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What The Rich Teach Their Kids About Money - 
That The Poor And Middle Class Do Not!

Robert Kiyosaki With Sharon L. Lechter


When I was growing up I had two dads. One was a highly educated teacher with a PHD (Poor Dad), the other never finished the Eighth Grade (Rich Dad). Both fathers had conflicting views on money. One Dad would say "I can't afford it" while the other would ask: "how can I afford it?" Here is what I learnt from them. 


When I was 9 my best friend, Mike, and I were tired of other kids not wanting to play with us because we were 'poor kids'. When we asked Mike’s dad (Rich Dad) how to make money he agreed to teach us. 

Rich Dad put us to work dusting cans in one of the corner stores he owned. The pay (10 cents a week) wasn't much. After 3 weeks dusting and not learning anything I decided to quit. I saw Rich Dad and demanded a pay increase. I told him that he wasn't keeping to the bargain and teaching us about money. He disagreed. In 3 weeks I was already sounding like his employees, he said. Life pushes you around, he said. 'Some people just give up and quit every time life pushes them. Others take the opportunity to learn'. 

"Most people are afraid of not having any money. That's why they take a low paying job. Some people say I exploit my employees but they really exploit themselves." He convinced me I had a good opportunity to learn so I agreed to keep working. "Good," he said, "But his time you'll work for nothing." 

I worked for 3 weeks with no pay when Rich Dad came by. He told us how most people let their emotions do their financial thinking rather than their brains. When it comes to money most people are driven by the emotions of fear (not having enough money) and desire (to have nice things). You must always acknowledge your emotions, but don't let them do your thinking. He offered us a huge raise, which we declined. He could see we had overcome our desire by not accepting the larger pay, and we had also overcome our fear by working for nothing. This was good. We now needed to use our eyes to look for opportunities. 

A couple of weeks later I noticed the lady who managed the store cutting the cover off some comic strips and throwing away the comics. Mike and I set up a comic library for the local kids in a room at Mike's house. We charged kids 10 cents to enter the library and paid Mikes sister $1 a week to mind it. After a while we were averaging $9.50 a week. 


If you want to be rich you need to develop financial literacy. Even the difference between an asset and a liability is often confused. An asset earns you money and a liability burns your money. When you put money into assets such as stocks, bonds and investment properties you can earn money or income from them. Poor dad saw them as liabilities.

Liabilities are things that cost you money. A car loses 25% of its value the day you drive it off the lot. In addition, you have many other expenses such as loan repayments, insurance, registration, running and maintenance costs. 

The rule is that if you want to get rich, put your money into income earning
assets. This doesn't mean not to buy a home or car - just think don't think of them as assets. 

Lets look at the cash flow of the rich, middle class and poor. The poor tend to spend all of their money on living expenses, (food, clothes taxes etc) regardless of what their income is. Everyone has living expenses but the poor spend all of their money on them. The middle class tend to spend most of their money on liabilities such as credit card debt, personal loans and mortgage repayments. While the rich also have living expenses and liabilities they focus their money on purchasing income-producing assets. 

Wealth is not so much about your level of income but your pattern of spending. Even people with relatively high incomes can easily find themselves struggling or broke. And people who win big in lotto usually find that after a couple of years they are back to where they started. 

If you want to change your financial circumstances you need to change your pattern of spending. If you find yourself in a hole - stop digging.



Most people who continue to struggle financially rely on their weekly paycheque. Job security is now a thing of the past and shouldn't be relied on. You have to start minding your own business. By this I don't mean throwing in your day job, but start building assets. 

In my early days I worked on a commission basis at Xerox selling photocopiers. I used the money I made to purchase real estate. Within 3 years the income I was earning from real estate was greater than what I could earn selling photocopiers

The rich focus on increasing their assets while everyone else focuses on increasing their income. But when your income increases so do your expenses and liabilities. Most people rush out and purchase expensive consumer goods, home entertainment systems, cars, clothes, holidays… as soon as they can. The rich deliberately delay doing this until they have a good portfolio of assets bringing in a steady income. 


It wasn't until 1874 and 1913 that England and the United States respectively introduced permanent income taxes on their citizens. Initially it was levied only against the rich but it soon trickled down to the middle class and the poor.

The rich have never sat around waiting to be taxed but have made sure they conduct research to find where the best tax advantages lie. And often these tax advantages are available to everyone but it is the rich who are 'minding their own business' and making use of all the tools and opportunities that are available to them. 

The poor and middle class don't do much financial research. Many people today still don't the legitimate tax deductions they can make, for instance and suffer because of it. You need to gain financial literacy in order to understand how to best use your money and make it work for you. 


Self confidence is one of the biggest things that hold us back in life. Boldness is the thing that gets us ahead, financially and otherwise. And we all possess at least some of it. If you want to succeed to financially we need courage to take risks and not cling to what we think is secure. 

The more we develop our financial IQ the more options we have available to us. For example, in the early 1990s the economy in Phoenix was terrible. People were going bankrupt. Houses that were once $100,000 were going for $75,000. In the bankruptcy courts I was able to pick up these same houses for $20,000 or less. I would quickly resell these properties for $60,000 making a $40,000 profit. I did this 6 times and made $190,000 in profit and the total amount of time it took was only about 30 hours. 

Think about how long it would take to save $190,000 out of your income and how much it would cost you in taxes to save it. This proves that no matter what the economic climate you can always succeed if you have good financial intelligence. This is just one example of the many different transactions I made on the way to financial success.


There are many skills you must master in order to be successful. The most important skills are in the areas of sales, PR, marketing and advertising. 

A journalist I met wanted to become a best selling author. She had written some good novels but nothing had happened. I told to her to take a course in sales. She was offended at this suggestion and said she would not stoop so low as to do anything in sales. I pointed out that she was already a good writer. However, she would need sales skills to become a best-selling author. 

It is important to find employment where you will learn a lot of different skills even if it means earning less in your take home pay. When I graduated I went into the Merchant Marines. This taught me much about international trade. I then joined the Marine Corps in order to learn about leadership. I left there to join Xerox where I learnt to sell. 

Take the long term approach. Find employment where you can learn these skills, even if it means taking a second job. 


There are five main steps once you overcome the obstacles. 

  •   Fear. Nobody likes losing money. However if you can't handle your fear about it you won't be able to make any. One of the most common reasons for lack of financial success is that people play it too safe. One thing you can try and do is to think like a Texan. They live their life big. They either win big or they lose big. There is a saying that "everyone wants to go to heaven but nobody wants to die". 

  • Overcome cynicism. Don't listen to cynicism from yourself or others. Especially don't take advice from someone who hasn't done what you want to do. Many people give advice on things they know nothing about. Don't let this influence you.

  • Laziness. People can be lazy in a number of ways. Some people keep themselves busy doing everything but the one thing they need to do. A good way to overcome this is to enlist the emotion of greed. Think about all the things you can have and do once you've achieved your financial goals. 

  • Habits. Create good habits especially in the area of money. Pay yourself (in savings or investments) first before you do anything else with your money.


These are the steps I suggest you follow to awaken your financial genius

  1. You need a big dream. Some thing that is strong and will drive you to success. 

  2. Use the power of choice.  For example, you could sit at home and watch TV all day or you could take a course in financial planning. The choice is yours

  3. Choose your friends carefully. Choose people who have great personal characteristics that you admire. 

  4. Keep learning. The world is changing rapidly. What may have worked yesterday might not work today. 

  5. Pay yourself first. Spend money on assets before you do anything else with your pay cheque. 



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