“Rich Dad Poor Dad” by Robert T.Kiyosaki

It’s the first finance book I’ve read. Although many people say that this book changed their lives and perspectives, the concept of the book was not that novel to me. I was already aware of managing money and investing. I realized that most self-made rich people give the same piece of advice. The author truly unfolded his rich dad’s morals as well as his own experiences.

Lesson 1. The rich don’t work for money

• The faster you can make a decision, the more likely you’ll be able to seize opportunities before someone else does.
• We learn best through action — doing the real thing or a simulation. Reading and lectures are the least effective ways to learn.
• It’s easier to change yourself than everyone else. If things must change, first you must change.
• The poor and the middle-class work for money. The rich make money work for them, even when they aren’t physically present.
• When emotion goes up, intelligence goes down. Use your emotions to think, not to think with emotions.
• Most people’s lives are controlled by fear and greed. Fear of being without makes them work hard, but once they have money, greed gets them thinking about all the things they could buy. Which makes them need more money, which makes them spend more. <— Rat race

Lesson 2. Why teach financial literacy?

It’s not how much money you make. It’s how much money you keep.

• Know the difference between an asset(stocks, real estate, intellectual property) and a liability(car loans, credit card debt) and buy income-producing assets. Asset adds to your income. A liability takes money out of your pocket. When your assets generate enough income to cover your expenses, you are wealthy, even if you are not yet rich.

Financial Scorecard

• Home is a liability because it takes money with taxes, expenses, its loss in value, and the opportunities missed when all your money is tied up in your house.

People may have learned how to make money, but not how to manage it. When their income increases, so do their expenses and taxes.

Lesson 3. Mind your own business

• The rich focus on their asset columns while everyone else focuses on their income statements.
• Don’t spend your life working for someone else. There is a big difference between profession and business. Minding your business doesn’t mean starting a company. Businesses involve around your asset column, not your income column.
• Acquire the type of assets you love, because you will take better care of them and enjoy learning about them.
• The rich buy luxuries last, while the poor buy luxuries first

Lesson 4. The history of taxes and the power of corporations

• Financial intelligence = Accounting (financial literacy, ability to read numbers and evaluate the strengths and weaknesses of any business) + investing + understanding markets + the law (tax advantages and protections)
• Rich play the game smart, and they do it through corporations <— the biggest secret of the rich. The educated upper-income middle class pays for the poor. The rich are not taxed. Employees earn and get taxed, and they live on what is left. A corporation earns, spends everything it can, and is taxed on anything that is left.

Lesson 5. The rich invent money

Often in the real world, it’s not the smart who get ahead, but the bold.

• Most people aren’t trained financially to recognize the opportunities in front of them. Financial intelligence is simply having more options, figuring out ways to create opportunities, or altering situations to work in your favor.
• Create your luck. The most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth.
• Rich people are often creative and take calculated risks. Excessive fear and self-doubt are the greatest distractors of personal genius.

Lesson 6. Work to learn — don’t work for money

• Many talented people struggle financially. Too many of us specialize. If we learn and master one more skill, our income would jump exponentially. The more specialized you become, the more you are trapped and dependent on that specialty.
• Learn a little about a lot. — Gain a variety of experiences. Seek work that will teach you the skills you’ll need.
• The main management skills needed for success are 1) Management of cash flow, 2) Management of systems, and 3) Management of people.
• The most important specialized skills are sales and marketing. Communication skills such as writing, speaking, and negotiating are crucial to a life of success. Attend courses or buy educational resources to expand your knowledge. The skills of selling and marketing are difficult for most people, primarily due to their fear of rejection. The better you are at communicating, negotiating, and handling your fear of rejection, the easier life is.
• Give, and you shall receive. Not receive, and then you give.

Lesson 7. Overcoming obstacles

• Overcoming fear. The primary difference between rich and poor is how they manage the fear of losing money. The only people who have never lost money investing are those who haven’t done it. Put your eggs in a few baskets and focus. Building your asset column takes courage and the right attitude towards failure.
• Overcoming cynicism(ичгүүргүй явдал). Don’t let rumors affect you. The seemingly worst times are actually the best times to make money. When everyone else is too afraid to act, the rich pull the trigger and are rewarded.
• Overcoming laziness. Ask yourself, “How can I afford it?”. The cure of staying lazy(busy to take care of wealth) is a little greed.

Lesson 8. Getting started

• You must have strong enough emotional reasons that sustain you through setbacks.
• Intelligent people can be ignorant (үл тоосон) if they combine their smart with arrogance(бардам).
• A truly intelligent person welcomes new ideas. New ideas can combine with already accumulated ones and result in something great. Listen. Learn. Take a long view of wealth, not a get-rich-quick mentality. Invest in your greatest asset — your mind — before investing in stocks or real estate.
• Be true to yourself and don’t go along with the crowd. The crowd usually shows up too late to a great deal. Instead, look for a new deal — a prospect that can be frightening.
• Information is priceless. A good broker should provide you with information as well as make you money. What you pay them is tiny in comparison with what kind of money you can make with the information they give you.

Lesson 9. To do’s

• Start Early. Buy a book. Go to a seminar. Practice. Start small.
• With each dollar bill, you have the power to determine your destiny. Every day with every dollar, you decide to be rich, poor, or middle class.

I don’t think that everyone should pursue the rich path and reach financial freedom. Everyone should not start a business or become an investor. But I do believe that all people should manage their income wisely, buy assets rather than liabilities, keep their expenses low, and improve themselves constantly.