Rich Dad Poor Dad

(By:Robert Kiyosaki)

Project Report
Submitted to Management Department, ITM University, Gwalior

For the Fulfilment of 1st Trimester

MBA
Section - Drucker
Submitted To
Mr. N. K. Singh

Submitted By
Rahul Shrivastava Deepak S. Rajpoot Amit Saxena Vijay Mahor Charan Singh

Institute: Management Department ITM University

Author: Robert Kiyosaki is a multi billionaire by all

standards .The book basically is about what people must

S tudy h a
INTRODUCTION

learn and practice in order to become financially independent. The book talks about two different points of view about attaining financial independence (Rich dad Vs. Poor dad) His poor dad (his biological father), was a PhD holder who worked for Government, but never really attained financial independence, while his rich dad (his friends father) did not graduate from high school, but later became a very rich man Parents advice of getting good grades and jobs will not necessarily lead to financial independence, because schools do not equip kids with the information needed to ensure financial independence

Introduction of the Author A fourth-generation Japanese American Kiyosaki was born and raised in Hawaii. He is the son of the late educator Ralph H. Kiyosaki (1919 1991). After graduating from Hilo High School, he attended the U.S. Merchant Marine Academy in New York, graduating with the class of 1969 as a deck officer. He later served in the Marine Corps as a helicopter gunship pilot during the Vietnam War, where he was awarded the Air Medal. Kiyosaki left the Marine Corps in 1975 and got a job selling copy machines for the Xerox Corporation as a salesperson. In 1977, Kiyosaki started a company that brought to market the first nylon and Velcro "surfer" wallets. The company was moderately successful at first but eventually went bankrupt. In the early 1980s, Kiyosaki started a business that licensed T-shirts for Heavy metal rock bands, which was later sold in 1985. Kiyosaki's foray into the motivational speaking business began with "Money & You", a seminar company started by Marshall Thurber. These 3-1/2 day personal growth seminars focused on teaching people financial strategies and helping them achieve financial freedom. In 1985, Kiyosaki

took over the seminar business with Thurber's former partner, D.C. Cordova. They promptly shifted the market to Australia and New Zealand. During the same year, he withdraw from the business and semi-"retired" but was claimed to be homeless, leaving D.C. Cordova running the business alone. In 1994, after becoming financially independent through various real estate investments and private business operations, Kiyosaki retired at the age of 47. In 1997, after his short lived retirement, he then launched Cashflow Technologies, Inc. which owns and operates the Rich Dad[ and Cashflow brands. He is married to Kim Kiyosaki. He and Kim have settled in Phoenix, Arizona since 1994. Kiyosaki has one sister, Emi Kiyosaki, a Tibetan Buddhist nun known by the name Ven. Tenzin Kacho. He has co-authored one book with her called "Rich Brother, Rich Sister" released in 2009.

Introduction Of the Rich dad Poor dad The book is the story of a person (the narrator and author) who has two fathers: the first was his biological father the poor dad - and the other was the father of his childhood best friend, Mike the rich dad. Both fathers taught the author how to achieve success but with very disparate approaches. It became evident to the author which father's approach made more financial sense. Throughout the book, the author compares both fathers their principles, ideas, financial practices, and degree of dynamism and how his real father, the poor and struggling but highly educated man, paled against his rich dad in terms of asset building and business acumen. The author compares his poor dad to those people who are perpetually scampering in the Rat Race, helplessly trapped in a vicious cycle of needing more but never able to satisfy their dreams for wealth because of one glaring lack: financial literacy. They spend so much time in school

learning about the problems of the world, but have not acquired any valuable lessons about money, simply because it is never taught in school. His rich dad, by contrast, represents the independently wealthy core of society who deliberately takes advantage of the power of corporations and their personal knowledge of tax and accounting (or that of their financial advisers) which they manipulate to their advantage. The books theme reduces to two fundamental concepts: a can-do attitude and fearless entrepreneurship. The author highlights these two concepts by providing multiple examples for each and focusing on the need for financial literacy, how the power of corporations contribute to making the wealthy even wealthier, minding your own business, overcoming obstacles by not fostering laziness, fear, cynicism and other negative attitudes, and recognizing the characteristics of humans and how their preconceived notions and upbringing hamper their financial freedom goals. The author presents six major lessons which he discusses throughout the book:

The rich dont work for money The importance of financial literacy Minding Your own business Taxes and corporations The rich invent money The need to work to learn and not to work for money

Character Summaries Rich Dad, Poor Dad revolves around three main characters: poor dad, rich dad (Kiyosakis second father) and the son (the author himself as narrator of the book). The essence of each character is:

Poor dad educated but lacking the street smarts Rich dad very little education (eighth grade), tons of street smarts

Kiyosaki the spectator who learns lessons from both but internalizes only rich dads traits

Poor Dad The author compares his poor dad to the millions of fathers who encourage their sons to do well in school so they could get a good job with a good company. Poor dad believed in the traditional principles of working hard, saving money, and not buying material things that one cannot afford. He believed that having a good job with a solid company is what one should aspire for; hence he expresses disappointment when his son leaves the employ of a large, reputable corporation. Poor dad looks to education as the passport to success. He held a doctorate degree, went to Ivy League universities, but was always struggling financially. He believed he would never be a rich man and the author points out that this became a self-fulfilling prophecy. Poor dad was more interested in a good education than the subject of money. The author wrote that his poor dad would always say things like, Im not interested in money or money doesnt matter. The author points out that poor dad was preoccupied with things like job tenure and security, Social Security, vacation and sick leaves, company insurance and salary raises and promotions. The author felt that his poor dad was more interested in these factors rather than on the job itself. This is what the author calls being trapped in the Rat Race. His poor dad worked hard incessantly but somehow never made it ahead financially. Poor dads approach to the subject of money was based on working hard to have enough money to pay the bills (in contrast to rich dads approach to make ones money work for him).

Rich Dad The author wrote that it was when he was nine years old that he started realizing that his rich dad made much more sense than his poor dad. It was from rich dad that the author learned not to say, I cant afford it, but instead to ask, how can I afford it? He explains this principle by relating an incident when he and his best friend Mike went to work for Mikes father. Rich dad paid them very low wages deliberately so that would

stir anger and a sense of injustice in them and eventually for them to realize that in order to get ahead, one must work for himself and not for others. For example, in that part of the book when the author complains to rich dad that he can hardly afford to buy anything with the wages he is paid, rich dad tells him that he shouldnt dwell on the fact that his wages are low, but instead ask how can I make more money because this stimulates the brain to take action. His rich dad says that when someone says, I cant afford it, his brain stops working. It therefore kills initiative and promotes passivity. The author adds that while his poor dad invested time and effort in education, he did not have any knowledge on investing. His rich dad, by contrast, was very skilled in the investment game because thats all he did. The attitude of his rich dad about money was manifested in the saying the lack of money is the root of all evil (his poor dad, on the other hand, believed that the love of money is the root of all evil). According to the author, rich dad also nurtured the idea that taxes punished producers and rewarded the nonproducers. He was the type who encouraged money talk at the dinner table and was portrayed by the author as someone who learned to manage risk, instead of not taking risks.

The Son (Robert T. Kiyosaki) The author begins his book, Rich Dad, Poor Dad, by saying that he is fortunate in having had two fathers. He learned valuable lessons from both of them, but in Chapter One it becomes evident which father had the more sensible approach towards money. He compares and contrasts both fathers views about working hard, getting an education, saving and investing and realizing how habits of the rich and poor significantly differ. He attributes his financial acumen through the many conversations he carried out with his rich dad.

The author takes a common sense approach to the subject of money and emphasizes the need for accounting knowledge so that the reader clearly understands what assets and liabilities are. He makes simple diagrams that show the inflow and outflow of money and how the rich build up the asset column and the poor build up the liability column (expenses). It is obvious that the author places much importance on accounting knowledge no matter how boring it is - because he says it is the most important subject in your life. By using numerous examples and anecdotes, the author drives home his messages effectively, revealing his procapitalist stance. The author also shows his understanding of the mechanisms employed by the government and the tax man and concludes that it is the middle class that actually pay for the poor. The rich are the ones who are hardly taxed because they have the knowledge to use tax legislation to their advantage.

