If you only ever read one book in your life, make this it. I feel this book has the potential to transform your life more than any other book because it explains the simple formula to financial freedom. It gives you the information so that you no need to spend the majority of your life trading your time for money to pay bills. Of course you may already be rich or love your job but the majority of us could use some extra cash or would love to not have to go to work. Personally I wish I’d have read this earlier in my life as I am now on the path of implementing everything in this book and have set myself a goal to gain financial freedom in the next 6 years. Had I started ten years ago I would probably already be financially free.
The method Robert Kiyosaki explains how to become rich is to spend your money buying assets that produce passive income, rather than liabilities which simply cost you money. Some types of assets that you could invest in are listed below (from page 135) :
- Property
- Businesses that do not require the presence of the owner
- Stocks
- Bonds
- Income generating real estate
- Notes (IOUs)
- Royalties from intellectual properties such as music, scripts and patents
- Anything else that has value, produces income or appreciates, and has a ready market
There are a number of simple to follow diagrams comparing the balance sheet of the poor, the middle class and the rich. This shows the cash flow between your Income statement (your income compared to your expenses) and your balance sheet (the assets and liabilities you own).
He goes on to explain you need to increase financial intelligence, as even academically smart people can be financially stupid. Financial intelligence consists of these four main technical skills (explained on page 192) :
- Accounting.
- Investing.
- Understanding markets.
- The law.
There are three main management skills needed for success which are (from page 233):
- Management of cash flow
- Management of systems
- Management of people
Of course even by reading this book and having all the information in the world, it will make no difference if you don’t implement the ideas he explains. Robert Kiyosaki explains there are five reasons why financially literate people may not become financially dependent (page 247):
Fear – Don’t let fear take you out of the game. Playing it too safe will get you nowhere. Most people play not to lose, when they need to be playing to win. Winning usually follows losing. Be inspired by your failures. You won’t meet anyone rich who hasn’t lost money. Focus – follow one course until successful.
Cynicism – Identify and quiet the noise. Don’t allow doubt to keep you from acting. Don’t live in fear of making mistakes. Learn from them. If you play it safe opportunities will pass you by. Don’t doubt. Doubt is expensive. I don’t wants hold the key to success. Cynics criticize and winners analyse.
Laziness – Overcome with a little greed. Ignore guilt trips, do it anyway. Don’t procrastinate by putting off what’s really important. Rather than saying, I can’t afford it say “How can I afford it?” Greed to have something better is how progress is made. Too much is bad but a little can spur you on.
Bad habits – To be successful you need successful habits. Â Pay yourself first then use fear of not paying your bills to motivate yourself
Arrogance – Every time you lose money it’s down to arrogance of thinking what you don’t know isn’t important. Overcome it by educating yourself with an expert or a book.
I will confess I wrote down so many quotes from this book so rather than explain the book anymore I will list all the gold nuggets of information that are in my favourite quotes from the book:
“Taxes are highest on earned income and lowest on passive. As rich dad would say, the government taxes income you work hard for more than income your money works hard for.” pg 349
“Its whats in your head that determines what is in your hands.” pg 349
“You and your children’s future will be determined by choices you make today, not tomorrow.” pg 345
“All of you were given two great gifts: your mind and your time. It is up to you to do what you please with both.” pg 345
“Ordinary income is money you work for, and passive and portfolio income is money working for you.” pg 344
“The key to financial freedom and great wealth is a person’s ability to convert earned income into passive and/or portfolio income.” pg 342
“Buy the pie, and cut it into pieces. Most people look for what they can afford so they look too small.” pg 334
“Its fun and only a game” Pg 333
“Small thinkers don’t get the big breaks. If you want to get richer, think big.” pg 328
“Always remember: Profits are made in the buying, not in the selling.” pg 327
“Search, offer, reject, negotiate, and accept are all parts of the process of almost everything in life.” pg 326
“…easy and simple the game is. So many people make things too difficult and take it too seriously.” Pg 326
