Mastering Money Mindset: Insights from Rich Dad vs. Poor Dad

 Welcome to the journey of unraveling financial wisdom and wealth-building strategies in Robert Kiyosaki's renowned work, "Rich Dad Poor Dad." In this exploration, we delve into the insightful principles that distinguish the paths of financial success and shed light on the fundamental lessons that can shape your financial mindset. Join us in dissecting the key concepts and discovering how they can influence your journey towards financial prosperity.

Rich Dad Poor Dad (by Robert T. Kiyosaki)

In the body of the blog, we'll delve into Kiyosaki's core principles. Exploring the dichotomy between the philosophies of the "Rich Dad" and the "Poor Dad," we'll dissect the importance of financial education, the mindset behind asset acquisition, and the role of entrepreneurship in creating lasting wealth. Each section will provide actionable insights, enabling you to apply these principles to your own financial journey. Let's navigate through the pages of "Rich Dad Poor Dad" and extract the valuable lessons that can empower you to make informed financial decisions and build a prosperous future.

Many employers feel that advising their workers to mind their own business is bad for business. But for me, focusing on my own business and developing assets made me a better employee because I now had a purpose. I came in early and worked diligently, amassing as much money as possible so I could invest in real estate. Hawaii was just set to boom, and there were fortunes to be made. The more I realized that we were in the beginning stages of a boom, the more Xerox machines I sold. The more I sold, the more money I made and, of course, the more deductions came out of my paycheck. It was inspiring. I wanted out of the employee trap so badly that I worked even harder so I could invest more. By 1978, I was consistently one of the top five sales people at the company. I badly wanted out of the Rat Race. In less than three years, I was making more in my real estate holding corporation than I was making at Xerox. And the money I was making in my asset column in my own corporation was money working for me, not me pounding on doors selling copiers. My rich dad’s advice made much more sense. Soon the cash flow from my properties was so strong that my company bought me my first Porsche. My fellow Xerox salespeople thought I was spending my commissions. I wasn’t. I was investing my commissions in assets. My money was working hard to make more money. Each dollar in my asset column was a great employee, working hard to make more employees and buy the boss a new Porsche with before-tax dollars. I began to work harder for Xerox. The plan was working, and my Porsche was the proof. By using the lessons I learned from my rich dad, I was able to get out of the proverbial Rat Race at an early age. It was made possible because of the strong financial knowledge I had acquired through rich dad’s lessons. Without this financial knowledge, which I call financial intelligence or financial IQ, my road to financial independence would have been much more difficult. I now teach others in the hope that I may share my knowledge with them. I remind people that financial IQ is made up of knowledge from four broad areas of expertise:

1. Accounting

Accounting is financial literacy or the ability to read numbers.

This is a vital skill if you want to build an empire. The more

money you are responsible for, the more accuracy is required,

or the house comes tumbling down. This is the left-brain

side, or the details. Financial literacy is the ability to read and

understand financial statements which allows you to identify

the strengths and weaknesses of any business.

You can play CASHFLOW 

Classic on the web at 

www.richdad.com and 

learn how money works.

2. Investing

Investing is the science of “money making money.” This

involves strategies and formulas which use the creative

right-brain side.

Great opportunities

are not seen

with your eyes.

They are seen

with your mind.

3. Understanding markets

Understanding markets is the science of supply and demand.

You need to know the technical aspects of the market, which are

emotion-driven, in addition to the fundamental or economic

aspects of an investment. Does an investment make sense or does

it not make sense based on current market conditions?

The single most

powerful asset we all

have is our mind.

If it is trained well,

it can create

enormous wealth.

4. The law

A corporation wrapped around the technical skills of

accounting, investing, and markets can contribute to explosive

growth. A person who understands the tax advantages and

protections provided by a corporation can get rich so much faster than someone who is an employee or a small-business 

sole proprietor. It’s like the difference between someone walking 

and someone flying. The difference is profound when it comes 

to long-term wealth.

• Tax advantages 

A corporation can do many things that an employee cannot, 

like pay expenses before paying taxes. That is a whole area of 

expertise that is very exciting. Employees earn and get taxed, 

and they try to live on what is left. A corporation earns,

spends everything it can, and is taxed on anything that is 

left. It’s one of the biggest legal tax loopholes that the rich 

use. They’re easy to set up and are not expensive if you own 

investments that are producing good cashflow. For example, 

by owning your own corporation, your vacations can be 

board meetings in Hawaii. Car payments, insurance, repairs, 

and health-club memberships are company expenses. Most 

restaurant meals are partial expenses, and on and on. But it’s 

done legally with pre-tax dollars.

For most people, the

reason they don’t win

financially is because

the pain of losing money

is far greater than the

joy of being rich.

• Protection from lawsuits 

We live in a litigious society. Everybody wants a piece of

your action. The rich hide much of their wealth using 

vehicles such as corporations and trusts to protect their 

assets from creditors. When someone sues a wealthy 

individual, they are often met with layers of legal protection 

and often find that the wealthy person actually owns 

nothing. They control everything, but own nothing. The 

poor and middle class try to own everything and lose it to 

the government or to fellow citizens who like to sue the 

rich. They learned it from the Robin Hood story: Take 

from the rich, and give it to the poor.

It is not the purpose of this book to go into the specifics of owning

a corporation. But I will say that if you own any kind of legitimate assets,

I would consider finding out more about the benefits and protection

offered by a corporation as soon as possible. There are many books

written on the subject that will detail the benefits and even walk you

through the steps necessary to set up a corporation. Garret Sutton’s

books on corporations provide wonderful insight into the power of

personal corporations.

Financial IQ is actually the synergy of many skills and talents.

I would say it is the combination of the four technical skills listed

above that make up basic financial intelligence. If you aspire to great

wealth, it is the combination of these skills that will greatly amplify

your financial intelligence.

Rich dad believed

that the words

“I can’t afford it”

shut down your brain.

“How can I afford it?”

opens up possibilities,

excitement, and dreams.

In summary:

Business Owners and Employees Who Work

with Corporations for Corporations

1. Earn 1. Earn

2. Spend 2. Pay Taxes

3. Pay Taxes 3. Spend

As part of your overall financial strategy, I recommend that

you learn about the protection that legal entities can provide for

businesses and assets.

As we conclude this exploration of "Rich Dad Poor Dad," remember that financial literacy is a lifelong journey. Embrace the lessons learned, cultivate a mindset of continuous learning, and take proactive steps towards your financial goals. Whether you align more with the philosophies of the "Rich Dad" or the "Poor Dad," the power to shape your financial destiny lies in your hands. May the insights gained from this journey serve as a compass on your path to financial success. Here's to a future filled with financial empowerment and wealth-building endeavors.