Chapter Summaries
Chapter 1: Rich Dad, Poor Dad
The story of Robert Kiyosaki and Mike starts in 1956 Hawaii, when both boys were a nine years old. Their first get-rich scheme was a counterfeit nickel making company. They made plaster molds of the nickels and melted lead toothpaste tubes and filled the molds to produce the nickels. Their plan was foiled by Mike's father, who informed the boys of their illegal activity. After that day, the boys dedicated their free time to leaning about finance and economics from Mikes father, the rich dad.

The first lesson Mikes dad made the boys experience was hatred of the Rat Race. He was able to achieve this by making the boys work in one of his grocery stores for three hours for ten cents an hour pay. Within a few weeks, Kiyosaki, tired of being exploited for labor, demanded that he receive a raise, but instead, Mikes father cut his pay and told him to work for free. Eventually, both boys tired of being under appreciated (and unpaid) and they met individually with Mike's father. In their meetings with rich dad, he apologized for lack of pay and he offered them either the moral of the lesson or a pay raise. Both boys chose to learn the moral of the lesson, while rich dad offered them pay raises. He started at twenty-five cents, a dollar, two dollars, and even five dollars, which would have been considered a large amount of money for an hourly wage, but the boys still remained strong with their decision to learn the moral of the lesson. The lesson to get out of the Rat Race and instead of spending your whole life working to put a little money in your pocket and a bunch of money in someone elses pocket, have people work hard to put money in your pocket. Out of all the lessons that were taught to the boys, this one was the most important. (Kiyosaki and Lechter 28-35). According to Robert Kiyosaki's Rich Dad, "The poor and middle class work for money. The rich have money work for them."

Chapter 2: The Rich Dont Work for Money

The author tells his readers to forget the notion that life teaches. He says the only thing that life does is push you around.

This chapter talks about people who are more comfortable in playing it safe because they were not taught early to take risks. The author develops the ideas that the poor and the middle class work for money, fear and greed cause ignorance and poverty, and the importance of using ones emotions versus thinking with emotions. The author also stresses that opportunities in life come and go; the rich recognize them instantly and turn them into gold bullions. Others do not see these opportunities because theyre too busy seeking money and security. As the author says, well thats all theyre going to get.

Avoiding the trap

-fear and greed -The rat race - work to spend and spend to have -job is a short term solution to a long term problem -The poor and middle class believe that money is real and that the company or government will look after them. -Dont work for money i.e. dont depend on your boss to make you rich -Learn how to make money work for you by cutting your expenses moderately, investing wisely and creating opportunities to earn passive incomes outside of salaries -Seek to be a business owner and/or an investor, rather than an employee Robert Kiyosaki said about the rich person and poor person is that

The only difference between a rich person and poor person is how they use their time

If you want to be rich then don't work for money. The rich don't work for money and yet they still get richer and richer. Most people work for money and because they work for money they remain poor or average and fail to become rich. I want to share with you why the rich don't work for money and how you can act like the rich and become rich also.

Have a look at your everyday person. They go to work 9-5 to work for money. At the end of each month they receive a paycheck. But each month they need to go back to work because they need to receive their paycheck in order to survive. If they stop working they can't afford to eat. Each month they don't get any further ahead and they are still required to work in order to survive. Now let's look at the rich. They don't work for money, they work to acquire assets. Assets are things that put money in your pocket whether you work or not. Rich people work to build businesses, or to buy real estate, or to buy investments. The more they work the more their assets grow, and as a result their passive income (income they don't have to work for) goes up. Every day they work their assets grow and their passive income goes up, meaning they don't have to work to survive. Their passive income from their assets will fund their expenses, giving them more time to spend getting rich instead of working for someone else. The rich don't work for money because money doesn't make you rich. A lot of people think money is what makes you rich but it's not. If money made you rich then why do so many people who win the lotto go broke within 5 years. Money does not make you rich in and of itself, it's what you do with your money that makes you rich. Do you want to know what the rich do with their money? The rich buy assets that generate them passive income. The rich buy their assets first, then they use the passive income from their assets to pay for their expenses (like their food, their mortgage, their cars, their fun and entertainment). The rich don't need to work for money, because their assets generate them money anyway, so instead they work to acquire more assets so that they can become richer and richer. I hope I haven't confused you. Let me make it simple, as asset is something like a rental investment property, where there is more rent coming in than there is expenses going out (like mortgage, rates, tax, management etc). This means their is money left over every month that goes