“That’s how the game works. The game of buying and selling is fun. Keep that in mind. It’s fun and only a game. Make offers. Someone might say yes.” pg 325
“The world pushes you around and puts pressure on you. And if you don’t have the tolerance for financial pressure you’ll never become rich.” Pg 314
“Do not listen to poor or frightened people. To them, when it comes to investments, the sky is always falling. They can always tell you why something won’t work” pg 313
“The more I teach those who want to learn, the more I learn” pg 306
“It is true that your world is only a mirror of you” pg 306
“Poor people are more greedy than rich, if a person was rich, that person was providing something that other people wanted.” Pg 305
“Copying or emulating heroes is true power learning” pg 303
“Remember, the easy road often becomes hard, and the hard road often becomes easy.” pg 303
“Too often today, we focus on borrowing money to get the things we want instead of focusing on creating money.” pg 302
“The sophisticated investors first question is ‘How fast do I get my money back?'” pg 298
“The rich know that savings are only used to create more money, not to pay bills” pg 295
“I was like a good soldier defending the fort – Fort Assets.” pg 295
“…have the guts to go against the tide and get rich” pg 293
“People who have low self esteem and low tolerance for financial pressure can never be rich.” pg 290
“Working hard for money is an old formula born in the days of cavemen” pg 289
“Its not so much what you know anymore that counts, it is how fast you learn.” pg 289
“You become what you study, be careful what you learn, because your mind is so powerful that you become what you put in your head” pg 288
“Wise investors buy an investment when it’s not popular” pg 287
“There is always another wave” pg 287
“In the market, it is usually the crowd that shows up late that is slaughtered” pg 286
“One of the hardest things about wealth building is to be true to yourself and to be willing to not go along with the crowd” pg 286
“Listening is more important than talking” pg 285
“A truly intelligent person welcomes new ideas.” pg 285
“Intelligence combined with arrogance equals ignorance” pg 284
“Arrogant or critical people are often people with low self esteem who are afraid of taking risks” pg 284
“Most people simply buy investments rather than first investing in learning about investing.” Pg 283
“Without a strong reason or purpose, anything in life is hard” pg 282
“There are many people in the world of money, finances and investments who have absolutely no idea what they’re talking about.” pg 268
“If I pay myself first, I get financially stronger, mentally and fiscally.” pg 267
“My asset column is far more important to me than the government” pg 266
“Do what you feel in your heart to be right – for you’ll be criticized anyway. You’ll be damned if you do, and damned if you don’t” – Eleanor Roosevelt. pg 265
“Guilt is worse than greed, for guilt robs the body of it’s soul.” pg 265
“Whenever you find yourself avoiding something you know you should be doing, then the only thing to ask yourself is ‘What’s in it for me?'” pg 265
“They are avoiding something important. That’s the most common form of laziness: laziness by staying busy” pg 262
“A great property manager is key to success in real estate.” pg 259
“Cynics criticize, and winners analyse.” pg 258
“Only a person’s doubts keep them poor.” pg 258
“FOCUS: Follow One Course Until Successful” pg 253
“If you have little money and you want to be rich, you must be focused, not balanced.” pg 253
“Failure inspires winners. Failure defeats losers” pg 251
“The pain of losing money is far greater than the joy of being rich” pg 250
“Everyone wants to go to heaven but no one wants to die” pg 250
“People are so afraid of losing that they lose, winning means being unafraid to lose” pg 249
“If you start young, its easier to be rich” pg 248
“Were all hero’s at something, and cowards at something else.” pg 248
“I have never met anyone who really likes losing money. And in all my years, I have never met a rich person who has never lost money.” pg 247
“The primary difference between a rich person and a poor person is how they manage fear” pg 247
“The situation you fear the most is the skill that you need to learn and conquer.” pg 243
“Rather than, “Give, and you shall receive,” he believed in “Receive, and then you give.” pg 243
“When it comes to money, the only skill most people know is to work hard.” pg 239
“To receive money, you had to give money.” pg 235
“The skills of selling and marketing are difficult for most people, primarily due to their fear of rejection. The better you are at communicating, negotiating, and handling your fear of rejection, the easier life is.” pg 234
“The most important specialized skills are sales and marketing. The ability to sale – to communicate to another human being, is the base skill of personal success. Communication skills such as writing, speaking, and negotiating are crucial to a life of success.” pg 233
