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Rich Dad, Poor Dad - Reading Notes

French Ben

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Rich Dad, Poor Dad 

Employees lose, investors and owners win. It’s the difference between controlling your destiny or entrusting someone else with it. 

Educated dad says to work for a corporation. Rich dad says to own the corporation 

Poor dad says money is the root of all evil. Rich dad says the lack of money is the root of all evil. 

Poor dad said I can’t afford it. Rich Dad said How can I afford it? 

Poor Dad thought the riches should pay more taxes to take care of the less fortunate. Rich Dad said the taxes punish those who produce and reward those who don’t. 

One encouraged talking about money and business at the dinner table. The other one forbade it. 

One said not to take risks, the other said to learn to manage risk. 

One believed in self-reliance and spoke how the entitlement mentality was creating weak and financially needy people. 

One taught how to write good resumes. The other taught how to write strong business and financial plans. 

One worker for money. Money worked for the other one. 

Money is not taught in schools. Schools focus on scholastic and professional skills but not financial skills. That is why there are many smart bankers, doctors and accountants who had excellent grades and still struggle financially. 


Lesson 1: The rich don’t work for money 

If you can’t make your mind decisively then you will never learn to make money. Opportunities come and go. Being able to know when to make quick decisions is an important skill. 

True learning takes energy, passion. Anger is a part of that, as anger is passion and love combiner. Most people do not want to take risks, so passion does not direct them, fear does. 

Why does the people let the government take their money? Only the poor and the middle-class do. They pay more in taxes than rich people.  

Most people never see the trap they are in. Fear compells them to work hard and greed pushes them to spend it. They react emotionally instead of thinking. Ue your mind and emotions in your favor, not against yourself. Be an observer to your emotions. Unfortunately, for many people, school is the end, not the beginning of learning. 

The difference between emotions speaking and the mind speaking: “Everyone has to work. The rich are crooks. I like this job because it’s secure.” instead of “Is there something I am missing there?” 


Lesson 2: Why Teach Financial Literacy? 

It’s like planting a tree. You water it for years and then one day it doesn’t need you anymore. Its roots have gone deep enough and it provides shade for your enjoyment. 

Accounting should be the most important subject to study if you want to be rich long-term. 

Rule 1: always know the difference between an asset and a liability. Rich people buy assets. Poor and middle-class people buy liabilities thinking they are assets. 

Money only accentuates the cash-flow pattern running in your head. If your pattern is to spend everything you get, mot likely an increase in cash will result in an increase in spending. 

Fear causes people to conform and not question commonly accepted opinions or popular trends. 

An intelligent person hires people who are smarter than them. Schools don’t provude employers, they produce good employees. 

The greatest losses of all are the ones of missed opportunities. 

Wealth is a person’s ability to survive without working. If I stopped working today, how long would I survive? 

Lesson 3: Mind Your Own Business 

Financial struggle is often directly the result of people working all their life for someone else. Poor people work for the government (taxes) or for the bank. Most people spend their whole lives making someone else rich. 

What assets should you acquire? 

  1. Business that do not require your presence (careful, 90% of companies fail within 5 years) 

  1. Stocks  

  1. Bonds 

  1. Mutual funds 

  1. Income-generating real estate 

  1. Notes (IOUs) 

  1. Royalties from intellectual property such as music, scripts, patents 

With small companies, my strategy is to be out of stock in a year. 

With real estate, I start small and keep trading the properties for bigger and bigger properties, delaying paying taxes on gain. I usually hold real estate less than 7 years. 

Rich people buy luxuries last, whereas poor people buy luxuries first. 

Lesson 4: The History of Taxes and the Power of Corporations 

In real reality, the rich are not taxed. It’s the middle-class who pays for the poor, especially the educated upper-income middle-class. 

Originally the only taxes that existed were levied in times of war (Britain vs Napoleon 1799-1816, and US Civil War 1861-1865). Income tax became permanent in England in 1874 and in the US in 1913. It had taken them 50 years after the Boston Tea Party to sell the idea of permanent taxes to the people. It only worked because the masses believed in the Robin Hood theory of economics. But the government’s appetite for money was so great that taxes soon had to also be levied on the middle-class. 

In reality, no matter what the “Take from the rich” crowd comes up with, the rich always find a way to outsmart them. They hire smart attorneys and accountants, persuade politicians to change laws, create legal loopholes. The people who lose are uninformed- they wake up every day, work hard and pay taxes. If they understood the rules of the game the rich play, they could play it too. 

