What is Rich Dad Poor Dad
Rich Dad Poor Dad has sold millions of copies. What is the secret behind its success? It is a story of Rich Dad and Poor Dad’s thinking. Can you learn to be rich?
There are some anomalies in the story of Robert Kiyosaki, but does it matter? Can you learn from his way of doing business?
- Prior to his 1997 publication of Rich Dad, Poor Dad, Robert Kiyosaki never had any documentation of the wealth he supposedly amassed (Forbes)
- There really wasn’t a rich dad, even though his book specifically claims there was one (Smart Money Magazine, February 2003)
Rich Dad Poor Dad is really a concept. Robert Kiyosaki wrote the book, I believe, to show the difference in thinking between an attitude of wealth and an attitude of non-wealth. (Poverty is too strong a word.)
Does he have a point? Are there some differences in thinking and habits which mean that it is easier to become wealthy, if you have been brought up to think and believe in a different way?
If he is right, there are differences, then can we change our way of thinking to make it easier to become wealthy?
He does advocate dropping out of education and not getting a traditional job. This may be reasonable advice for some, but, I believe, not for all.
Where Rich Dad Poor Dad Comes from
Robert was born in April 1947. He has been “around the block,” as we say.
He is not stupid and he has definitely learnt how to make money. The million-dollar question is:
“Can he teach you to make money as well?”
For me, there is a second question: “Are you prepared to do things which may be morally questionable or legally dubious, in order to get rich?”
Rich Dad Poor Dad How it works
If we grow up in an ordinary home, (if there is such a thing,) one where people go to work to make a living and usually spend a little more than their income, but make do, then this environment will govern our expectations of how to survive in life and possibly limit what we can achieve.
If, on the other hand we grow up in a rich family where the colour of our helicopter is more important than the price of a litre of milk, then our expectations of what we can do will be very different.
Here is my first piece of financial advice, I cannot lay claim to this myself, it was given by a seriously “rags to riches” millionaire in Denmark.
If we spend more than we earn we are in debt and constantly struggling, see no.1.
If we spend less than we earn, we a surplus, or savings, see no.3
What a lot of people dream of is no.2. That means making a lot of money and our spending stays the same.
Reality is that if you are in the habit of spending more than you earn, you will always do it. Even if you earn a lot of money, you will still spend more than you earn and still be in debt.
The lesson here is very simple and often hard to accept, “Spend Less than you earn.”
What is the Effect of Language?
We use different language to discuss ourselves and our future.
To Quote Robert Kiyosaki: His poor dad would say: “The Love of money is the root of all evil.” His rich dad would say: “The lack of money is the root of all evil.”
If you have a think about this, you can see his point. A lot of crime is committed by people who need money. Money is an essential in our lives, just like food and water, so how can money be evil. We are allowed to love food, love drink, love cars, furniture, paintings etc. etc. But, money is needed to acquire all these things.
The rich expect things and figure out how to get them. The poor expect to struggle to get what they want. A lot of this is the language we use when we talk about life and especially money.
Let’s look at 2 sentences:
- If I make a million.
- When I make a million.
What is the difference? The first assumes it might not happen. The second assumes it WILL happen.
You do not need to be rich to talk in a different way, a way that will help you.
Instead of thinking about if you will pass your exam, talk about “when” you will pass your exam. It really does help; try it.
Rich Dad Poor Dad, the Man
Robert Kiyosaki, in 1974, joined Xerox as a sales rep. He soon started a company of his own, “Rippers,” selling Velcro based products. This company went bankrupt.
He started another company, which also went bankrupt.
This is not necessarily bad since bankruptcy can be the result of making mistakes. Learn a good lesson from mistakes and that can lead to success.
Kiyosaki and some friends bought out a company he liked called E.S.T. The changed the ethos of the company into an educational one rather than sales based.
Kiyosaki sold the company in 1994 and was later to use their model of business in another form, under another name.
In 1992 Kiyosaki brought out his first book, called; “If you Want to be Rich and Happy, Don’t Go to School.” This generated a lot of controversy, understandably. He suggested that parents get their children to invest in property and real-estate instead of getting an education.
When he was challenged over this, he sidestepped it neatly by explaining that he meant that schools did not teach enough about business and making money.
He is not averse to encouraging people to do things which others would find immoral or possibly illegal.
His wife, Kim, has a large investment in real-estate and seems to be successful in what she does.
What Does Rich Dad Poor Dad Do Now?
In 1997 Kiyosaki started “Cash Flow Technologies Inc. This is the business that uses the book title “Rich Dad, Poor Dad” as its theme.
His books and seminars are often full of stories about his successes and those of his “students.” This form of “training” is often criticized as being full of emotional content and low in real content.
The main criticism of companies using the “Rich Dad, Poor Dad” brand is that they do the same thing and upsell students into very expensive seminars whi9ch promise enormous riches.
These “seminars / courses” often cost $10,000 to $50,000.
So What are the Lessons We Can Learn from Rich Dad Poor Dad?
If I can digress with an example outside of property, I think I can explain something subtle and simple to you.
There is a market run by Mr. R.
The market traders
- Pay Mr. R. to pitch their stalls and sell their wares.
