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Rich Dad Poor Dad Thoughts?
On a vacation to Whistler this past week I managed to read Rich Dad, Poor Dad (in between shredding the slopes) and thought that it was an interesting read. The concept of the rich buy assets versus buying liabilities made common sense even though I never thought to put it into words that way. And his discussion about always paying himself first.
How can he do that?! Is he saying that he always pays his salary first before all debt? And what kind of liabilities is he talking about? I mean people like nice things, but nice things arent generally good investments (i.e. boats, cars, diamonds).
What do you guys do? How do you incorporate the Rich Dad Poor Dad philosophy into your business?
Kiyosaki never followed the advice he gives in any of his books, seminars or 'teaching' events. It is well documented his Rich Dad book is a work of fiction. There was no rich dad and probably no poor one either.
I can tell you from first hand experience he does not know what the rich teach their kids.
He's just a guru, good at marketing, good at story telling but never done what he tells you to do.
Well that makes me feel like i just wasted 4 hours of my life.
You shouldn't. I've read thousands of business books, including that one.
There is something to be learned from all of them. It's just sometimes it's not what the author had in mind.
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His books are very inspiring, but lack much "how-to". Don't waste your time and money on his seminars. Just don't. Go to REIA meetings in your area and read on this site instead.
When he says he pays himself first, it basically means (as I understand it) to always carve out some money to put in your savings from each paycheck. Even if it's not much, pay yourself (into savings) something.
According to him, liabilities are anything that do not make you money, which I agree with for the most part. You need to be financially secure before buying all those nice liability things.
Almost everyone on the Podcast has mentioned Rich Dad Poor Dad as their favorite real estate book. The books are very well known and often the first step in opening up your mind to the concepts. However they say rereading the books have no value or meat to it.
I would recommend reading the series of books focused on real estate such as the ABC's of real estate investing by Ken McElroy who recently appeared on the bigger pockets podcast.
It has been awhile since I have read his book. However, if I am remembering it correctly, the take away I had was that you should strive to operate like a business.
A business pays all of its bills first, including salaries, expenses and costs and then pays taxes on the funds that are left. Rather than as a W-9 employee that pays taxes on their income first and then pays their bills on what is left.
Paying yourself a salary is one option, but not necessarily the only option. The key is to reduce your taxable income by paying "business expenses" i.e. your expenses.
Good Luck
I started as a fan of his books, but realized he never quite revealed - for lack of a better term - the 'secret sauce.' An example that sticks with me a decade later is some contract he had in which he was only losing $40/month or so. He took it to his Rich Dad, who chided him for it, made some changes to the contract, and lo and behold, now he was going to earn $40/month.
What I really wanted to see, of course was the before and after of the contract. "Maybe in the next book," I thought, but no, it wasn't. Nor in the book after that. Etc., etc.
Of course, a much later interview in which he said the Rich Dad was more like "Santa Claus" then a real person torpedoed any remaining credibility he had with me.
I will say I found this book to be way overrated! I also went to one of his free introductory seminars and found it to be a complete waste of time - not to say that his book doesn't have value. It has been a while since I read it but here are my takeaways:
Invest in assets rather than liabilities:
- an asset being anything that can create income/increase in value (ie. a business, a rental property etc.)
-liabilities being anything that reduces wealth (ie. boats, cars)
Pay yourself first: (David Bach has some good personal finance books in which he stresses this point - I may be mixing up Bach and Kiyosaki)
- Put aside a portion of your income as soon as you get it (ie. automatic transfer the day you get a paycheck) so that you guarantee a portion of your income is saved and learn to live on the rest.
I read Rich Dad ten years ago and it was the right message at the right time for me. I was working for a large corporation and working on my MBA. I was 40 and didn't want to retire like my parents and social security. I just got my 21st property under contact today. I've been laid off twice in the last 5 years but the second time was able to keep buying properties and took 15 months off. Buying assets works whether you like Kyosaki or not. I wouldn't pay for any seminars though. Good luck.
Originally posted by @Duncan Taylor:
I can tell you from first hand experience he does not know what the rich teach their kids.
He's just a guru, good at marketing, good at story telling but never done what he tells you to do.
