I just finished reading the book Rich Dad Poor Dad – What the rich teach their kids about money that the poor and middle class do not – by Robert T. Kiyosaki with Sharon L. Lechter. This book is about financial literacy, a topic that is not taught in any formal school curriculum. Rich parents, the authors argue tend to teach those skills to their kids, whereas middle class/poor parents tend to stick to the old mantra of working harder for success. The central idea revolves around analyzing one’s personal finances, as corporations do, in terms of an income statement (P&L) and a balance sheet. The key then is to buy assets that will continually strengthen one’s income. As the author’s best put it: “The rich by assets. The poor only have expenses. The middle class buys liabilities they think are assets.”
Below are some of my favorite excerpts from the book:
1) “Losers avoid failing. And failure turns losers into winners. Just remember the Alamo.”
2) “Today, I often meet people who are too busy to take care of their wealth. And there are people who are too busy to take care of their health. The cause is the same. They’re busy, and they stay busy as a way of avoiding something they do not want to face. Nobody has to tell them. Deep down they know. In fact, if you remind them, they often respond with with anger or irritation.”
3)”In today’s fast changing world, it’s not so much what you know anymore that counts, because often what you know is old. It is how fast you learn. That skill is priceless. It’s priceless in finding faster formulas-recipes, if you will, for making dough. Working hard for money is an old formula born in the day of the cave men.”
4)” Many people only manage people they feel smarter than and they have power over, such as subordinates in a work situation. Many middle managers remain middle managers, failing to get promoted because they know how to work with people below them, but not with people above them. The real skill is to manage and pay well the people who are smarter than you in some technical area. That is why companies have board of directors. You should have one, too. And that is financial intelligence.”
An easy and insightful read into the area of personal finance. This book does raise awareness on financial intelligence, but does not discuss in details/depth various practical ways to implement the principals discussed – beyond real-estate.