Anyone in the self-help or training circles will tell you about this book and has been cited as the start of many entrepreneurial careers. It was also my first book in this genre and I listened to it repeatedly when I was first starting out.
The book chronicles Robert’s childhood as he is taught about money by his two male influencers, his own father a successful educator in Hawaii (poor dad) and the father of his friend who lives in a run-down house and drives a beaten-up car (rich dad).
The crux of the book is that success is dependent on your mindset and financial knowledge not on your position in a job. Robert’s own father pushed him to get a good job with a good pension to protect him in old age, whereas his friends’ father taught him to take jobs to learn, initially making Robert and his friend work for free in one of his stores.
The lessons from the book are clear, working for others and exchanging your time for money would never be a secure way of becoming rich, that, however, does not mean you should never work for others, the trick is to exchange your time for knowledge that you will be able to convert into money at a much higher rate than your salary.
The other lesson from the book is to make investments in yourself but also strategically to get your income to work for you. This means taking part of your weekly or monthly income and investing it to make more money. This accumulation should then be reinvested back until the income from your investments is greater than your outgoings.
At this point, the term financial freedom is introduced as a concept for people to aim for, a position where the income needed to pay for your lifestyle is produced from the returns from your investments not from your work.
The book itself is a great way of introducing the idea of financial education to the masses, however, some of the investment strategies are different for the UK marketplace. That shouldn’t however put you off the book. If the concepts from the book were taught in schools the consumer society we have at the moment may be reduced a little.
One of the concepts of the book is that of classifying everything as either a liability or an asset, with an asset being something that will put money in your pocket, whereas a liability is something that will take money out. this simplistic approach is a great way to quickly classify things.
However, where I disagree is that Robert suggests a house is a liability, this is a good example of something that is oversimplified. Of course, if you buy a house you will pay a mortgage on the property but you will also have maintenance and taxes on it. These come out of your pocket. But a house can also appreciate in value over time meaning that it is an asset.
Moreso, we need somewhere to live, if you take away the cost of renting a property, specifically to the UK market it is usually cheaper to buy a house than it would be to rent.
Conclusion
I would definitely recommend this book to those just starting out on their enlightenment, but it may be too simplistic for those who are already financially literate.
