Rich Dad Poor Dad Summary Chapter Wise

Suppose you were to spend the average American salary of $56,516 annually. 

Put another way, even if you could save an unrealistic 50% of your salary and stash it under the mattress every year, it would take you 6.5 million years to keep your way to Elon’s wealth.

So we can’t all be the wealthiest people on the planet, but how about a million dollars? 

Surely that couldn’t be that hard. Let’s say you’re the average engineer earning $80,000 per year. 

It would take 16 years to earn $1 million, but that doesn’t include rent or food cost of living.

If you diligently and consistently save 10% of your earnings, it would take 156 years to keep your way to a million dollars. 

The average teacher. Two hundred seventeen years, bartender 625 years. 

For the rich, the measure of wealth is time.

How many days, months, or years could you survive on your savings if you lost your job tomorrow? That is the definition of wealth. 

So how long could you survive?

Rich Dad Poor Dad will give you the financial intelligence that you probably missed out on growing up, the secret financial intelligence that wealthy families pass on from generation to generation, 

The education system and your parents forgot to teach you. 

Not getting this information is why many people remain forever stuck in the rat race.

By the time you complete reading the Chapter wise Summary of Rich Dad Poor Dad, you will know 95% of everything this book offers. 

You will have a bird’s eye view of all the most critical concepts and quotes that will change your perception of wealth and guide you on your journey to financial freedom. 

Before we start Rich Dad Poor Dad Chapter Wise Summary, here is a small introduction to the book.

Introduction

Rich dad, poor dad. 

The story of two fathers. One has a wall full of degrees and diplomas.

One, a high school dropout after death will leave next to nothing behind except debt. 

The other will have died one of the wealthiest men in Hawaii and will pass on his empire to his children.

Rich dad, guys, and two boys are on a journey to best use their minds in finite time to create wealth through investments and business.

This story shows the difference between the two sides; I can’t afford that, and how can I afford that? 

His poor dad would say things like, I’ll never be rich, and his prophecies became true. 

His rich dad, however, even after going bankrupt and having $0, would say I’m a rich man. 

You must understand being poor and being broke are not the same; there’s a difference.

“Broke is temporary. Poor is eternal.”

Rich Dad Poor Dad Chapter 1 Summary

Lesson one: The Rich Don’t Work for Money.

Lesson one: The Rich Don’t Work for Money.

The rich don’t work for money; the poor and the middle class work for money. Rich have money worked for them. 

When Robert Kiyosaki, the author of this book, was nine years old, his best friend, Mike, asked his rich dad, Mike’s father, How to make money?

Before long, they were both working within rich dad’s companies.

The only problem Robert had was his salary, 10 cents a week, a poverty wager he seriously thought about quitting every week that passed. 

Who was this guy exploiting us for 10 cents a week? He would ask himself. 

It was at this moment in time that rich dad gave them their first lesson on the topic of money.

Life pushes us around, some people give up, and others fight. 

If you learn the lesson to move on, they welcome life pushing them around. 

Most people leave their jobs because they aren’t receiving enough money. They would’ve already quit, but the wealthy see it as an opportunity to learn., one of life’s biggest traps.

They work hard for little money, clinging to the illusion of job security, three weeks’ vacation, and a sparse pension.

Two emotions control the life of people, fear and greed. 

Here’s how the pattern goes. 

Your fear of not having money motivates you to work hard, then the paychecks begin, and your desire and greed for new cars, products, shoes, and clothes start.

You want more things, so you work harder for that promotion. 

Then the pattern is set, and you’re stuck in it. You get up, work, come home, and pay your bills. 

Your earnings lead to increased spending, and this is the rat race to break the boys out of the nine-to-five mentality driven by fear and greed.

Eventually, the rich dad cut down the two boys’ wages to zero. 

Robert didn’t dare tell his poor dad he worked for nothing. 

They began working solely for knowledge, and the rich dad forced them to think of ways to start generating their income. 

One day two older comics were left lying around one of rich dad’s stores, which inspired them to open their first business.

They recovered the outdated comics and opened a library in their basement. 

Classmates paid 10 cents for entry. They spent the sister a wage of $1 a week. 

Before they knew it, they earned $9 and 50 cents a week without even needing to work; this was the beginning of their journey of not working to make money. But making money works for them.

Key lesson. 

Getting a job is just a short-term solution. 

The long-term challenge of building your net worth is getting enough to pay expenses. 

The more you get paid, the higher your expenses; this is human nature, and fear and desire drive it. 

Once you get stuck in this cycle, you are forced to work for someone else for the rest of your life.

Rich Dad Poor Dad Chapter 2 Summary

Lesson two: Why Teach Financial Literacy? 

Lesson two: Why Teach Financial Literacy? 

It’s not how much money you make. It’s how much money you keep. 

If you’re looking at school to make you rich, you’re looking in the wrong place. The education system’s primary objective is to train you to become a good employee, but it does poorly in making you a good employer.

