Perhaps the greatest take-away from Rich Dad Poor Dad was the “idea” of passive income. It became like an addiction for me. I understood that stocks could make a person rich while they slept. I could have surmised that real estate would do the same as Kiyosaki is obviously a big fan of the real estate market. But what else would fit the Rich Dad Poor Dad model? How could I use this formula to create a perpetual stream of income the way that Kiyosaki had done with real estate? In a lot of ways, you might say that Rich Dad Poor Dad was the seed for developing this blog and many of the ideas we explore today.

I don’t fully agree with everything in Rich Dad Poor Dad or that Kiyosaki preaches. I went to graduate school. I save money for retirement in a 401k. Rich Dad Poor Dad teaches you to develop your own mind and draw your own conclusions about creating wealth. It is only natural that not everyone will agree on the path.

About the only criticism I had of this book was the way in which Kiyosaki portrayed his own father. Although he never mentioned any ill-will towards him, Kiyosaki clearly paints Mike’s Dad and his own father at two polar extremes – often times with Kiyosaki’s real Dad on the short end of the stick. And although Rich Dad’s lessons may have ultimately been better, I could not think of honoring the memory of my own father (or my son to me) in this manner. However, this is only my personal opinion on the matter. I do not know nor claim to know the full history behind Kiyosaki and his father’s relationship. Kiyosaki does seem to make some redemption towards the end of the book by discussing how Educated Dad helped develop his sense of compassion – a characteristic that made Kiyosaki into “a socially responsible teacher who is deeply concerned with this ever widening gap between the haves and the have-nots” (p. 129).

Obviously (as you can tell by the analysis within this post), I would recommend that anyone read Rich Dad Poor Dad. The story is interesting, entertaining, and very easy to understand. Above all else, the lessons are vital and may change the way you think about creating and spending your money. For that reason alone, I would give it a try!

Readers – Who has read Rich Dad Poor Dad? Did you love it? Hate it? Did you find the advice practical? Even if you haven’t read it, what do you think about the concept of building “assets” that will create multiple streams of perpetually generating income?

rich dad poor dad, robert kiyosaki

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Related Posts:

1) More Passive Income Ideas

2) Top Money Book Recommendations

3) How Much Money Would I Make If I Rented Out A House?

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  1. says

    I like this book and hated it at the same time. While I found some of the lessons valuable, I couldn’t felp but feel slightly dirty reading it. It was a little condescending and arrogant at times. Overall, I gave it a thumbs down!

    Thanks for the review!
    Holly@ClubThrifty recently posted..Why I Prepay My MortgageMy Profile

    • MMD says

      That’s funny. I also had mixed emotions the first time I read it. The tone is definitively a little know-it-all.

  2. says

    I really enjoyed the book when I read it a few years back. It had been a totally different perspective on some things that I had read about managing money. And almost everything he talks about makes sense! Houses are a liability when you buy one that you can’t afford and buy a large one. The point he makes about larger houses come with larger utility bills, higher taxes, more repairs, etc, is one many people don’t think about. So when you think in those terms it really is a liability.

    I loved the chapter on taxes too. I know a lot of business owners and frankly it’s a great way to work the system. I shouldn’t say it like that, because it’s all 100% legal, but that’s how the “average Joe” feels when reading that part.
    Jason @ WSL recently posted..Blog Income and Site Statistics – July 2012My Profile

    • MMD says

      I also found the chapter on taxes very interesting, especially when I read it when I was younger. There do seem to be a lot of advantages to having a company and working the system.

    • MMD says

      Even if you never do read it, you could always browse the chapter on assets and liabilities (Chapter 2) if you see it in the book store. Despite what anyone says, there’s plenty of value in that chapter.

    • MMD says

      It’s definitely a love it or hate it book. You don’t have to believe everything in it, but I think the main idea is worth learning about. I hope you enjoy it when you finally do read it!

    • MMD says

      Thanks! I also found his assessment of the poor and middle class to be interesting. It has since been echoed in so many other books, and reaffirmed that the rich use their money to buy things that will make them more money!