The biggest bully is not the boss or the supervisor but the tax man. He will always take more if you let him. Rich Dad paid ltso to accountants. He knew the law because he abided by it. He knew it because it was expensive not to know it. If you know you are right, then you are not afraid of fighting back. 

Financial IQ is made of 4 areas of expertise: 

  1. Accounting, financial literacy 

  1. Investing 

  1. Understanding markets 

  1. The law – it makes the difference between someone walking and someone flying. 

  1. Tax advantages 

Unlike people, corporations can pay expenses before paying taxes 

  1. Protection from lawsuits 

Try to set up a corporation as soon as you can 


Lesson 5: The Rich Invent Money 

The only thing that holds us back is not the lack of technical information but some degree of self-doubt and lack of self-confidence. Your balls determine your future much more than your grades. In the real world, it’s not the smart that get ahead but the bold. Students should really learn to take risks, be bold and let their genius convert that fear into power and brilliance. 

I would rather be welcoming change than dreading it. I would rather be excited of making millions than dreading not getting a raise. Today, so many people struggle because they cling to old ideas. 

Many people play CASHFLOW (the game) and complain opportunities are not coming their way, so they just sit there. 

Some people get the right opportunity and say they don’t have enough money. So they just sit there. 

Some have both an opportunity and the money and they fail to see the opportunity. This is the most common scenario. They find about it one year later and it’s too late already. 

Few people realize that luck is just created. If you are the kind of person who is waiting for the right thing to happen, you might wait for a long time. That is like waiting for all the traffic lights to be green for 5 miles before starting the trip. 

Putting money aside is not bad but it blinds you from what is really going on. Kiyosaki began shopping at the bankruptcy attorneys office of the courthouse steps to get cheap houses. 

Financial intelligence is made of these 4 skills: 

  1. Financial literacy  the ability to read numbers 

  1. Invesment strategies 

  1. The market- supply and demand 

  1. The law 

The really hot deals are not offered to people who are novices. Often, the best deals that make the rich even richer are reserved for those who understand the game. It is illegal to offer someone who is considered not sophisticated such speculative deals, but of course, it happens. 

Kiyosaki likes to buy high-risk speculative private companies that are just about to go public on a stock exchange in the US or Canada. 

We learn to walk by falling down. If we never fell down, we would never walk. The same is true for learning to ride a bike. I still have scars from falling but now I can ride a bike without thinking. The main reason so few people are rich is because they are afraid of losing. Winners aren’t afraid of losing, losers are. Failure is part of the success. People who avoid failure also avoid success. 

There are 2 kind of investors: 

  1. Some buy pre-packaged deals, like you take a computer from a shelf. They call a real estate company, financial planner or stockbroker who sells them a mutual fund, a REIT, stock, bond. That is ok 

  1. Some create investments: they assemble opportunities together, put components of a computer together. 

If you want to create personalized investments, you need to : 

  • Learn to find an opportunity everyone else has missed. One friend bought a really shitty house because it came with 4 extra empty lots, tore the house down and sold the lots to a builder. 

  • Learn to raise money. Learn to buy houses without a bank. Learn to buy a house by “tying it up” with a written contract between buyer and seller, give it to the buyer and only get money for bringing the deal to him 

  • Learn to organize smart people 

There is always risk, so learn to manage it instead of avoiding it. 

Lesson 6: Work to Learn, Don’t Work for Money 

The first thing to learn is sales. Kiyosaki is not a best-writing author, he is a best-selling author. 

Most people are just one skill away from great wealth. Get a second job in a multilevel marketing company, they have excellent training programs that help people get over their fear of failure and rejection. 

In school and the workplace, people want to specialize. If you do that then try to work for a company that is unionized. Unions protect specialized workers because they cannot transfer their skills to another industry. Pilots and teachers can’t find other jobs. So, they highly specialize, then unionize. 

Rich Dad says to do the exact opposite. You want to know a little about a lot. 

Groom yourself. Corporations groom young business school graduates who will one day run the company. These young people never specialize and are moved from department to department to learn all the aspect of the business. 


The second thing to learn is leadership. Often workers work just hard enough not to be fired and owners pay just enough so they don’t quit.  

Life is like going to the gym. The most painful part is deciding to go. 


Everyone can make a better burger than McDonald’s- but if you can, why are not richer than McDonald’s? The reason so many talented people are poor are because they focus on building a better hamburger and know little to nothing about business systems. They focus on making a better hamburger instead of learning the kills of selling and delivering them. 


