Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money
Book corner: Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
Every now and then a book comes along which leads to a major shift in how Americans think. Uncle Tom’s Cabin changed perceptions about slavery. The Jungle woke the nation to the horrific labor and sanitary practices in factories. The Feminine Mystique shed new light on feminism and women’s roles in society. All those books struck deep into society’s conscious and led to major changes.
Robert Kiyosaki’s Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! might not echo the social justice that his revolutionary predecessors strived for. But this 1997 best-seller packed no less of a wallop. Hitting the bookstores just as the twentieth century was coming to a close, Kiyosaki’s book changed how Americans – and others around the world – think about personal finance.
Rich Dad Poor Dad is not an instructional book as one would expect in a college course, with Kiyosaki running through facts, charts and figures. A Japanese-American born and raised in Hawaii, Kiyosaki uses his own life and background to tell a simple, almost fable-like story. The “Poor Dad” in the title refers to Kiyosaki’s biological father, Ralph Kiyosaki, who worked as a educator most of his life. By all accounts a good father and an honest man, he was a big believer in standard, traditional education, wanting the younger Kiyosaki to be a good student and then go to college in order to get a good job – in other words, as Kiyosaki puts it, to be an employee. But he had little financial education, which is what Kiyosaki explains is knowledge of business, investing, accounting, entrepreneurship, real estate and all other related subjects whose knowledge one can use to make money and be financially independent – to be an employer in contrast to an employee. Kiyosaki explains that although his Poor Dad made a decent salary, he was able to save little of it due to his lack of financial education and poor career decisions later left him broke.
The ”Rich Dad” in the title is the father of Kiyosaki’s buddy Mike, a man of limited standard education but excellent and well-developed financial education. A savvy entrepreneur with his hand in many businesses, he was approached by the two pre-teens for lessons on getting rich. Rich Dad put them to work in his general store for little money, but provided something more valuable – lessons on business and entrepreneurship that would form the foundation of Kiyosaki’s life and career. The book is structured around the conversations he had with his Rich Dad and the advice he was given, and the contrast in mentality to his Poor Dad.
As Kiyosaki explains, the drive for financial education consumed him and drove his decisions well into adulthood. A mediocre student, he nonetheless graduated from the Merchant Marine Academy, and then as a US Marine, served honorably in Vietnam as a helicopter pilot. Kiyosaki was eligible to work in the maritime industry after the war, a job that would bring excellent pay, conditions, steady work and several months of vacation a year. But he instead enrolled at Xerox’s sales school – considered the best of its kind in the country – seeing it as a major key in his financial education. His need for independence was so strong that in later years, during hard times, he and his then-wife Kim slept in their car rather than the accept the charity of friends’ guest rooms.
Besides the lack of financial education in the school system – an issue that Kiyosaki raises several times throughout the book – Kiyosaki challenges conventional beliefs. He rails against purchases that are liabilities instead of assets, even arguing against home ownership. He discusses the mindset of money and wealth creation and how ordinary people – due to society’s conditioning to be employees – are held back by limiting beliefs. To be successful in wealth creation and to take control of your financial destiny, Kiyosaki argues, one must take calculated risks; inspired by his Rich Dad, he says that one must not think I can’t afford this but instead What do I need to do to be able to afford this?
In one of the few diagrams in the book, Kiyosaki introduces the cash flow quadrant (of which he would later base an entire book), which categorizes individuals as employees, self-employed, business owners, or investors. He discusses the advantages and/or disadvantages of each quadrant.
Kiyosaki hit a raw nerve in the personal finance-hungry public, turning him into an international finance guru. It has to this date sold anywhere from thirty to forty million copies and is noted as the bestselling personal finance book of all time. He – and Kim, who has a series of similarly-themed books intended for women – have subsequently published an entire series of finance books, each with its own spin, such as real estate, investing, gold/silver, multi-level marketing, etc. These include two collaborations with Donald Trump, Why We Want You to Be Rich and Midas Touch: Why Some Entrepreneurs Get Rich — And Why Most Don’t. Kiyosaki also markets a board game, Cashflow, that attempts to teach the basics of financial education and how to exit what he calls the “rat race”, which is his description of the sometimes grueling life of dependency that employers place upon their employees and the financial mediocrity that ensues.
Rich Dad Poor Dad is not without controversy. Two of Kiyosaki’s businesses prior to his turning full-time to financial education went bankrupt, fueling claims that he is not as savvy as his image projects. Some experts and competing finance writers claim that he gives poor, substandard – even dangerous – advice. Another claim regards the identity of the “Rich Dad”. His name is not revealed in this book nor the follow-ups in the series and Kiyosaki was silent about this issue for several years, leading to accusations that the book is complete fiction. He has since revealed the identity of the man, plus his friend referred to as “Mike”. Kiyosaki explained that many years ago, upon the book’s initial publishing, the family requested anonymity, to which he respectfully complied.
Another claim, not without merit, is that this book gives little advice in general beyond the series of anecdotes and soundbites. Kiyosaki has not refuted that, and has claimed that it is the intention of the book to raise these issues and to simply convince people of the need – and to direct them onto – the path of financial education.
The book is worth reading. You won’t come away with the knowledge to pick stocks, examine real estate, understand tax laws or read a financial statement. But you’ll be immediately reaching for books that do – and that, according to Kiyosaki, is the intention.
If you want to read another Book Corner article, please visit this review by Evan Rothfeld: https://www.angrymetatraders.com/post/dangerous-and-unpredictable-duties-during-the-vietnam-war
