Rich Dad Poor Dad Book Summary and Key Lessons

Rich Dad Poor Dad is one of the most famous personal finance books. Let's find out why.

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Lesson 1: 02:56 Pay yourself first.
Lesson 2: 04:30 Wealth is created by building assets.
Lesson 3: 07:42 You are your own business.

Originally self-published by Kiyosaki in 1997, this book hit the New York Times Bestseller list by the year 2000 and continued to have massive sales for years. By 2017 the book had sold more than 27 million copies worldwide in more than fifty languages.

In Kiyosaki’s story, the Poor Dad is his biological father, who is booksmart, college-educated, and gainfully employed, though stuck in what Kiyosaki describes as a “poor mindset.” The Rich Dad is the father of Kiyosaki’s friend Mike. Rich Dad has several local businesses that he manages, though he was never traditionally educated. Years later, Kiyosaki has admitted that these stories may not have actually happened and that Rich Dad may not actually exist,

I doubt they did

but the stories serve as window dressing for the real messages in the book. In this sense, it almost reads like a collection of personal finance fables, rather than an actual memoir.

Now that we know the setup of the book, What are some of those messages? What does the book actually talk about?

Pay yourself first.

This is a point in the book, that while fundamentally sound, has caused Kiyosaki to be the recipient of criticism. He’s big on the concept of paying yourself first- meaning when you get your paycheck, you have a certain percentage that you save. Ten percent, fifteen percent, whatever amount you can afford, that percentage is sacred. You always save that amount, and that percentage is never sacrificed for any other expenses. He’s asserting that really, the amount you save and devote to your own investments is really the only money that you’re being paid. All other money that goes out the door to pay your bills may as well not even exist because it’s not going into your money machine.

I’ll explain the money machine in a minute.

Okay so now you’ve paid yourself first. What do you do with the money you’re saving?

That’s Takeaway #2

Wealth is Created by Building Assets

That’s the silver bullet of this book. If you wanted to take away one message, if you told me “Ross, I don’t have the time to ever read the book, but I need to know Kiyosaki’s method of getting rich,” I’d tell you that the book is a primer of financial education focused on getting the reader to understand the message that building assets is what creates wealth - assets are what create your money machine.

Assets can be many things. They can be businesses you own and operate, they can be investments like stocks, they can be buildings you own and rent out. The key is that your assets spin off money by operating. The book is all about building your pile of assets. That pile of assets is your money machine.

Kiyosaki shows the cash flow of a poor person, a middle-class person, and a rich person. The poor person’s income goes straight to expenses. The middle class person’s income goes to liabilities like a mortgage, and a car loan, and other structured debt. The rich person has effectively built at least two sources of income, a paycheck, depending on whether they wish to continue working a traditional job, and their money machine, which is the income generated from their assets. They built their money machine with the money saved by paying themselves first.

Now, this isn’t a quick process, and Kiyosaki mentions several times in the book that he had a goal to be “rich” in his forties, which he really only achieved to his desired standards in his fifties.

How do you live like you’re rich? After all, that’s what everybody is reading the book for, right? That takes it to my third takeaway from this book.

You are your own business. Whether you like it or not.

Kiyosaki encourages readers to imagine that their true income only arrives as the income from their investments. According to him, your paycheck is simply a way to fund your money machine by increasing your assets. The money those assets spin off are your true usable income.

Kiyosaki encourages readers to think of their personal finances as their own business.

It was a very motivating read and I had a hard time putting it down. I actually read this book over the span of two days, mainly because it’s an easy read, written in a very conversational tone, and it does a good job of conveying its lessons in ways that feel extremely actionable. It’s quite motivating in that way.


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