In other words, the main management skills are:  

  1. The management of cash-flow 

  1. The management of systems (including yourself and time with family) 

  1. The management of people 

The most important specialized skills are sales and understanding marketing. It is the ability to sell – therefore, to communicate with another human being, be it a customer, employee, boss, spouse or child- that is the base skill of personal success. Writing, speaking, negotiating are crucial to a life of success. It’s difficult for most people due to their fear of rejection. The better you are at communicating, negotiating and handling your fear of rejection, the easier life is. 

Leaders give. Rich Dad gave lots of money away to charities. He knew that to receive money, you need to give money. Giving money is the secret to most wealthy families- the Rockefeller Foundation, the Ford Foundation 



Overcoming Obstacles 

There are 5 reasons why financially literate people still do not develop large assets: 

  1. Fear 

All rich people have lost money. But lots of poor people have never lose a dime investing. 
If you hate risk and worry... start early. 

You must start early and definitely set up a retirement plan and you should hire a financial planner you trust to guide you before investing in anything. 

The greatest reason for lack of financial success is that people play it too safe. People are so afraid of losing that they lose. The pain of losing money is bigger for them than the joy of being rich. 

The Texans lost Fort Alamo and turned it into a business that makes millions every year. Texans don’t bury their failures; Americans didn’t bury Pearl Harbor; they turned them into rallying cries- “Remember Pearl Harbor!”. That is what makes them better. For winners, losing inspires them. For losers, losing defeats them. 

Rockefeller said: I always try to turn every disaster into an opportunity. 

This is the secret that loser to not know. Failure defeats losers and inspires winners. Winners hate to lose but are unafraid to lose. 

Most people are so afraid of losing money that they lose by playing too small. They buy big houses and cars, but not big investments. They have cash in CDs, low-yield bonds, mutual funds from a mutual fund family, and a few individual stocks. It’s not the winning portfolio, it is the portfolio of someone playing not to lose. They end up getting broke over a simple duplex 

If you have little money and want to get rich, you must start by being focused, not balanced. Nobody successful started balanced. Balanced people go nowhere, they stay in one spot. You must focus. Put a lot of eggs in a few baskets. 

  1. Cynicism 

Lots of people say it won’t work despite having no background and who buyer’s remorse and back out of deals. Tax liens certificates can make you 16% but people will tell you they are risky, while themselves making no more than 5%. Doubt is expensive. 

The real world is simply waiting for you to get rich. Only a person’s doubt keeps them poor. Getting out of the rat race is technically easy. It doesn’t take much education, but those doubts are cripplers for most people. 

Cynics criticize and winners analyze. Criticism blinds while analysis opens eyes. Real estate is a great tool to escape the rat race, but people say they don’t want to fix toilets instead of shopping for a property manager who fixed toilets for them. 

Property managers are key to success in real estate. Finding a good manager is more important than the estate itself. They also often hear of good deals before real estate agents, which makes them very valuable. 

Most people don’t make money because they choose not to lose money. 

One of his friends complained oil prices would rise, so Kiyosaki bought lots of shares in oil and made big profits. Most people don’t do that because they don’t know about a “stop”, a computer command that sells if the price drops- which is a great tool for those terrified of losing. 

Colonel Sanders started at 66 and got rejected 1,009 times before he finally made it and founded KFC. 

  1. Laziness 

Today many people use being busy as a way not to take care of their health or their wealth and avoid things they know they have to do. If you remind them, they respond with anger or irritation. That is laziness by staying busy. The cure for laziness is a little greed. 

  1. Habits 

The poor pay their bills first. The rich pay themselves first (see The Richest Man in Babylon) 

  1. Arrogance 

Many people won’t learn 

Getting Started 

It’s really easy to find great deals, it really is, it’s like riding a bike. It’s wobbly at first and then it’s a piece of cake. It is the determination to go through the wobbling that makes the difference. There is gold everywhere, most people are just not trained to see it. In a day, he can find 5 good deals whereas someone else in the same neighborhood would find none. 

Most people just work hard and hand the excess to their broker. But I don’t want to work all my life, be an employee, miss football games and not even be able to pass on my money to my children because of taxes. I want to be free to travel, control my time and life. I want money to work for me. 

  1. Invest first in education 

Most people buy investments instead of learning about investing. Go to seminars. Kiyosaki goes to seminars at least 2 a year. Just because you bought a house or 2 doesn’t make you an expert. 

  1. Choose your friends 

His 3 friends who have become billionaires report that their friends who have no money never ask them how they did it. They ask them for a loan or a job. Most people listen to the expert saying the market will crash. But surfers know there is always another wave 

Wise investors buy an investment when it’s not popular, when it’s not famous. Your rich friends know where the money is made. And they have lots of insider information for you to use. 