  3. says

    I rarely agree with everything any one of these types of books say, but I love learning little bits and pieces from each one. I like people who buck the system, too, so I’ll have to check it out. Thanks for the review!
    femmefrugality recently posted..Frugal Cooking 206My Profile

    • MMD says

      You’ve brought up the best point about this whole review! You don’t have to agree with everything you read – especially in this book. Despite what I read, I still have a job, went to grad school, etc. My take-away from the book (that I’m sure most people can agree with) is to use your brain and develop your own financial IQ. I’ve never stopped thinking about that – make my own decisions about what’s best for my finances and never stop learning more about how to become rich!

    • MMD says

      Thanks guys! I’m glad you liked it. The advice is pretty useful no matter when you read it. The whole section on using your assets to develop income (passive income) is a monumental concept – one that if properly developed it could lead to some pretty powerful changes in our lives!

    • MMD says

      Kiyosaki really loves his real estate, doesn’t he? The fact that he thinks so low of stocks was one of my dislikes about the book. He really lets loose with how much he doesn’t care for them in later books. Oh well … everyone has their preference!

    • MMD says

      I think its at least worth a shot. Kiyosaki is a love him or hate him author. There are many things I don’t like about him. But I think some of the principles expressed in this book are extremely useful, and for that it is worth the read.

  4. says

    I’ve read it and his cash flow quadrant book which expands on concepts he mentions in his first book. It is a book that makes you think and yes challenges 9-5 thinking, though he seems to be high on risk and tends to use debt and leverage more than I could stomach. This book isn’t for those struggling to make ends meet, but for those with ‘disposable’ income.

    In his cash flow quadrant, he discusses investing in greater depth–good follow up to 1st book. I learn bits and pieces from every book I read, but rarely accept and apply everything.
    Brent Pittman recently posted..10 Reasons Why Personal Finances Are Like The Settlers of CatanMy Profile

    • MMD says

      Kiyosaki goes on and on about the Quadrants in Unfair Advantage. That is one of the areas where I start to dislike Kiyosaki because he really starts to dump not only on us common workers but also on small business owners. Basically to win in the Quadrants, you have to have a large corporation or invest other people’s money regularly. Not very good advice for the common man.

      This is why I liked this book. Rich Dad Poor Dad does have useful advice for common people. The lessons on assets vs liabilities, taxes, and developing your financial IQ are all things that we can all agree will improve our finances.

    • MMD says

      I liked the book too even though there were a ton of things he says that I didn’t necessarily agree with. The allure of passive income was a very powerful concept. In theory, it works. One thing I would have liked more was how exactly to get there!

  5. says

    What a fantastic review to one of my favorite books of all time! I’ve been meaning to re-read this book, as it’s been about 5 years since I first read it. Now I don’t have to because you’ve pretty much covered everything in this review!

    I’m currently reading, “Why We Want You To Be Rich,” co-written by Donald Trump and Robert Kiyosaki. Another great and inspiring book by two people who have already lived it!
    Matthew Allen recently posted..Building a Niche Site (the Dumb Way) – Follow AlongMy Profile

    • MMD says

      Thanks. I was hoping to do a pretty comprehensive review, but I purposely left out some parts so you’d still have something look forward to when you read it.

      Is that other one any good? I think Trump is hilarious, but I had reservations about actually reading or following any of his material…

  6. says

    I “listened” to the audiobooks during my commutes to work. I find the assets/liabilities concepts to be very informative. After listening to audiobooks, I realized that I do not retain as much information as I probably would have if I read the actual book. I thinking of purchasing the book to give it another read. What do you think of audiobooks?
    Ron @ Running From Debt recently posted..Money Talk With the WifeyMy Profile

    • MMD says

      You want to know something funny – I drive 1 hour to work everyday and I’ve never bought or checked out an audiobook to listen to on my commute! I have no excuse why. I drive with a colleague on most days, so I guess that would be pretty weird, right? :) To be honest, there’s a really funny morning show on the radio in my area, so I’m content just listening to that and being entertained!

  7. Danny Burns says

    Thanks a lot pertaining to discussing all of us relating to this bring up to date. I do hope you will not likely acquire worn out in generating articles as informative because this.


  1. […] Money Design reviews one of the classics, Rich Dad Poor Dad. What a great book to turn everything you’ve ever thought on its head. This might be the only […]

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