Rich Dad Poor Dad Book Review - 3 Lessons

[James Paine]

Some people love this book, some people hate it. I get it and I am ok with a debate on this post. I have thick skin. Personally I feel like I have to disclose that I read 40 or so books a year and often read books that I don’t like looking for at least a nugget or two to add value to my life and my business. 

Here are the 3 main lessons I’ve taken from this book:

1. 1. A simple but beautiful definition for my friends without a CPA or MBA: Assets vs Liabilities. Assets are things that put money into your pocket. Liabilities are things that take money out of your pocket. The best example of how this impacted my life is from the first time I read this book at I think 20 years old. I have never owned a personal residence and may never own one. The last house I lived in was in La Jolla, CA on the cliff, beach front. The house was worth something like $5MM-$8MM. The property taxes if purchased when I was renting it for the last two years would have been about $50k-$80k/year. The maintenance of the beautiful yard would have been about $3k/year. Insurance about $5k/year. If you were able to mortgage the entire thing your mortgage payments would range from $240k-$400k/year. I rented that house for $8,500/month. I took the money I saved and instead of putting it against mortgage payments like I always see realtors advertise “why are you paying someone else’s mortgage” and I bought cash flowing rental properties.
2. 2. Wealthy people do not work for money. They make money work for them. This is a lesson learned in almost every biography of the mega-wealthy investors I have studied. It is broken down into simple terms that anyone can understand. This book helps normal people think about money from a different vantage point.
3. 3. The most important thing you can grow is not your asset column (that’s second) but your financial education. I couldn’t agree more again I am reading about 40 non-fiction books a year. If you study Mark Zuckerberg, Bill Gates, Warren Buffett, Elon Musk, etc they are all fanatic readers. The more knowledge you are able to accumulate the better informed decisions you can make.

Over all I give the book a 4 out of 5-star review for the average investor and a must read review for any non-investor.