- They have to bring the goods to the market,
- Obey restrictions, such as goods they can sell,
- Leave by a certain time and
- Clear up their rubbish.
- Electricity and other costs are extra.
It costs $50 to rent a pitch and an extra $10 for electricity supply, which half of them use.
There are 300 stallholders.
A stallholder may sell $400 of goods at 50% profit. That means he has made $200.
He pays Mr. R. $60 and is left with $140.
Mr. R. collects 300 rents at $50 and 150 at $10 for electricity. That is $16,500.
He pays $2,000 for the pitch $500 for the electricity. His profit; $16,500 – $2,500 = $14,000.
Which would you rather do? Work hard all day for $140 or pay someone to collect the rent for you and make $14,000?
Remember that if it rains, the stallholder still has to pay for his pitch but not many customers will come, his sales will be low.
This is a lesson in Scaling a Business.
Spend less than you earn is a magical rule.
What Can You Really Learn from Rich Dad Poor Dad?
Stories have been used to pass information and teach people as long as people could speak.
- Robert Kiyosaki tells stories.
- They are not necessarily 100% true.
- You can learn from stories.
- Are the lessons useful to you? They might be.
- Rich people are brought up to think big.
- Poor people are often brought up to think in a limited way.
- You can choose how you think.
- Some people cheat and bend the rules to become wealthy.
- You do not have to cheat or bend the rules to become wealthy.
Do not take Kiyosaki literally in what he says but look at the real meaning behind the stories. The market example above is a story. It is based on fact and simplified. (There are insurances and fire regulations and all kinds of things to consider.)
I do not suggest you break the rules. I personally do not believe it is necessary.
Can You Get Wealthy by Following Kiyosaki’s Rich Dad Poor Dad Recommendations?
It might help. There are other ways that are more sustainable. Remember that he has been bankrupt several times and what he earns money from is franchising out his Seminars and courses. Other companies use his name to associate their business with him. They pay him for the privilege.
Which would you rather do?
- Travel all over the country running the same seminar again and again and living in hotels.
- Stay on holiday in the Bahamas while 45 companies pay you for the right to use your name, over and over again.
How Can I do What He Does?
- Language: When you talk to yourself, (we all do,) say “I can…”
- Learn before you act. Read the books. Research the internet.
- Decide what you really want. Just wanting loads of money does not work. How? When? How much? Get a piece of paper and write it down.
- Plan what you are going to do and give yourself deadlines for doing it.
- Find your stumbling blocks and research ways round them.
- Think in terms of scale.
- Learn as much as you can about the area of business you are going in to.
- Calculate carefully the risk and be prepared to lose it all.
- Losing teaches us lessons. Kiyosaki went bankrupt several times.
If I can give an example of how trading Foreign Exchange or the stock market works:
Two rules are dominant:
- Let your winnings run.
- Get out of your losses quickly.
This means your gains exceed your losses. You win.
In business, as in life, you will sometimes lose. Learn from this and become wiser and stronger. What most people do is the opposite: they:
- Leave their losses to run, hoping things will change for the better.
- Get out of a deal quickly when they have made a small profit.
This means your losses exceed your gains. You lose.
The Lessons in Rich Dad Poor Dad
The real lessons are about the mentality of attitude to money. It is not about real-estate or investment bonds or other investments.
It is about opportunity and attitude to opportunity.
Was There a Rich Dad?
Unlikely as it seems. Yes, there possibly was. Does it matter? No.
Maybe Kiyosaki’s idea grew into the Rich Dad being himself.
He wants you to see him as the Rich Dad you never had. He will tell you the secrets of wealth.
But he does not do that. He tells a lot of stories and you have to read into the stories to find out what getting wealthy is really about.
Is Rich Dad Poor Dad a Scam?
If you want it to be, yes it is.
If you want to squeeze the Kiyosaki lemon dry and see how he operates by reading his books, you could gain a lot from them.
There are other books and plenty of seminars and courses.
I do not recommend the seminars, workshops and courses. Most of them are just sales platforms for over-priced upsells that can run into $10s of thousands of dollars.
If you really want to be rich:
Ask yourself what you will do with the money and if you could gain your dreams without being rich.
Be prepared to work hard at it. (Kiyosaki did.)
Be prepared to take risks, (calculated ones.)
Look hard for opportunities, (Kiyosaki certainly did.)
Be prepared for failure, (Kiyosaki failed several times and you learn from mistakes.)
Be prepared for success, (Kiyosaki copes very well, would you?)
Plan to scale your success up so that you are not doing all the work, Kiyosaki did.)
Rich Dad Poor Dad, the Outcome
The opportunities that exist today are probably very limited in real estate.
The world is going “virtual,” with TV, smartphones and the internet.
I feel that most of Kiyosaki’s advice is general and he does not give a specific, step-by-step approach to getting wealthy.
There are ways of starting for nothing in internet business and if you would like to hear about how I started and how you can, as well, email me. (BTW, it is genuinely free to start and there are no expensive seminars, workshops or courses to buy.) Once you have taken as much time as you like to try out the program, you can choose to take the professional training, if you want to.
If you would like to leave a comment, please do. I will answer all comments and enjoy hearing from people who have a viewpoint or ask questions.