into your pocket. Another example of an asset is a business where you don't have to work in it. Any McDonalds you drive past is an asset to its owner. The owner hires managers to run the day to day management of the store. The managers hire and fire staff and run the shop. The owner is the one that gets all the money at the end of the day, even though they didn't have to work for it. Rich people work to get assets like real estate and businesses, they don't just work for money so they can get by. It is a completely different attitude and though pattern and that is why the rich get richer while the poor stay poor. The rich have better ideas and a better strategy. Whenever the rich work they generate passive income that lasts their lifetime, so when they stop working the money keeps coming in. When the poor and average stop working the money stops. If you want to be rich then you need to stop working for money. You need to work to acquire assets that generate you passive income. Maybe you could start a business in your spare time, or maybe you could save some money and invest in some positive cashflow real estate. As soon as you start acquiring assets getting rich becomes easy, because you no longer have to work for money just to pay the bills. So start getting financially educated so you can start acquiring assets. Your next step towards becoming rich is to increase your financial IQ through education. By educating yourself in the area of finances you will be able to get a greater return on investment and you will be able to earn more with less work and less risk. Does that sound good to you? Here is a statement Bill Gates, the founder of Microsoft Corporation and richest man on the planet has made: If you are born poor, its not your fault; if you die poor, its your fault. You may have been born poor, but that does not mean you have to die poor. It depends on how you handle the money you make from your job, farm, or sales you make if you are a street seller. If you spend it all, you will die poor,

and you cannot blame anybody for that. But if you make money work for you by investing it, you can become and die rich.

Chapter 3: Why Teach Financial Literacy

The story of Kiyosaki and Mike continues later in life, 1990, and both of the now adults have made incredible leaps and bounds with regards to their finances and their socioeconomic status. Mike was able to take the lesson from his father and apply them to his life. He took control of his fathers large business and increased every aspect of the empire and he is currently raising his son to take control of the company once he retires. As for Kiyosaki, he was able to retire at the age of 47 with his wife Kim. At a business meeting at the Edgewater Beach Hotel in Chicago, Charles Schwab, Samuel Insull, Howard Hopson, Ivar Kreuger, Leon Frazier, Richard Whitney, Arthur Cotton, Jesse Livermore and Albert Fall met to talk about different investments and money schemes. Twenty-five years later, a report stated that a large majority of those extremely wealthy people that met in Chicago either ended up in jail, dead or penniless. The major idea to take from the results of these unfortunate entrepreneurs is that you need financial literacy to be and stay safe. The idea that was represented with the big 1920s entrepreneurs is still prevalent today with some of the professional athletes making poor financial decisions and ending up with next to nothing. This specific lesson is meant to teach people not to be wise with your money once you have it, but rather be smart with your money before you have it. In a way, dont try to build a skyscraper or even a house without building a strong foundation first. According to Kiyosaki, there is one rule, and only rule that can help a person to build a strong foundation; know the difference between an asset and a liability, and make sure that you only control assets. (Kiyosaki and Lechter 56)

When it comes to beliefs about money buying freedom and the ability to enjoy retirement without fear of outliving ones money, this chapter catches the essence of the authors advocacy for financial independence. He says, Intelligence solves problems and produces money. Money without financial intelligence is money soon gone. The author believes that financial literacy begins with a working knowledge of accounting. It is essential to know the difference between assets and liabilities. To make these two terms understandable to readers, the author makes a rudimentary diagram of these two concepts to motivate them to purchase assets in order to solidify the asset column, while keeping the liabilities (expenses) to a bare minimum. The author states that poor people remain poor because they do the opposite. They pile up on their liabilities and have zero assets so that their balance sheets and income statements look out of kilter. People have to understand that its not how much they make, but how much they keep according to the author, and this is an essential principle that this chapter focuses on. Financial intelligence equips you with the what is required to make money that will last for generations, while money without financial intelligence is soon gone. Financial literacy teaches that it does not matter how much money you make, but how much money you keep. It also teaches that Investments can be made at each income level and if you invest today you will guarantee your financial future. Differentiate between an asset and liability, and invest in assets Assets generate income, while liabilities generate expenses; i.e. your GSM mobile phone could be an asset or liability depending on what it is used for. 1. You must know the difference between an asset and a liability and buy assets.

