One of the best-selling books in the world is Robert Kiyosaki’s Rich Dad Poor Dad. The 1997 book compares two fathers to highlight the value of financial independence and the significance of accumulating wealth through investments. This book contains the fundamental concept of financial literacy. It contains nine big chapters, including many sub-chapters. So, here is the question: Why should we teach ourselves financial literacy? 

The answer to this question is also included in the book. In this book, Robert Kiyosaki said that earning money is a science that is not taught in schools. Schools teach us how to become employees and build careers. For middle-class people like many of us, our family, especially our dad, teaches us how to become poor. It’s not because they don’t love us; it is simply because they are not educated on this topic. He claimed in his book that poverty is like genetics; it passes from generation to generation. These six lessons are taken from this book:

  • The rich don’t work for money

Make money work for you. Life is the best teacher. Use your head. Not work hard . Pressure yourself to grind, not just seek jobs and paychecks yourselves. Most people confined themselves to fear and greed and to losing money. Tell the truth to yourself, not to others. Desire makes us work for money. 

  • Why teach financial literacy? 

Robert’s rich dad advised him that if you want to be rich, you need to be financially literate. So, financial literacy is the first step towards our richness. First, we must know the difference between assets and liabilities. All you have to do to become wealthy is purchase assets. Most people define these two definitions differently on the spot. 

A liability takes money out of your wallet, while an asset puts money in your pocket, according to Robert’s straightforward definition. In his book, he also describes the cash flow pattern of an asset. This pattern explains the balance between assets and liabilities from your income and the expenses you need to know to become rich.  Example: house is the liabilities ( tax + other costs)  The cash flow from the asset column divided by the expense column is a measure of wealth. 

  • Mind your own business

Using the most famous McDonald’s example, Kiyosaki described in his book that, as the owner of the real state in the world, in only some of the most valuable intersections and street corners around the globe, there is often a big difference between your profession and your business. We should not spend our whole lives working for someone else. Minding your own business doesn’t mean you need to start a company, though for some people, it will. Instead, your business revolves around your assets column, not your income column. So diligently build solid assets and reduce liabilities. 

  • The background of taxation and corporate power 

In his book, he claimed that the educated upper-income middle class pays heavy taxes because the rich see an opportunity because they don’t play by the same set of rules of the laws of taxes. 

A corporation is simply a legal document that creates a legal entity that reduces taxes, and the reach grabs the opportunity to become richer. 

  • The rich invest money

Our mind is the most important asset if we train it right. Millions can be made from a simple idea or an agreement. If you increase your financial intelligence, you will start seeing things that others don’t; in other words, you will start. Robbert says that the market goes up and down, and investment comes and goes. The world is always handing you opportunities of a lifetime if you simply need to be able to see them. So we should develop our finances like you to see that future change through the lens of excitement.

  • Work to learn; don’t work for money

Learn how to sell. Most people work hard to get a secure job, focusing on pay and benefits in the short term. What they should not do is work that will teach them the skills they need, so Robert’s long-term requirements and long-term use of simply working for money and security take a second job to learn second skills.  It’s like going to the gym; you might have to talk yourself into starting, but you will be so glad when you do the workout. 

The book also emphasizes how crucial it is to raise your financial IQ to launch a profitable company. It provides practical steps that teach you financial freedom at a very early age, and for this, it’s a must-read. 

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Writer

Mafroha Somiya

Intern, Content Writing Department 

YSSE