REVIEW: "Rich Dad, Poor Dad" by Robert T. Kiyosaki

Today I review one of White Coat Money “GOOD READS” recommendations.  In “Rich Dad, Poor Dad,” author, entrepreneur and member of “The Rich” Robert T. Kiyosaki explores the different lessons about money and wealth he learned from his “Rich Dad” and his “Poor Dad”.  Spoilers ahead – one of the “dads” isn’t his real dad.

In the book, there are 2 categories of people as far as wealth is concerned.

  1. “The Poor and the Middle Class”  - these are those caught in the “Rat Race” where they work for money.
  2. “The Rich”  - these are people who are in the “Fast Track” where they make money work for them.

The underlying assumption and reason why you would even consider reading the book in the first place is that you want to end up among “The Rich”.

6 lessons are learned from the “Rich Dad” – father of Kiyosaki's friend, mentor to the author on money and a representative of “The Rich.”

Lesson 1 – “The Rich Don’t Work for Money.”  Make sure you read this with the right emphasis: it is “The Rich Don’t Work for Money” and not “The Rich Don’t Work for Money.”  The concept is that the rich don’t work for the paycheck, rather they work to learn – ideas, skills, knowledge etc. - tools which they apply on their way to financial independence.

Lesson 2 -  “Why Teach Financial Literacy?”  The lesson here is that “The Rich” buys assets, not liabilities.  And it behooves you to know the difference if you want to end up among “The Rich”.  One of the interesting arguments in this section is a controversial redefinition of “asset.”  For example, the author considers a house – which most Americans considers an asset – a liability.  Rather an “asset” is something that makes you money by simply existing.  Examples include rental property, intellectual property, dividend stocks, savings account that generates interest etc.

Lesson 3 -  “Mind Your Own Business.”  This lesson encourages readers to focus on the asset column as described in Lesson 2 and to build it up as quickly as possible.  For example, be frugal and hold off on purchasing that Mercedes you had your eye on until your assets can “buy it” for you.

Lesson 4 – “The History of Taxes and the Power of Corporations.”  This lesson touches on the topic of tax dodging, specifically through corporations.  The distinction between tax treatment of the individual and the corporation lies in whether you get to spend your income before paying taxes (corporations have that privilege).  This lesson may upset some as it advocates tax dodging and delaying – while legal, may be morally wrong.

Lesson 5 – “The Rich Invent Money.”  In this lesson, the author argues against the age-old idiom “You need money to make money.”  Rather, Kiyosaki describes examples where he generated large gains over very short times by knowing when and what kind of deals to strike, sometimes with no actual capital required.

Lesson 6 – “Work to Learn – Don’t Work For Money.”  Not sure why this chapter was needed.  The lesson is essentially the same as lesson 1 above, mixed in with the emphasis that one needs to be ready for change in order to incorporate the new learned ideas, skills into their daily lives.  

The remaining chapters of the book titled “Overcoming Obstacles,” “Getting Started,” “Still Want More?” and “Final Thoughts” are essentially tips on how the reader can get started on the road to becoming “The Rich.”

Overall, “Rich Dad, Poor Dad” is a quick read at 179 pages.  It is an inspiring read as the author uses personal examples to illustrate the 6 lessons he advocates.  At the core of all 6 lessons is the advice to seek knowledge – to read more books, attend more seminars and become more financially literate.  It is difficult to argue against education or self-betterment.  But it is exactly this core message that renders the book merely another inspirational account of one man’s rise to wealth, rather than a how-to-become-rich playbook for the masses.  This is akin to if I wrote a multi-chapter book on how to become a good doctor and the secret was that you need to learn more medicine.  It is a true statement but that does not make becoming a doctor easy.  And that’s ok.  Because any educated reader should realize that if it’s really that easy to become rich, there would be a lot of more Kiyosakis out there.  

Future Proof, MD

Dr. Bo Liu is an aspiring radiologist-in-training and the founder and editor of the White Coat Money Blog.  He has an interest in interventional radiology and helping his medical colleagues get ahead in this mad world of medicine and money.  When he's not crushing the list at the PACS station or typing up your next favorite blog post, you can usually find him at the local badminton club, movie theater or the most recently opened restaurant.