-The rich buy assets but the poor and middle class buy liabilities they think are assets. -The cash flow pattern of an asset is from Assets to Income. (pg 60) -The cash flow pattern of a liability is from Liabilities to Expense. 2.The financial nightmare - hard working educated couple marries and begins their careers. - decide to save for dream home, and so work hard to make more money taxes go way up . - They buy their new house and furnish it, and now have property taxes, mortgage and credit card debt. - Kids come along who cost money and so the parents work harder and up go the taxes.
3.

As an employee who is a homeowner: -you work for someone else and are making the owner(s) or shareholders rich. -you work for the government, from Jan to May to pay your taxes. -You work for the bank, paying off your mortgage, student loans and credit cards.

4. Remember this simple observation: -The rich buy assets -The poor only have expenses -The middle class buys liabilities they think are assets

According to Robert kiyosaki Academic qualifications are important and so is financial education. They're both important and schools are forgetting one of them.

Chapter 4: Mind Your Own Business

In this chapter, the author slowly introduces the concept of real estate investing and uses McDonalds as an example. He points out that McDonalds may not make the best hamburgers in the world, but owns the most valuable intersections and streets in America. The author remarks that individuals need to mind their own business if they wish to become financially self-sufficient. They shouldnt mind their employers business, they should strive for ways to become their own boss and nurture their own businesses. The author continues his discussion on building assets. To him, real assets are anything with value stocks, bonds, mutual funds, income-producing real estate, notes, royalties from intellectual property, etc. This chapter also reveals the authors investment preferences: real estate and stocks. For real estate, he says he starts small, and trades his properties for bigger ones and then delays paying taxes on capital gains through one IRS mechanism. Mind your own business. i.e. while excelling with your qualifications and keeping your day

time job, also look for other opportunities elsewhere to accumulate wealth Do not depend only on a salaried job, or else you will continue to work for your boss, the government and the banks (if you have taken a loan), with little or nothing left to invest in yourself What are assets? -Business that do not require your presence to run and make money -Stocks -Bonds -Mutual Funds -Income generating real estate -Royalties from intellectual property -anything else that has value and produces income

Chapter 5: The History of Taxes and the Power of Corporations

The author states that the poor let the big machinery (corporations) manipulate them whereas the rich know how to use big machinery. This means that the rich possess the knowledge and savoir faire to use the power of the corporation to protect and enhance their assets. The advantage of a corporation versus that of the individual lies in how corporations pay taxes, according to the author. He makes this point clearly: individuals earn money, pay taxes on that money, and live with whats left. The corporation, on the other hand, earns money, spends everything it can, and is taxed on anything thats left. The author adds that individuals may not be aware of how much theyre being manipulated; they work from January to mid-May to enrich the government by paying taxes on their income. In the meantime, the rich are hardly taxed.

The author recommends developing ones financial IQ as one way of leaving the humdrum of daily existence. This is accomplished by gaining knowledge of accounting, investing, understanding the markets, and the law. He says being ignorant gets you bullied whereas being informed translates into you have a fighting chance. Where the cash flows make sense, you are better off managing your finances through a corporation rather than as an employee, because of the different tax advantages you can get. . As an individual, your income is taxed, and what you have left is your disposable income. . As a corporation, you first make your money, then you take out your expenses. The profit is what is taxed, hence you pay less tax. In this chapter , Robert Kiyosaki talks about the history of taxes and the power of corporations. Taxes are an extremely important factor to your overall wealth simply for the fact that they are generally a person's greatest expense. In fact, most people work 3 to 4 months out of the year just to pay taxes to the government. It used to be that Americans were anti-tax, especially in regards to federal income taxes. According to Kiyosaki, it was the idea of "stealing from the rich to give to the poor" that eventually convinced the mass public to buy into the idea of income taxes. So, as the story goes, it was the rich who were targeted as the main source of additional tax revenue. However, as the size of the government increased, so did its expenditures and its need for more capital. The most natural thing for the government to do was to place more of a tax burden on the poor and middle classes. After awhile, the rich succeeded in finding loopholes to protect more of their income from the government. However, the poor and middle class remained the oblivious victims of our income tax system. The loopholes that the rich began to take advantage of were found through the use of corporations. In the words

