Reading Corner: A Review of Rich Dad Poor Dad
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Have you heard of Rich Dad Poor Dad? If you’ve read some financial books or even read lists of must-read financial books, then you probably have. The book is a best seller. It’s been reviewed hundreds of times. It’s considered a staple in the financial literacy canon. So what can I add? Well, I’m going to take an unpopular stance and tell you that this book doesn’t live up to its hype. Here’s why.
To give a little background, Rich Dad Poor Dad refers to Kiyosaki’s two “dads” and their contrasting approaches to finances and life. Kiyosaki’s biological father, who is his poor dad, supported academic education and life choices that would lead to obtaining a safe, secure job with a pension and benefits. Kiyosaki’s best friend’s dad, who is his rich dad, promoted financial self-reliance. He believed in making lifestyle choices that lead to financial freedom. Have your money work for you rather than work for your money.
Kiyosaki has some valuable advice that he learned from his rich dad. One idea he stresses is acquiring assets in order to generate passive income. Using basic diagrams, he shows how the poor use their income to pay for their many expenses (e.g., taxes, rent, food, etc.). The middle class uses their income to buy liabilities that they think are assets, such as a mortgage and car loans. The rich use their income to buy assets, which generate additional, passive income. In his words, mastering the power of money means making your money work for you. It allows you freedom, rather than being a slave to money.
Kiyosaki has a few additional takeaways that I thought were worth mentioning:
Think outside the box when it comes to making money. Most people think of their 9-5 job as their only source of income. Consider all the opportunities open to you. Kiyosaki made his money identifying opportunities in real estate.
The right mindset is important. When you come across something you want, thinking “I can’t afford it” closes the mind to considering solutions and leads to helplessness. Instead, thinking “how can I afford it?” opens up the mind to thinking of alternative solutions.
“Action always beats inaction.” I’ve read that we most regret the things we didn’t do in life rather than the things that we did. When it comes to creating financial opportunities for oneself, which is what this book is about, it’s important to take action. That’s the only way to improve your situation.
With that out of the way, here’s the nitty gritty on why this book doesn’t live up to its hype.
First, the writing is terrible. Kiyosaki starts the book with a series of childhood stories to highlight the ideas in the book. I know these stories were edited for storytelling purposes, but they’re so scripted that they’re ridiculous and unbelievable. He passes them off as the undeniable truth, giving me the impression that he fabricated these stories to sell his ideas and ultimately his book (more on this below).
Second, he frowns upon formal education. Kiyosaki writes as though higher education has no purpose. He criticizes his own father for earning a PhD. No one goes into a PhD program thinking they’re going to get rich. Not every life decision is made based on how much money one can make from it. There’s a place for formal education. After all, don’t you want your doctors and other professionals to be highly educated? Kiyosaki promotes developing skills outside of formal schooling, but he doesn’t have to dismiss formal education to do it.
Third, there’s a lot of inspiration and little substance. He provides almost no specifics on how to grow your assets other than exploring the money-making opportunities around you and sharing his experience in real estate. Real estate isn’t for everyone. It takes money to get started and losses can be great. I question some of the tactics he suggests using as well.
So if you’re looking for step-by-step instruction on how to make money or examples of how to do it beyond real estate, you won’t find it here. I didn’t need to read this book to realize that I can and have to look for my own money-making opportunities.
Fourth, he’s a best-selling author, not a best-writing author. Kiyosaki even says it himself. He’s very good at selling. His real business is being an author, selling his books and seminars. No fault to him for being successful at this business, but he makes growing wealthy sound ridiculously easy.
He briefly mentions that on average, he is successful at two or three out of every ten investments. I wonder how much he has lost in real estate dealings that didn’t go well. It’s like a gambler shouting that he won $100 but not revealing that he lost $1000 on all his other tries. He doesn’t paint a realistic picture of how much work it can take to grow wealthy.
Rich Dad Poor Dad is good for those who are completely new to finances or want some general inspiration. If you already have good knowledge of financial basics including how to create passive income for yourself, then you already know the information in the book. Given the above points, I’m surprised the book is on so many lists of top financial books to read. I’m interested in hearing your thoughts on the book. Perhaps you can help me see it differently.
Have you read Rich Dad Poor Dad? What are your thoughts on it? Did you find the book helpful to your life?