  1. Become master of one formula and then learn a new one 

You become what you study. Kiyosaki took a class on how to buy real estate foreclosures, made millions, and when it became too mainstream decided to attend classes for derivative traders. Today it’s not what you know, it’s how fast you learn. 

  1. Pace yourself 

People with low self-esteem and low tolerance for financial pressure can never be rich. The world will push you around. The three most important skills for you to start your own business are: 

  1. Learning to manage cash flow 

  1. Learning to manage people 

  1. Learning to manage personal time 

Pay yourself first, bills later. It will put pressure on you to find solutions. 

Build up assets first before buying a house or car. When you come up short, let the pressure build and don’t dip into your savings or investments. The rich know that savings are only to create more money, not to pay bills. If you’re not tough inside, the world will always push you around. 

  1. Pay your brokers well 

It’s hard to find competent people. A broker is your eyes on the market. People tip waiters 15% and try to stiff their broker who is working for their assets, that is financially unintelligent. 

Most brokers are just salespeople, especially in real estate, even if they don’t even own any assets themselves. There is a big difference between the one who sells houses and the one who sells investments. You need to kiss many frogs to find the prince. 

When interviewing a professional, ask them how much property or stocks they personally own and what percentage they pay in taxes. That applies to tax attorneys as well as accountants. 

If you cut their commission, they won’t want to be around you. 

Many middle managers never rise because they only know to manage people less competent than them. Learn handle smarter people. Corporations have a board of directors for that. You should have one too. 


Poor people are more greedy than rich people. They want to get and not to give. 

Chapter 10: More To-Dos 

Stop doing what you are doing and ask yourself if it is working. 

Look for new ideas. For investing ideas, Kiyosaki goes to the bookstore and looks for books on different and unique subjects, and buys stuff he knows nothing about. 

You can find bargains in an attorney’s office and in banks. 

Find someone who has done what you want to do and take them to lunch. For the 16% tax lien certificate, K went to the tax office and invited the employee. He read the book in 1 day, took action in a day, an hour for lunch, one day to acquire 2 great deals. 

Take classes and go to seminars. 

Make lots of offers. Nobody knows the real price. It’s a game. Most sellers buy too much. You can offer half. People who are not investors have no idea what it feels like to be trying to sell something. Many people are very happy to sell, no matter how low the price. 

Always make offers with escape clauses. In real estate, K adds a clause “subject to approval of business partner”. The business partner is his cat. 

Jog or walk in the same area. Notice change over the weeks: real estate signs that stay for a long time. Look at the moving trucks. Talk to the postal carriers. They know a lot of information 

Find a bad area, especially an area that the news have scared people away from. Look for signs of thigs changing for the better: when a retailer moves in, talk to them and find out why they are moving in. 

Peter Lynch – Beating the Street (book) 

Napoleon Hill – Think and Grow Rich 


K looks for people who want to buy first, then he looks for someone who wants to sell. He found a piece of land larger than the one his friend wanted to buy, so he tied it with an option, sold the land to him and he kept the remaining land for free. Buy the pie and cut the pieces. Most people look too small. They only buy one piece of the pie and end up paying more for less. Small thinkers don’t get the big breaks. If you want to get richer, think bigger first. 

Retailers love giving volume discounts, because everyone likes big spenders. So even if you are small, you can think big- call your friends and buy something together. 


K’s friend found a house for 102K and offered 79K for it. The owner had a non-qualifying loan on it- which means even a bum could buy it without a banker’s approval. The owner owed 72K so all the friend had to find was 7K (??). A few yers later, he sold on a 1031 tax-deferred exchange. 

The idea that it takes money to make money is the thinking of financially unsophisticated people. K turned 5K in 1M in just 6 years. It’s not that hard. It’s pretty easy once you get the hang of it. 


With every dollar bill that enters your hand, you have the power to choose your destiny. Spendit foolishly, you choose to be poor. Spend it on liabilities, you join the middle class. Invest it in your mind and learn to acquire assets. 

Most people go to school to learn to be employed or self-employed. They don’t learn to be business owners or investors or generate passive income or portfolio income. 

Investors make more money because they know how to protect themselves from mlosses. Risk comes from now knowing what you are doing. 

Take responsibility for your finances or take orders all your life. You’re either a master of money or a slave to it. Awaken the financial genius within you. Your genius is waiting to come out. 

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