“He never understood that the more specialised you become, the more you are trapped and dependent on that specialty.” pg 232
“The world is full of talented poor people,. Not because of what they know, but because of what they do not know.” pg 231
“Skills do not necessarily transfer from industry to industry.” pg 230
“Workers work hard enough to not be fired, and owners pay just enough so that workers won’t quit.” pg 225
“Job security meant everything to my educated dad. Learning meant everything to my rich dad.” pg 223
“Schools reward people who study more and more about less and less.” pg 222
“It is what you know that is your greatest wealth. It is what you do not know that is your greatest risk.” pg 214
“Luck is created. So go create yours.” pg 209
“Courage can make the difference in leading a successful life, Financial genius requires technical knowledge as well as courage.” pg 207
“Intelligent people are those who work with or hire a person who is more intelligent than they are.” pg 204
“Investing is not buying. It’s more a case of knowing.” pg 204
“Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure often avoid success.” pg 201
“Sometimes you win and sometimes you learn. But have fun. Most people never win because they’re more afraid of losing.” pg 201
“Great opportunities are not seen with you eyes. They are seen with your mind.” pg 200
“The smarter you are, the better chance you have of beating the odds.” pg 199
“If the opportunity is too complex and I do not understand the investment, I don’t do it. Simple math and common sense are all you need to do well financially.” pg 195
“Id rather welcome change than cling to the past.” pg 194
“I want to be with people moving boldly forward. I do not want to be with those left behind.” pg 185
“The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth seemingly instantaneously. An untrained mind can also create extreme poverty that can crush a family for generations.” pg 184
“Financial intelligence is simply having more options.” pg 183
“Often in the real world, it’s not the smart who get ahead, but the bold.” pg 175
“Every time people try to punish the rich, the rich don’t simply comply. They react. They have the money, power and intent to change things. They don’t just sit there and voluntarily pay more taxes.” pg 172
“My rich dad just played the game smart, and he did it through corporations – the biggest secret of the rich.” pg 172
“Each dollar in my asset column was a great employee, working hard to make more employees and buy the boss a new Porsche with before-tax dollars.” pg 160
“I wanted out of the employee trap so badly that I worked even harder so I could invest more.” pg 160
“Be smart and you won’t be pushed around as much.” pg 158
“If you work for money, you give the power to your employer. If money works for you, you keep the power and control it.” pg 157
“The rich focus on their asset columns while everyone else focus on their income statements.” pg 145
“When assets generate enough income to cover luxuries, that’s when you can buy them.” pg 144
“Mind your business. Don’t spend your whole life working for someone else.” pg 141
“An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.” pg 137
“Life is sometimes tough when you do not fit the standard model.” pg 133
“Financial struggle is often directly the result of people working all their lives for someone else. Many people will simply have nothing at the end of their working days to show for their efforts.” pg 131
“It’s not how much you make but how much you keep” pg 115
“Wealth is a persons ability to survive so many number of days forward – or if i stopped working today, how long could I survive?” pg 110
“…When it comes to money, high emotions tend to lower financial intelligence” pg 101
“An intelligent person hires people more intelligent than he is” pg 97
“Remember the golden rule. He who has the gold makes the rules.” pg 95
“A person can be highly educated, professionally successful, and financially illiterate” pg 95
“if you find you have dug yourself into a hole, stop digging” pg 94
“Cash flow tells the story of how a person handles money” pg 90
“Rich people acquire assets. the poor and middle class acquire liabilities that they think are assets” pg 79
“Intelligence solves problems, and produces money.” Pg 77
“It’s not how much money you make. Its how much money you keep” pg 75
“Stop blaming me and thinking I’m the problem. If you think I’m the problem, then you have to change me. If you realize you’re the problem, then you change yourself, learn something, and grow wiser” pg 71
“When emotion goes up, intelligence goes down” pg 60
“The fear of losing is greater than the excitement of winning” pg 36
“The poor and the middle class work for money. The rich have money work for them” pg 19
“Broke is temporary. Poor is eternal” pg 15
So if you want to gain control over your life by achieving financial freedom rather than exchanging time for money, read this book and put the information into practice. It will change your life…
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