Duncan, can you provide proof to this? I've done some googling and it's just conspiracy theory websites that I've been able to find. Everywhere someone makes an accusation, they say "allegedly" and other similar words. Keep in mind, in writing the book, I would not be surprised if he change "unimportant" elements of the book to reserve privacy. Names, Locations, etc (which would explain why people are finding "holes" in the specifics he mentions). He is a very public figure and just like famous people, politicians, etc, everything in his life is up for speculation. Things get twisted once media and the Internet is involved. No one is perfect and I'm sure he's made mistakes along the way (everyone has). And FYI, I have no dog in the fight with anything related to Robert Kiyosaki, but whenever you say something negative about someone (especially when you don't provide proof), it never puts you in a good light.
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My 2 cents - I dig Robert Kiyosaki.
This business requires two SECRET ingredients (come close, we're about to reveal the goods.... drum roll please....)
1) Knowledge
2) Motivation
OK, maybe not such big secrets, but it seems like really good teachers don't just give you facts, but they MOTIVATE you to get off your a** and go ACHIEVE something that changes your life. Many many investors have gotten this excellent balance of knowledge and motivation from Robert Kiyosaki.
Originally posted by @Justin B.:
Originally posted by @Duncan Taylor:
I can tell you from first hand experience he does not know what the rich teach their kids.
He's just a guru, good at marketing, good at story telling but never done what he tells you to do.
Duncan, can you provide proof to this? I've done some googling and it's just conspiracy theory websites that I've been able to find. Everywhere someone makes an accusation, they say "allegedly" and other similar words. Keep in mind, in writing the book, I would not be surprised if he change "unimportant" elements of the book to reserve privacy. Names, Locations, etc (which would explain why people are finding "holes" in the specifics he mentions). He is a very public figure and just like famous people, politicians, etc, everything in his life is up for speculation. Things get twisted once media and the Internet is involved. No one is perfect and I'm sure he's made mistakes along the way (everyone has). And FYI, I have no dog in the fight with anything related to Robert Kiyosaki, but whenever you say something negative about someone (especially when you don't provide proof), it never puts you in a good light.
As to Rich Dad existing...
In an interview by SmartMoney magazine, published February 2003, Robert Kiyosaki gave an answer that is surprisingly vague, yet real: ""Is Harry Potter real? Why don’t you let Rich Dad be a myth, like Harry Potter?"
As to his effectiveness as a 'teacher'...
http://abcnews.go.com/2020/story?id=1982669
The last line in the story is spot on...
"Which begs the question: Does anyone really need 18 books to learn to fail?"
So, are SmartMoney magazine and ABC News part of that conspiracy against RK?
I stand behind the Rich Dad Poor Dad books (and mentality) all day long. I've read numerous books of his and I can truly say that a lot of the principles those books taught me are why I am where I am today (which is working for myself, living my dream life, etc). Had it not been for some certain principles I learned from him, I wouldn't have been able to make some of the investments I have, survived the sanity-trial of becoming an entrepreneur, and have a tight grasp on how to make things work.
It's true, it's not a how-to book. Anyone who knocks on it for not being one is crazy... why does it have to be one? The point of the book is to teach a mentality that is very foreign to most people. It's a required mentality that you have to understand in order to accomplish a certain set of things. You can't just jump into the how-tos without understanding the fundamental premises behind knowing why you are doing what you are doing. That's what he teaches. Not how to buy a rental property or flip a house.
A liability is anything that doesn't increase in value. A TV, a car, some argue a primary house, clothes, vacations, etc. Assets will continue to provide value even after you buy them- real estate investments, stocks, college education (value in the form of smarts rather than money), educational books, etc.
Remember the advice of "take advice from people you would trade shoes with". I would trade shoes with Kiyosaki all day long, so I'm going to listen to his advice. I would not trade shoes, however, with a good majority of people on this website (or in general for that matter) who landlord their own properties, pay all cash, work full-time flipping houses, and more importantly, those who aren't at least millionaires. Therefore, if they those people tell me Rich Dad Poor Dad is worthless, I'm not going to take their opinions to heart. I know the advice in that book has allowed me to have an awesome life, so I'm going to go with it. Regardless of how Kiyosaki lives his own life or whatever.
Originally posted by @Ali Boone:
A liability is anything that doesn't increase in value. A TV, a car, some argue a primary house, clothes, vacations, etc. Assets will continue to provide value even after you buy them- real estate investments, stocks, college education (value in the form of smarts rather than money), educational books, etc.
I also agree that Rich Dad books are great and are meant for changing thinking and not a how to. To the above quote, I would make one correction in that liabilities are not defined by something that does not increase in value, rather something that takes money out of your pocket as opposed to an asset which places money into your pocket.
Somebody mentioned the personal residence and how some would argue it is an asset and some the other way. Even if it is paid off, you still have taxes, insurance, utilities, lawn care, etc. So, it is a liability UNLESS it produced income in excess of the expenses.