of Robert Kiyosaki, "A corporation is merely a legal document that creates a legal body without a soul." There is a misconception that corporations are only for big businesses with buildings, hundreds of employees, large operations, etc... However, anyone can create a corporation. It is relatively simple and would only require a little study on how to set one up. One advantage of having a corporation is that you can pay for many of your everyday expenses with before tax dollars. Another advantage is that there are several tax deductions that are available to corporations that are not available to individuals. Also, corporations are great tools for asset protection. For more on corporations, Kiyosaki recommends a book called Inc. and Grow Rich. Aside from the history of taxes and corporations, Kiyosaki mentioned four broad areas of expertise that you should study to increase your financial IQ. As I discussed before, increasing your financial IQ is critical to your becoming and staying rich. Below are the four areas mentioned by Kiyosaki:
1. Accounting - Ability to read and understand

financial statements; allows you to identify strengths and weaknesses in a business 2. Investing - Kiyosaki refers to this as the "science of money making money". This includes real estate, stocks, bonds, etc... 3. Understanding Markets - There are two types of analysis that you need to understand: 1) Fundamental analysis - economic sense of the investment based on current market conditions. 2) Technical analysis - study of emotion-driven price movements and indicators 4. The Law - Simply, a person with knowledge of corporations, accounting, investing, tax advantages, etc... will be able to get rich much faster than someone without that knowledge

Chapter 6: The Rich Invent Money

The author develops the concept of self-doubt. He says that each person is born with talent but that talent is suppressed because of self-doubt and fear. He remarks that its not necessarily the educated smart people who get ahead but the bold and adventurous. People never get ahead financially even if they have plenty of money because they have opportunities that they fail to tap, he stresses. Most of them just sit around waiting for opportunity to happen. The authors idea is that people create luck; they should not wait around for it. He says its the same with money. It has to be created. In this chapter, the author discusses the importance of an education (although some critics say that he appears to downplay its importance). The author is clear by saying, a trained mind is a rich mind. In his analysis, there are two types of investors, each with a different mind set: those who go for the packaged investment, and those who customize investments to suit their objectives. The author encourages people to hire people more intelligent than they because by capitalizing on the knowledge of others, an intelligent individual builds his own knowledge base and therefore has more power over those who dont know. Learn by heart that you can use other peoples money to create a financial empire for yourself without necessarily using yours i.e. it takes money for you to make money, but you dont necessarily have to use yours. For you to be wealthy, the earnings from your assets (investments) should be enough to fund your expenses. You dont qualify to incur additional liability, until you have funded an asset which yields enough income to fund the liability.

Seek to attain a point where if you resigned from your job, you could fund your lifestyle using unearned income from your investments. The reason that people except such low returns for their money is generally because they don't have any other options. To emphasize the importance of having options, Kiyosaki told the story of a 45 year old manager who was fired by his employer due to a downsizing. The manager was on his knees, in front of news cameras, begging the guards to let him talk to the owners to reconsider his termination. He had a wife and two babies, and he was also afraid of losing the home that he had just bought. This manager had no financial stability outside the comfort of his job and no other options due to his lacking financial intelligence. He was holding on to the old ideas of financial stability and believing that his company would always take care of him. According to Kiyosaki, "limiting your options is the same as hanging on to old ideas." After hearing this story and knowing that there are millions in similar situations, it is easy to see that this hanging on to old ideas is dangerous. Developing financial intelligence is simply about having more options. Having knowledge of accounting, investing, the markets, and the law will allow you to receive greater returns on your money and build up your assets much faster than the average person. In addition, not only can you learn how to get better returns on your money, you can also invent money. Due to the rapid changes in our economy and the development of the internet, this statement is more true now than it was nearly 10 years ago when Rich Dad Poor Dad was written. The key to unlocking new sources of assets and cash flow can be summed up in this quote by Robert Kiyosaki: "The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant." Kiyosaki gave several examples of how he has invented money through small company stocks and the real estate

