Rich Dad, Poor Dad by Robert T. Kiyosak provides an interesting take on modern finance, and particularly the different ways that rich and poor people approach how they spend and use money. Good financial management is a fundamental core life skill and one that if not mastered is likely to lead to a lifetime of unhappiness. As a result, encouraging your child to develop good financial management skills is one of the major focuses for those who wish to raise a child who will become a happy and successful adult. Reading this book will help you work out how to teach your kids how to look after their money and build wealth over their lifetimes, and it may have the added bonus of helping you understand a few things which you might not yet have learned yourself!
Basic Book Information (2011 Paperback Edition): ISBN: 978-1612680002; Year of First Publication: 1997; Recommended Retail Price (RRP): £11.99/US$16.95; Number of Pages: 178. To purchase this book in the UK, click here. To purchase this book in the USA, click here.
What is this book about? This book is all about the difference between how rich and poor people approach money, and how to build wealth so you have the freedom to do what you want to do in life (which is a sure-fire way to adult happiness) rather than having to work at a mind-numbing job just to pay the bills (which is not!). While the style it is written in will not be to everyone’s taste, the key ethos behind it is very solid and important. This is, that those who are financially sound focus on investing in assets first and spend anything that is left over, while those who are not on a firm financial footing (no matter how much they actually earn) concentrate on spending money on liabilities first and only invest in assets if they have anything left (which will rarely, if ever, happen because spending on liabilities almost always ends up consuming everything they earn). While I don’t agree with everything in this book (especially in relation to tax avoidance and corporations), I think this basic principle, along with an understanding of what is an asset and what is a liability, is a crucial element in the financial education of any child, and it is one that should be taught as early as possible.
Why is it important to know? Good financial management is one of the main keys to a happy and successful adult life, and much of adult unhappiness is rooted in poor financial management. As a result, it is essential that children gain good financial management skills as early as possible. However, you can only encourage your child to develop good financial management skills if you understand what exactly you should be encouraging them to develop. Reading this book will help you understand what you should be teaching them.
What are the key take home messages? 1. You can gain financial independence, meaning you are in control of exactly who you work for, what you do and when you do it, by prioritising the investment in assets over the purchasing of liabilities; 2. Assets are anything that generates you an income or that appreciates in value over time without you having to spend additional time on it, such as rental property, stocks and shares, and royalties from intellectual property (including music, books, websites and patents); 3. Liabilities are anything that you have to continue working to pay for or maintain, such as your own home, a car, consumer goods, like the latest television, and financial debts like loans or credit card debt; 4. The key to a sound financial future is to keep your expenses low, reduce your liabilities to a minimum and build a base of solid assets, and to start doing this at as young an age as possible.
Who is the author? Robert T. Kiyosaki is an American businessman, investor, and financial self-help author. He has a keen interest in financial education for both adults and children, and he is the creator of the Cashflow board and software games that teach adults and children business and financial concepts. Rich Dad, Poor Dad is one of a series of books aimed at increasing financial education and awareness. While not universally respected (he has a bit of a checkered financial history), he does provide some interesting views on how to develop a stable financial footing, and as this article on MoneyMiniBlog concludes “… You should be reading his books for wealth-building information, not moral guidance.” Having read this book, this is a sentiment I’d definitely agree with.
How technical is this book? This book is a mix of personal stories from the author’s life and advice, and it is written in an easy-to-read style, with illustrations which help to get his points across. It’s rather repetitive in places, in terms of trying to get its key message across, but this doesn’t necessarily detract from the message itself.
How long will it take to read? At 178 pages, the main body of this book might seem quite long, but it’s an easy read, and it shouldn’t take longer than four or five hours to read it from cover to cover.
Are there other books by the same author? Rich Dad, Poor Dad is the first in a range of financial self-help books written by Robert T. Kiyosaki. Others include Rich Dad, Poor Dad for Teens and The CashFlow Quadrant. You can find more information about them here (if you are based in the UK) or here (if you are based on the USA).
Links To Purchase This Book
About The Author: This post was written by Colin Drysdale, the creator of How To Raise A Happy Genius.
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