You're totally right @Will Barnard. Great definitely. When I was trying to write it I was blanking on wording. Lol. Yours is dead-on and much more accurate than mine.
Originally posted by @Duncan Taylor:
As to Rich Dad existing...
In an interview by SmartMoney magazine, published February 2003, Robert Kiyosaki gave an answer that is surprisingly vague, yet real: ""Is Harry Potter real? Why don’t you let Rich Dad be a myth, like Harry Potter?"
As to his effectiveness as a 'teacher'...
http://abcnews.go.com/2020/story?id=1982669
The last line in the story is spot on...
"Which begs the question: Does anyone really need 18 books to learn to fail?"
So, are SmartMoney magazine and ABC News part of that conspiracy against RK?
I ran across that in my searching as well. I've read different view points on that quote and some seem to believe it's taken out of context and he really didn't mean that Rich Dad isn't real. I also ran across several articles after 2003 where he says it's true. Here is one, just look at question and answer 11-12 paragraphs down.
http://www.cnn.com/2005/WORLD/asiapcf/03/16/talkasia.kiyosaki.script/
I could probably find 100 places where he says it's true and only one place where he says something that some have viewed as him saying it's false. The problem is, most people focus on the *1* article and make no mention of the 100 other times he's said it's true. If in that article, he said a quote like "Rich Dad is false, I made it up", it would be different, but he's never said that. The quote he said is very vague and without context when it's quoted alone and maybe purposefully misleading and people are interpreting it how they want to. For all we know, he did it to garner press when book sales were down (the whole "any press is good press" thought).
And as to whether or not he's a good teacher, or whether his ideas or good or not, opinions on that are fine. People post on BP all the time whether or not they like someone's teachings or whether or not they agree with their philosophy. That ABC article has nothing to do with whether or not Rich Dad doesn't exist BTW.
Show me a quote from Robert where he says "Rich Dad is not real, I made him up." or show me definitive proof (an 11-year old vague quote with no context around it isn't that proof) and I'll let it go. Until then you said something as if it were 100% true and there is no proof of that. That's the problem I have.
His book "Rich Dad, Poor Dad" was an eye-opener for me. Doesn't matter whether or not there is or was and actual "rich dad" and/or "poor dad". Or even if he follows his own teaching. I haven't read any of his other stuff or spent any money on any of his training or seminars or programs or whatever, but the original book was great for me. Regardless of what duncan said ;-).
For me, understanding the difference between an asset and a liability was worth the price of the book. That alone has reshaped my thinking and how I look at money and the "stuff" we buy with it. I don't care if the story is real, because the lessons are.
Hey, thanks, guys. You helped me win a bet. I am drinking and eating free at the club tomorrow after golf.
Peace be with you all.
Books are great but stay away from the seminars.
Very full on selling and very uncomfortable feeling being there.
Thanks
I agree with what most have said that his books have been life altering for a lot of people, many on BP have attested to that and I am one of them. The truths in the books are in the philosophy of business and personal finance decisions and not in the facts of whether there is a real Rich Dad person. The reality of a Rich Dad person is irrelevant and focusing on that means you've missed the point of the books and not learned the needed lessons of how to think about approaching your finances and investing decisions.
I'm curious as to what the bet was :)
Also, I do agree with those who say seminars are a waste of time. Disclaimer: I say that without ever having been to one. But I do say that because I've never been to one and I've just read books (and online research and BP, etc). And I've done pretty well for myself and well on my way to financial freedom and I didn't need a seminar or some expensive "boot camp" to get there :)
@Duncan Taylor - Happy for you that you won that bet. But all of that stuff in the article truly doesn't matter to me, because my only experience with the guy has been his original book. And I'm very glad that I read it and wished that I had read it earlier in life. Prior to reading that book, the only business and/or career advice that I had ever received was to "go off to college and get that engineering degree so you can get a GOOD job". So, Robert K's book, combined with a lot of other reading since then, was very helpful to me. Enjoy the golf, lunch, and top-shelf scotch tomorrow.
Originally posted by @Duncan Taylor:
But, his premise that he knows what the 1% teach our kids is total buncombe.
Once again though, thanks for helping me win a bet.
Why is that empty talk Duncan? It is widely known that our schools educators provide no curriculum regarding money management, how to balance a check books how to invest, what investing means, etc. I don't see that as empty talk at all unless I am missing your point.
Also, what was the bet and who with?