"Rich Dad Poor Dad" - A financial book review
Below is an essay I wrote on the book "Rich Dad Poor Dad" in July of 2019. This book is what lit the fuse and kicked off my burning desire to increase my financial literacy. Take a look at my reading list to see why I have it listed under the section "Don't recommend."
I chose to read Rich Dad Poor Dad by Robert T. Kiyosaki for my financial self-help book this semester. Of all the titles in the list offered to us, this book stood out as the one most likely to take me to a place I had not previously been in my financial education. This assumption proved to be quite correct. In these few weeks it has been a considerable catalyst for change in my personal life, my work life, and as well as my family’s financial life.
My first time through was listening as an audio book. By the time I finished, I went to a local book store to purchase a paperback copy. I knew I would be revisiting it many more times, and I wanted to be able to physically mark it up for future reference. I found the paperback to be organized in a way that wasn’t expressed in the audio book. Each chapter ends with a multipage summary as well as a practical application “Additional Questions” section. The author truly wants you to ponder over the words he’s offering and apply them.
The one topic that stood out to me the most was the difference between assets and liabilities. Simply stated, an asset is something that puts money into your pocket, and a liability is something that takes money out of your pocket. The author warns against traditional debt, but goes further making sure readers understand that automobiles and even homes are not assets, but rather liabilities. This principle proved to be the most controversial among the other class members who read the same book as their homes and automobiles tended to be their greatest investments to date. These are things that most of us have to go into debt to acquire, and for individuals doing it for the first time it can be unfamiliar and mistake can be made that limit future growth. Elder Ezra Taft Benson in 1962 was quoted as saying “I do not mean to say that all debt is bad. Sound business debt and reasonable debt for education are elements of growth. Sound mortgage credit is a real help to a family that must borrow for a home. Use credit wisely, to acquire an education, a farm, to own a home. But resist the temptation to plunge into a property far more pretentious or spacious than you really need.” When we purchased our home, we were surprisingly approved for a loan that far exceeded my current income. While we could have bought a much larger home, we refrained and purchased a modest home that we knew we could afford. The authors true purpose in discussing this topic is to get the reader to focus on putting their excess money into assets that will generate income, including investments such as the real estate and the stock market.
If you are going to have money to invest in assets, it is important to pay yourself first. The author very clearly states “if you cannot get control of yourself, do not try to get rich.” Self-discipline is required to make sure that money is constantly being allocated to create assets first. If done correctly, these assets can generate income that will fund your liabilities. When the author wanted something new, he focused on creating assets that would generate the income to purchase thing he wanted as a reward for exercising self-discipline. Looking back, I have spent a significant amount of money on items that sit on shelves and don’t get used. This reminds me of the spiritual guidance our Savior gave of “lay up for yourselves treasures in heaven… for where your treasure is, there will your heart be also.” As I’ve focused on obtaining financial self-discipline, I have found that I have obtained self-discipline in other aspects of my life as well.
As I have delved into studying about the financial markets and how to leverage them as an income generating tool, I started to worry about the reasons I was doing it. When I started to share the knowledge that I was gaining with others it helped me know I was on the right path and pursuing a worthy objective. This principle is taught by the author as “teach and you shall receive: the power of giving.” His rich dad was quoted as saying “If you want something, you first need to give.” In the last few weeks I have turned into a financial responsibility evangelist. I have found the desire to help people avoid the situation that I find myself in. It has been very rewarding to strike up conversations with people about the simple investment opportunities that are available to everyone regardless of your economic background. With just a small amount of education I have already seen people overcome the fear of the unknown and turn small amounts of money into large amounts of future hope. It did strike me as funny how easy I’ve found it to start conversations with people about a topic as sensitive as personal finance, yet I still have trouble discussing the gospel with friends. Teaching people financial awareness has opened my eyes to how easy it should be to teach people about the gospel of Jesus Christ.
The fifth chapter titled “The Rich Invent Money” states “financial genius requires technical knowledge as well as courage… take risks, be bold, let your genius convert that fear into power and brilliance.” This is similar to the gospel teaching that faith without works is dead. Once you have obtained a financial education, it takes action and courage to turn that knowledge into financial success.
There is much to be said about the power of positive thinking. As I have turned my focus to creating financial assets and made changes in my life towards those ends, I have found that I have also started focusing on turning many other aspects of my life away from being liabilities and having more characteristics of assets. I will be forever grateful for this assignment and the opportunity of reading this book. Since I initially read it weeks ago, I have also finished two additional financial education books, taken a number of online courses related to stock markets and options trading, passively participated in an online tax lien sales auctions to observe how they work, and a number of other tasks that have been just the beginning of my financial re-education. With everything I learn and do, I am trying to take Elder Scott’s advice to “measure everything against the teachings of the Savior” to make sure my actions and desires are working towards our ultimate goal of salvation and eternal life with our Heavenly Father.
The following is a list of resources cited in this paper.
- Robert T. Kiyosaki, author of “Rich Dad Poor Dad”
- Ezra Taft Benson, 1962, quoted by Max W. Brown in the article titled “What constitutes necessary debt, and how do we follow counsel from Church leaders to avoid unnecessary debt?”
- King James Bible, Matthew 6:20
- Richard G. Scott, “Removing Barriers to Happiness”