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I first read Rich Dad Poor Dad in high school, but it was not until I re-read it later as a working young adult that I truly appreciated its lessons.

Now, I have to say that this book will not give you actionable steps to building wealth. It does not teach techniques that you could apply to grow your nest egg or squeeze more money out of your budget. This lack of step-by-step guidance is the most common criticism of the book and quite understandably so.



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But don’t lose interest just yet.

To me, Rich Dad Poor Dad is about mindset. If you are relatively new to personal finance, it will be an eye-opener that will undoubtedly transform how you think about money and wealth-building.

It was first published in 1997 and has remained one of the best-selling personal finance books to date.

What makes this book so well-received? Let’s dive right in.


The book primarily contrasts the lessons that the author learned from the two most influential figures in his life, his poor dad (his biological father) and his rich dad (his friend’s father).

His ‘poor’ dad is not poor in conventional terms. He is a highly intelligent and educated man with a PhD and a well-paying job. However, he struggles financially because of his lack of financial literacy. In contrast, his rich dad only has an 8th grade education but becomes one of Hawaii’s wealthiest people due to his financial literacy.

Rich Dad Poor Dad


Lesson #1: Invest in financial literacy

The poor dad’s main emphasis is on acquiring a good conventional education to secure a promising job with excellent benefits. On the other hand, the rich dad’s primary focus is on acquiring a good education to start a business or buy existing businesses.

An investment in financial literacy is critical to building and maintaining wealth. Kiyosaki writes, “it is not about how much money you make, but how much you keep.”

To his point, can you think of any famous athletes who made multi-millions but became broke or even bankrupt later? How about lottery winners who quickly squander their windfall within a short period only to end up in their initial financial position?

While making more money is essential to attaining financial independence, knowing how to keep what you earn is equally important. Otherwise, lifestyle creep can keep you from ever making any real financial progress. As such, financial literacy is critical to achieving financial freedom.


Rich Dad Poor Dad recommends training your financial intelligence in accounting, investing, markets and Law.

  • Accounting: enables you to read and understand numbers presented in company financial reports as well as other statements such as mortgage amortization schedules, bank statements, etc.
  • Investing: this is critical to growing the money you have worked so hard to earn. Saving money is great, but it is only the first step to financial independence. Investing allows your money to work for you, and if done correctly, it can provide exponential growth and financial stability for the future.
  • Law: this knowledge will allow you to understand the tax advantages and personal protection provided by corporations. Understanding the law will help you to keep more of your money legally.

Lesson #2: Get your money to work for you

The author argues that the poor and middle-class work for money, but the wealthy have money work for them.

The poor dad continually works hard at his job but does not make much financial progress. He trades his time for money every day. In contrast, the rich dad works to acquire and improve upon his assets. He often buys businesses, real-estate with positive cash flow, etc. As such, he does not trade his time for money but instead acquires assets that make him even more money.

It may seem that the author is making a case against employment, which is not necessarily the case. Many people have achieved financial independence while holding full-time jobs. The main takeaway is to ensure that you invest in income-generating assets (stock market, real estate, side hustles, etc.) and thus have your money working for you.

Lesson #3: Beware of liabilities disguised as assets

Kiyosaki describes an asset as anything that puts money in your pocket. On the other hand, a liability is anything that takes money out of your pocket.

Liabilities cost money to acquire and maintain regularly. The common types of liabilities include houses, cars, designer items, phones, credit cards, etc.

Most people consider their residential homes an asset. However, a house takes money out of your pocket in mortgage payments, utilities, taxes, maintenance costs, etc. It can, however, become an asset if you eventually sell it at a profit.

Cars are also commonly considered personal assets. However, cars depreciate rapidly and cost a lot to maintain (gas, insurance, servicing, etc.). Your car is a liability unless used for income-generating commercial purposes.

Assets, on the other hand, help you to build wealth by generating passive income. Assets include stock market investments, income-generating real estate, businesses, etc.

It is also worth noting that your job is not an asset as the income ceases whenever you stop working. But investing the income earned from your job will create an asset that generates positive cash flows and builds your wealth.

Lesson #4: Pay yourself first

The key to building wealth is acquiring assets that generate enough income to cover all your expenses.

The rich have mastered this principle as they first invest their income in assets that generate even more income for them, and pay expenses last with residual income.

In contrast,  the poor spend all their income on expenses and never pay themselves. The middle class spend most of their income on liabilities (such as mortgage and car payments) and save what is left. In other words, the middle class pay themselves last.

To become financially independent, paying yourself first is crucial.

Lesson #5: Understand the tax code

Kiyosaki argues that corporations are the biggest legal tax loophole used by the rich to keep more of their money.

Corporations allow you to pay expenses first before paying taxes and thus significantly reducing your tax burden. In contrast, employees are taxed first and then pay expenses with what is left.

The rich take full advantage of their businesses and corporate structures to minimize their taxes.

Did you know that taxes will be your biggest single expense over your lifetime? Yikes!

Therefore, it pays to understand the tax code and how to apply it legally to your advantage.


Rich Dad Poor Dad is one of the ultimate beginner personal finance books. It covers so many invaluable foundational finance principles that are truly life-altering and are, unfortunately, not taught in schools.

Although light on the mechanics, it is a great starting point and a must-read for anyone looking to kickstart their financial independence journey.

It is also available as an audiobook if you prefer to listen to your books.

Have you already read Rich Dad Poor Dad? If so, did you like it, and what was your biggest lesson from the book?

If you enjoyed this article or have any questions, please leave them in the comment section below! I’d love to hear from you! Also, please feel free to share this with anyone that may benefit from it.

“An investment in knowledge always pays the best interest.” – Benjamin Franklin

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Ever feel like money just seems to slip through your fingers month after month? Our Monthly Budget Tracker will guide you to start making the most of every dollar. It’s a game changer—get it free for a limited time!

Nikki Kirimi

Nikki Kirimi is a recognized finance professional (MBA, CPA, CMA) and founder of Money World Basics. Her personal finance advice has been featured in Yahoo Finance, MSN, and Go Banking Rates.