The author grew up in a sugar plantation town in Hawaii where both the poor and the rich kids attended the same school. His best friend’s father was rich, whereas his own father, state superintendent of education, was highly educated but limited financially.
As the author put it, the “poor Dad” would say, “I can’t afford it.” Whereas, the “rich Dad” would ask, “How can I afford it?” His “poor Dad” advised him to study hard to work for a corporation. His “rich Dad” advised him to study hard to own a corporation. Education needed for both, but different focus and different subjects.
Remember hearing this? “Go to school, study hard, and get a good job.” But we’re not really taught how to deal with money at school or at home since not very many people know the answers. Take accounting classes or investment classes, and you get the methods and infrastructure for the two topics, but you don’t get the extra part of learning how true investors really analyze their investment decisions.
Today we’re facing global and technological changes that are greater than during any other part of history. So far there are “two choices: play it safe or play it smart by preparing, getting educated, and awakening your own and children’s financial genius.”
Money is not taught in schools. Schools focus on scholastic skills and professional skills, but not financial skills. The author’s belief is that the national debt is caused because of highly educated politicians and other government workers making financial decisions based on little or no training on the subject of money. He says it’s time to have bold, new ideas in order to keep up with the changing times.
The “rich Dad” did not mean we’re to buy everything we want, but when we ask “How can I afford it?” this will stimulate the brain into thinking of solutions giving exercise to our brain, the same way our body requires exercise. The author states, “Proper physical exercise increases your chances for health, and proper mental exercise increases your chances for wealth. Laziness decreases both health and wealth.”
The “poor Dad” would say, “When it comes to money, play it safe, don’t take risks.” “Rich Dad” would say “Learn to manage risks.”
“Poor Dad” thought the rich should pay more taxes to take care of those less fortunate. “Rich Dad” thought taxes were a punishment against those who produce and a reward for those who don’t produce, since everybody’s salary between January and May pays for the taxes for the whole year.
One Dad felt the house they lived in was the largest and best asset, but the other Dad felt that owning a house was a huge liability, and if it was your largest investment, then it was trouble.
One Dad believed in job protection and job benefits while the other Dad believed in being self-reliant, not having an “entitlement” mentality because it created weak and financially-needed people.
One Dad thought of himself as “never being rich,” whereas the other Dad thought of himself as being rich at all times, even when financial setbacks hit, because he said there was a “difference between being poor and being broke…broke is temporary, poor is eternal.”
One Dad wanted the author to get a degree as a lawyer, accountant, or business major to work for money. The other Dad wanted him to attend college and learn how money could work for him, telling the author, “I don’t work for money. Money works for me!”
Over 30 years, the “rich Dad” taught 6 main lessons, repeatedly, starting when the author was 9 years old.
The author asked his “poor Dad” how to be rich, and his father responded that he had to use his head to figure out a way to make money. The author and his best friend, Mike, used their heads and became partners, collecting toothpaste tubes from all the neighbors, melted them down since they were made from lead and not plastic, and poured the melted lead into plaster of Paris molds inside school milk cartons. They were making lead nickels. When his father arrived home from work, asking what they were doing, their response was, “We’re making money!” The father then had to take them both to the front porch steps and explain what “counterfeiting” meant, and that their lead nickels were illegal. But he did tell them to keep going, telling them that they’d be poor only if they gave up since most people just talk about getting rich.
The “poor Dad” then explained that the rich kids they were referring to at school had nice cars and nice houses because they worked for the sugar plantation company that provided the cars and homes, and that when the sugar plantation had financial problems, the “rich” kids would lose their nice home and car. He encouraged them to seek counsel from Mike’s father, the “rich Dad,” because of how many times the banker had said how brilliant Mike’s dad was at making money (warehouses, restaurants, construction of roads and housing development, convenient stores). Mike was shocked to hear this about his own father because there was no nice house or nice car!
When the boys asked the “rich Dad” to teach them how to be rich, he replied that if they worked for him, at 10 cents per hour for 3 hours every Saturday at one of his superettes, he’d teach them how to be rich, but it would not be classroom-style, it would be life-style, and if they chose not to work, he would quit teaching them. They took the cans off the shelves, feather-dusted them, and replaced them on the shelves, every Saturday for 4 weeks, when the boys decided they were being used and demanded a raise or they’d quit. The “rich Dad” laughed, saying he’d been waiting for this day to finally happen so they could move to the next level of being taught how to be rich.
“Rich Dad” explained that it was life that pushes people into learning things, not sitting in a classroom, and that people do one of 3 things:
1. some let life keep pushing them into submission, making them unteachable, depending on their fear to keep them safe
2. others fight back by blaming others (boss, spouse, job, pay, etc.) and quit one job to seek another job, living life waiting for that big break that will solve all problems,
3. or the wise people learn: “The poor and middle class work for money. The rich have money work for them!”
LESSON #1: The Rich Don’t Work for Money
The 9 year old was then told, in order to move to the next level and learn the lesson of not working FOR money, he could either quit, or keep the job and work for free. The author was shocked by this new offer, but accepted the challenge out of curiosity on how this would teach him what he wanted.
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