Rich Dad Poor Dad – still relevant in 2020?

For many, Rich Dad Poor Dad is the foundation of their personal financial philosophies. At its core, Robert Kiyosaki provides an alternative view as to how money works, specifically how the rich look at money. The author highlights what he believes are the differences in how “rich” and “poor” people view money. In his opinion, it is these differences that lead to financial freedom.  The book is not a “how to get rich” blueprint, so don’t expect some secret sauce or money making scheme. Nor does it give specific examples of investments or opportunities. It is just the first step on a philosophical journey about financial literacy and money.

Rich Dad Poor Dad is a book that provides the reader with a different lens to look at money through.  Kiyosaki challenges mainstream financial guidance and provides the reader an alternative viewpoint on money. Kiyosaki’s goal is to change the reader’s bias about money and provide a building block for financial literacy. He has sold a lot of books and has some good theories, but his theories are tough to implement. Practically speaking, we live in a world where few people actually execute his philosophy.

The book is a self help book with limited actionable points, but it does a good job illustrating alternative thoughts about money. Due to the limited number individuals actually following his methods, opportunities do exist for those implement his philosophy, provided they are willing to take the risk.

Rich Dad Philosophy

The Rich Dad philosophy is marked by a number of tenets that are taught via a story based method.  The three tenets that jump off the page are: 1) Buy Assets, not Liabilities; 2) Don’t Work for your Money, make your Money Work for you (like rich people do); 3) Engage in Strategies to Keep your Money (it is not how much you earn, but how much you keep).  These three things sound simple enough, but putting them into practice is no small task.

The book gives some examples with regards to these tenets, but there is not enough detail to create any sort of true actionable plan.  Read at a superficial level, the reader may come away believing that Rich Dad Poor Dad is a real estate investing book. To a degree it is about real estate investing, as buying residential real estate is one of the few assets that the average reader could someday purchase. Objectively, the book is not about real estate and does not unlock any secrets of real estate investing. If you go in thinking you will be a real estate guru after reading it, you will be disappointed. Reading the book for what it is, a good place to start thinking about money in a different way, makes it an enjoyable read.   

If you are a high wage earner, but feel trapped in your job, this book is a good first step to understanding financial freedom. The book may leave you frustrated, but it will encourage you to think. Most come away very motivated, but at a loss on just how to execute what was discussed in the book.

The narratives provide excellent primers for creating family financial discussions. As money is not a subject readily taught in schools, it is on parents to teach their kids about financial literacy. Kiyosaki’s stories create great examples to teach your kids about money. The book’s lessons are suitable for dinner table discussions with kids and sure to get the kids thinking. His ability to break down some very complex issues into manageable talking points, may be one of the best attributes of the book.

Conclusion

Rich Dad Poor Dad is still relevant today, but should be read for what it is, a philosophical discussion of big picture theories on financial literacy.  The author is a fine motivator and “educator” and has found his niche there, not as a real estate guru. While I have never been to one of his seminars and don’t plan to ever go, I do regularly reread the book. Each time I reread it, I find something new, something I had not seen before.

Buying assets, not liabilities is a lesson that truly resonates with me. It only makes sense, we should have assets that produce income and increase in value. It’s a great lesson to teach the kids at an early age, even if their assets may not produce income. Teaching them the difference between something that has value and something that does not is easily illustrated to children at any age through the stories in the book. The hard part after reading the book is finding “assets” to purchase or invest in (at least ones that are affordable for most).

Lastly, remember Rich Dad Poor Dad is a start on the journey to financial literacy.  If you read Rich Dad Poor Dad and nothing else, it won’t be valuable.  Read it to begin your financial education. Don’t let it be the end of that education; it is just the first step.

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