Robert Kiyosaki used to be THE top personal finance guru. His name and book have practically become synonymous with what financial management of household operations should look like. There are plenty of people who have enthusiastically read the book “Rich Dad, Poor Dad”. But when his own company went bankrupt, and when the enthusiasm wore off, skepticism about what he was actually teaching in his book began to emerge. So let’s take a look at which advice has survived the test of time and the initial hype.
1. Financial education and thrift
One piece of basic advice that will always stand up to everyone is Kiyosaki’s emphasis on financial education. Yours, your children’s, everyone’s. Admittedly, this is one area that is still often lacking in schools today. From a young age, it is important to practice making a financial plan, how much things cost, how much needs to be saved, how much can be spent.
Hand in hand with the importance of education in money and budgeting is the advice that something needs to be saved from every paycheck. Kiyosaki says the rich differ from the poor in one important way: The poor spend first and then save from what’s left over, while the rich save first and then spend from what’s left over.
Tip: If you want to learn about passive income, here’s a good article for that
2. Take your finances into your own hands
Like any good American speaker, you can hear a resonant voice in this book calling and encouraging, “Come on! You can do it! Only you are the creator of your own happiness! Take control of your finances! No one else will do it for you! …” The classic spirit of the American dream. The energy it sends out into your environment is so contagious that you sit on the edge of your seat and can’t wait to put it all into practice.
By promoting a responsible approach to life and not relying on anyone else, Robert Kiyosaki has definitely won me over, and once again, this is advice that I will definitely be happy to pass on to my own children. Despite the American rhetoric, which reads well when one is a teenager, but a little worse years later.
3. Assets versus liabilities! What to buy?
One of the more specific pieces of advice on how to make money that needs to be highlighted is Kiyosaki’s division of things into assets and liabilities. While this is not a division that would pass muster with an accountant, it is intuitive and can be understood by absolutely anyone. Assets are all things that bring in money, while liabilities are things that consume money.
The home you buy and rent is an asset. Whereas a car that costs you money all the time is a liability. But at the same time, an apartment that you live in yourself is a liability because you have to keep investing in it and repairing it. Whereas a car that you rent for a delivery service is an asset. And Kiyosaki, of course, advises investing in assets, not liabilities.
While you won’t find out what business to be in specifically here (other than Kiyosaki’s clear preference for the world of real estate), the idea of assets and liabilities is very simple and I believe can be useful to many.
4. What is the difference between good and bad debt?
A fourth piece of advice that is definitely worth using is the lesson that there are good and bad debts. If you take on debt for consumption, for Christmas and for holidays, then it is bad debt that will not bring in any money. On the other hand, debt to invest in things that will bring money is good debt, and it is certainly advisable to have such debt. So borrowing money is not always a bad decision.
In principle, this is a similar idea to point 3. Debt to acquire assets is good. A mortgage to buy a home that you will rent out is good. Debt to buy a car that you will pay off and still require more money is bad.
5. Learn from your mistakes! Take risks! Think big!
Kiyosaki’s book is interesting not so much for the specific financial advice (of which there isn’t that much), but rather for the mindset and worldview. Your thoughts and actions must be big, or you will always remain poor. Think big, dream big, act big to make your dreams come true. Learn! Keep learning, because in today’s world it is the mind and its ability to adapt to new conditions that will make you truly rich.
Don’t be afraid to take risks and lose. The difference between the rich and the poor is that the rich try again and again, they don’t get beaten and they don’t quit what they set out to do until they win. The poor fail and give up. The rich learn from their mistakes.
What I would rate as most positive is Kiyosaki’s attempt to give the reader the courage to see himself as the greatest asset, to educate himself, to take risks, to dream and to do what will one day make him rich.
Tip: If you don’t want to end like Kiyosaki, here’s an article on lessening the risks of investing
Should you read a book by Robert Kiyosaki?
Maybe I shouldn’t be so strict and possibly state my opinion in a roundabout way. But I would say unequivocally and succinctly that I would not. But maybe that’s more because it’s not my style and I feel it’s possible to find the same and often better advice elsewhere. And at the same time avoiding the more controversial part, which I personally found downright repugnant.
Kiyosaki revels in stereotypes. The rich, gutsy salesman who personifies the American Dream, which anyone can achieve, wins out on the full frontier. His rich dad is a smart and fearless businessman. While those who are employed are losers, wimps and jerks who will always suffer from poverty.
Tip: If you’re looking for a book on financial literacy and investing to get you started, I’d recommend The Richest Man in Babylon.
Likewise, the advice about paying yourself first and then everyone else, including people you owe money to or before paying taxes, is the exact same practice that brought his own company to ruin. Not entirely moral from my perspective. Although he takes the idea further by saying that after he pays himself, the need to earn money to pay his debts and taxes is what motivates him to work harder. Still, I’m not entirely convinced and I think some self-reflection would be in order here.
Perhaps the correct answer to the question “Read the book Rich Dad, Poor Dad?” is “Whatever”, just don’t be fooled by his American style and big talk. And pick and choose what you find beneficial. I’m sure those ideas are in there.
P.S.: Although Robert Kiyosaki tried to convince readers that this was a true story, it has become clear over the years that the “rich dad” is only a fictional character. Which is not a bad thing in fiction, but disappointment is inevitable if he’s been trying to convince you all along that this is a story based on a true event.