Things like managing your finances and building wealth aren’t taught to you by the education system in its current state. 

You can only rely on yourself to use this knowledge and acquire assets that allow you to generate an income. 

The first pillar of financial literacy and escaping the rat race is understanding the difference between an asset and a liability.

“An asset puts money in my pocket. A liability takes money out of my pocket.”

Let’s quickly look at the income statement. 

Your income statement is the money going into your pocket. 

Expenses are the money going out of your pocket. Things like rent, food, electricity, and clothing, go here. 

An asset is something that allows its owner to generate an income.

On the other hand, a liability generates expenditure. 

Here is the cash flow of an asset. 

Here is the cash flow of a liability.

Rich people acquire assets, and the poor in the middle class accept liabilities that they think are assets.

Cash flow, patents, and cash flow tell how someone handles money.  

Below is the cash flow of a poor person. They have a job, get a salary, use all their salary on expenses, and usually live from paycheck to pay. 

Below is the cash flow of the middle class. 

They have jobs, and they get a salary, but most of their money is tied up in liabilities and expenses, home loans, car debt, credit card, debit, mortgage, repayments, and taxes.

They think their home is an asset, but they wake up one day with a liability column full of mortgage debt and credit.

Below is the cash flow of a rich person. 

The rich are always thinking of ways to grow their asset columns. 

Their primary income source is from assets they have acquired over time.

Your home is not an asset. 

By focusing on a home, you are building a liability rather than an asset. 

When it comes to houses, most people work all their lives paying for a home they might never own, incurring 30-year loans that they are tied to. 

You need to pay property tax, and these taxes rates are entirely out of your control.

You need to pay other home expenses; the value of your home over time does not always go up, and most important. 

The highest cost of a house is all the lost opportunities. 

If all your money is tied up in a house and going out through the expense column in mortgage payments, it’s not being used to grow your asset column.

Furthermore, think of all the other investment experiences you’re missing out on when you only focus on local residential real estate.

Here are some examples of tangible assets:

  1. An apartment generates monthly payments from a tenant, and the repayments allow you to repay the loan repayments on that property.
  2. A business that doesn’t require you to be present within it.

The home was an asset for the rich dad, and for the poor dad, the house was a liability. 

Below is how the poor dad’s income statement looks. 

Take note of the inflated liabilities. 

And here is rich dad’s income statement. 

Over time, he has grown his asset column.

Most people fall into this trap because they are financially illiterate; they don’t understand the relationship and differences between the balance sheet and the income statement. 

Why do people struggle? 

If you follow what the masses do, this is what your life will become. You have three people that you work for.

You work for the company to get a salary. You’re making the owner and the shareholders rich. 

If you have debt, you work for the bank; your mortgage and credit cards make the bank rich through your interest payments. 

Finally, you work for the government. The government takes a cut of your money before you have even seen it, and the harder you work, the more you pay in taxes.

Take a calendar year; if you’re a regular person, every dollar you earn from January 1st to March 16th goes straight to the government. That’s two and a half months yearly that you give to the government over 40 years. That’s almost six years you work to pay the tax. 

The rich understand this; the masses don’t. 

The primary way to get out of the rat race is to fully understand the difference between an asset and a liability.

Focus on obtaining assets that generate a cash flow, and keep your expenses and debts to the bare minimum.

And finally, which leads us to the next lesson. 

Key lesson; life is not about how much money you make; it is about how much money you keep and for how many generations.

The key to achieving this resides in having financial literacy and understanding the difference between an asset and a liability, the rich build and acquire assets. 

The poor and the middle class acquire liabilities that they mistakenly think are assets.

Rich Dad Poor Dad Chapter 3 Summary

Lesson 3: Mind Your Own Business

Robert Kiyosaki’s first professional job was far from glamorous. He was a photocopy salesman for Xerox, using the wages he earned. He invested in apartments, and after just three years, the revenue he was generating from his investments outpaced his salary.

It was then time for him to leave Xerox and look after his full business time. 

So, what tangible assets can you begin focusing your attention on? 

  1. The business that does not require your presence to operate 
  2. Stocks
  3. Three bonds, 
  4. Income-generating real estate, 
  5. Notes or IOU six.
  6. Royalties from intellectual properties like music scripts or patents 
  7. Other things that produce income or appreciation are cryptocurrency websites, YouTube channels, et cetera. 

Once a dollar goes into your asset column, never let it come out again. Feed your asset column. 

Robert thinks of every dollar he puts into his asset column as an employee. “Each dollar in my asset column was great, making more employees buy the boss a new Porsche.” 

The best thing about money is that it can work for you 24 hours a day and for generations.

The critical lesson; is don’t confuse your profession with your business. 

The middle-class focus on their profession, and as a result, they spend their entire lives building someone else’s business.

The rich, on the other hand, focus on building their businesses. Your profession concentrates only on the income section of your income statement.

Your business revolves solely around the asset column on your balance sheet.

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