market. In one of the examples, he was able to create $190,000 of real estate notes without using his own money. This is how he did it: There was a time between 1994 and 1997 when the real estate market was depressed and the supply of homes greatly outnumbered the demand. So, a house that was normally worth $100,000 was then worth $75,000. However, instead of shopping at the local real estate office, Kiyosaki searched the county courthouse and spoke to bankruptcy attorneys to find deals. As a result, he was able to get this $75,000 house on contract for $20,000 and a $2000 down payment that he borrowed from a friend. While the acquisition was being processed, he immediately began to offer the home in the newspapers for $60,000 with no money down. The house sold quickly, he asked for a $2500 processing fee, and the remaining $40,000 ($60,000 - $20,000) was added to his asset column as a note charging 10 percent annually. If you do the math, he was receiving around $400 per month for structuring the transaction this way. He was able to complete six deals similar to this one within a 2-3 year period.

The prior example was used to show you that money can be invented if you develop your financial intelligence. As I stated before, developing financial intelligence can also help you to make your money work hard for you. This can be accomplished by learning how to invest. According to Kiyosaki, there are two types of investors. The first type of investor simply purchases an investment as if he was shopping for retail goods. These investments can be real estate, stocks, bonds, etc... and are packaged to be bought in a simple manner. The second type of investor is creative with the way he puts his deals together. Again, this was demonstrated in the last real estate example. The main idea is that financial intelligence is the key to

creating money and having money work hard for you.

When it comes to making more money, most people have tendencies to simply work harder instead of exploring their options. The other theory people subscribe to is to put a little money away every month into some type of savings account and let the interest compounding work for them overtime. The problem with this theory is that it works extremely slow. If you take inflation and taxes on your interest into account, you'll see that you're getting a very poor return on your money.

Chapter 7: Work to Learn, Dont Work for Money

This is the chapter where the author talks about the skills individuals need to develop for financial success. The reader is given an example of a young woman who had a Masters Degree in English Literature and who was offended when it was suggested that she learn to sell and do direct marketing. After all the hard work for her degree, she didnt think she would have to stoop so low to learn how to be a salesperson, a profession she didnt think very highly of. The author uses this example to emphasize that there are other skills people need to cultivate to help them on the road towards financial freedom. The author mentions management skills. He says individuals need to know how to manage cash flow, systems, and people. To that he throws in selling and marketing skills. He puts equal emphasis on communication skills. He says there are many people who have the scientific bent and hence have a powerhouse of knowledge, but they fail miserably in communications. These are the people who are one skill away from great wealth.

The author calls attention to one outstanding trait of great wealthy families: they give money away plenty of it unlike the poor who feel that charity begins at home. Dont grab a job for what you can earn, pick a job to learn about business systems, about managing people and other skills that would prepare you to run your own business, or manage your own investment Money can be illusion that clouds good judgment. Fear and greed do not allow people make rational decisions Dont specialize to much -An expert is someone who knows more and more about less and less till he knows everything about nothing. -The more you specialize, the less options you will have. -A broad understanding of economics, history, politics and business will only help you make money. In the Rich Dad Poor Dd book that has inspired millions, Author, Robert T. Kiyosaki talks about working to learn, rather than working for money... regardless of your current income. The question to be asked is, can education free us from proverbial the rate race? I find this a very interesting topic and standpoint. So often are we driven by the fear of not having enough money and the desire to have more to solve all of life's problems. I soon learnt that this way of seeing money is the exact thing that keeps us trapped and working for money, rather than having money work for us. We clock up bills, and think that by getting a higher paying job we will soon be debt free. We marry, or not, get a bigger house, have children, desire to travel and consume as a result of emotional reaction. Basically, we want to enjoy life but get caught in the endless cycle of earning, spending, earning, spending, on

