Rich Dad Poor Dad: A Life Changing Mindset Or Just a Myth: A Critical Book Review
A Critical Book Review of Robert T. Kiyoski’s Bestseller and its Impact on Financial Literacy
Book Review By: Anjana Bohara_
Oct 9, 2024
Introduction
Rich Dad Poor Dad, authored by Robert T. Kiyosaki and Sharon Lechter, is not just another book on personal finance. It offers a fresh perspective on money, investing, and financial independence, challenging conventional thinking. The book takes the reader through Kiyosaki’s early years, where he compares the economic philosophies of two influential figures in his life: his “poor dad” (his biological father) and his “rich dad” (his best friend’s father). These two individuals profoundly influenced Kiyosaki’s understanding of money, work, and success.
A Tale of Two Mindsets
The central theme of Rich Dad Poor Dad revolves around the stark contrast between these two father figures. Kiyosaki’s poor dad, highly educated with a Ph.D., believed in working hard for a paycheck, obtaining a stable job, and saving money in the bank, following the traditional “go to school, get a job, and retire with a pension” mentality. In contrast, Kiyosaki’s rich dad, with little formal education, emphasized financial literacy, understanding how money works, and the importance of investing in assets that generate passive income. He believed in letting money work for you rather than trading time for money.
Kiyosaki brilliantly presents these two mindsets as representations of how people typically approach financial matters. The poor dad’s mentality, common among the majority, reflects a dependence on security — working a job for a stable income, often in fear of risk. The rich dad’s mentality is centered on taking calculated risks, entrepreneurship, and making money work for you. Kiyosaki encourages readers to understand, embrace, and eventually adopt this divergence in thinking in their own lives if they desire financial freedom.
Key Lessons:
Assets vs. Liabilities
One of Kiyosaki's most significant lessons is understanding the disparity between assets and liabilities. Many individuals believe that purchasing a house, for instance, is a long-term investment, but Kiyosaki argues that a house can often be a liability because it reduces money through loan payments, maintenance costs, and taxes. According to Kiyosaki, assets are things that generate income, such as businesses, stocks, bonds, real estate investments, or intellectual property.
This is a pivotal moment in the book as it compels readers to reassess their financial priorities. Kiyosaki demonstrates that accumulating wealth is not solely about working harder but also about making sharp choices with your money opting to invest in assets that appreciate in value or generate cash flow rather than liabilities that reduce your resources.
Financial Education is the Key
Another compelling concept Kiyosaki addresses is the absence of financial education in traditional schooling systems. He contends that schools teach us how to work for money but rarely instruct us on how to make money work for us. He stresses the need for financial literacy and encourages readers to continuously seek knowledge in personal finance, investing, and entrepreneurship. Kiyosaki challenges the notion that formal education equates to economic success. Instead, he promotes a different kind of education derived from real-world experiences, financial literacy, and learning how to manage risk.
Kiyosaki explains that this lack of financial education leads people into the “rat race,” where they toil for years to pay bills and support a lifestyle that doesn’t lead to true wealth. His rich dad’s philosophy of acquiring assets, investing in business ventures, and leveraging tax advantages emerges as a clear solution to break free from this endless cycle.
Breaking the Fear of Failure
Kiyosaki also tackles the emotional barriers that hinder people from achieving financial success. One of these barriers is the fear of failure. He underscores that wealthy individuals often encounter failure, but they view those failures as opportunities to learn and grow. In contrast, individuals from less affluent backgrounds are often immobilized by the fear of losing money, which prevents them from taking risks that could lead to wealth creation. Kiyosaki urges readers to overcome this fear by changing their mindset — regarding failure as part of the process, not the end of the road.
Criticism and Praise
Strengths of the Book
· Relatable stories and straightforward language: Kiyosaki utilizes relatable stories and simple language, which makes it easy for readers to grasp complex financial concepts.
· Practical advice: The book offers actionable insights and strategies that encourage readers to reconsider their approach to personal finance.
· Empowering change in mindset: Kiyosaki’s focus on financial independence, risk-taking, and education empowers readers to take charge of their financial futures.
Critiques of the Book
While Rich Dad Poor Dad has motivated millions, it has encountered some criticism:
· Lack of specific steps: Critics argue that while the book offers valuable mindset shifts, it doesn’t provide detailed, actionable steps for readers to follow. Kiyosaki encourages readers to invest in assets and start businesses, but he doesn’t go into the specifics of how to begin.
· Emphasis on real estate: A significant portion of Kiyosaki’s advice revolves around real estate investments, which may not be accessible or practical for everyone. Some readers may find his investment strategies too risky or specialized.
· Controversy surrounding the “Two Dads” story: There has been debate over the truthfulness of Kiyosaki’s story of his two dads. Some argue that it is a fictionalized account, which raises doubts about the book’s credibility.
Conclusion
Overall, Rich Dad Poor Dad remains an impactful and inspiring read that challenges traditional beliefs about money, work, and success. Kiyosaki’s advice needs readers to look beyond conventional employment and explore ways to make their money work for them. Kiyosaki presents a compelling case for pursuing financial independence and personal freedom by focusing on financial education and a growth mindset. Despite the book’s limitations in terms of specific guidance, its principles have motivated numerous readers to begin their own journeys to financial success.
For those looking to gain a fundamental understanding of personal finance and shift their mindset toward wealth-building, Rich Dad Poor Dad serves as an excellent starting point. Whether you agree with all of Kiyosaki’s viewpoints or not, his thought-provoking perspectives offer valuable insights that prompt readers to reassess their financial goals and strategies.
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