and on it goes. We want the freedom to do what we want, when we want without limitations, and so we should. So, why are so many of us trapped in a money dominated system? The common Education and money cycle 1 you get yourself an education 2 you get yourself a good job because of your education...and then, 3 you are working for money. You may be in your chosen profession, getting payed. But you are still working for money. You need to pay the bills, pay the bills, and pay the bills... So, you may stretch to 4 get more education, which leads to 5 A better payed job, hopefully...which leads to 3 you are working for money. You may be in your chosen profession, getting payed, but you are still working for money. You need to pay the bills, you need to pay the bills, and you need to pay the bills... (No, that was not a typo. It's is clearly a cycle.) Robert T. Kiosaki also refers to a job as a J.O.B = Just Over Broke. The alternative to a J.O.B? 1 be your own boss, 2 determine your own value and earnings accordingly 3 choose who you work with and develop your own team of great people to work with. 4 be connected to the most up to date and effective education by leveraging off the internet If we are not doing this our businesses in cyber fail, if we are leveraging off the net, we are up to date with the latest most efficient ways to keep growing our businesses, with unlimited potential. We are living in the great time of information. Since the www, information is constantly floating around cyber

24/7.The internet is our greatest and fastest technical tool, to spreading information, around the globe. So, how can this help you earn an income and your freedom? The best education you could involve yourself in right now is to research the internet, for a way to start your own business. Read this letter to better understand the opportunity for being an educated and independent income earner. The Author's Odyssey After college graduation Robert Kiyosaki joined the Marine Corps. He learned to fly for the love of it. He also learned to lead troops, an important part of management training. His next move was to join Xerox where he learned to overcome his fear of rejection. The thought of knocking on doors and selling copiers terrified him. Soon he was among the top 5 salespeople at the company. For a couple of years he was No.1. Having achieved his objective, overcoming his shyness and fear, he quit and began minding his own business. Learn skills like PR, marketing, and advertising. Take a second job if it means learning more. A Difference in Education Schools train professionals. Professionals become so specialized they cannot apply themselves in other fields and need to form unions to protect their jobs. Remember you can have a profession, say, learn to be a pilot if you want to learn how to fly, but at the same time mind your own business. The rich "groom" the next generation by training the heir in all aspects of running the business. They move him from department to department so he learns how each one relates to the other. Specialization is not the key here, but picking up important lessons from each area and seeing the business as a whole. Rich Dad groomed Kiyosaki and Mike in the same manner. Mike would later take over Rich Dad's empire, which

included restaurants, convenience stores, and a construction company. Kiyosaki created his own empire with real estate, new products and educational materials. Five Obstacles to Financial Independence 1. Fear. Don't play it safe and cling to what you think is secure. If you don't go for it and think big you won't be able to earn big. 2. Cynicism. Don't listen to advice of others who are not doing what you intend to do. Listen to your self and those who are doing what you aim to do. 3. Laziness. Greed is good and fights laziness. Think about the freedom and money you'll have and you will put in those extra work hours. Change your thinking. Instead of saying "I can't afford it." Ask yourself "How can I afford it?" Challenge your mind to create solutions. 4. Bad Habits. Spending habits should turn into saving and investing habits. 5. Arrogance. Don't think you know everything there is to know about money. Listen to others. Enroll in useful seminars.

Chapter 8: Overcoming Obstacles

The opinion of the author is that five personality traits hamper human beings: fear, cynicism, laziness, bad habits, arrogance. He explains that while its normal to have fear, what matters is how one handles it. The author shares his sentiment about his particular fondness for Texas and Texans: When they win, they win big and when they lose, its spectacular.

The author maintains that its not merely a question of balance but also FOCUS. He recommends that the Chicken Littles of the world be ignored. Theyre only concerned about the sky falling, spending the rest of their lives in pessimism. He says he constantly hears people saying they want to be rich, but when its suggested that money can be made from real estate, their initial reaction is but I dont want to fix toilets. The author believes its ironic that theyre more concerned about trivia like fixing toilets rather than what lies ahead in real estate. As a final point, the author states that it is healthy to be greedy, so when faced with a decision, a person must always ask, Whats in it for me?

Chapter 9: Getting Started

This chapter serves as a section on tips to create and build personal wealth. His first tip is, find a reason greater than reality to motivate you. What he means by this is to wake up the financial genius in oneself by empowering the mind. He says that people must have a strong /purpose for living.

The next tip is to feed the mind. By feeding the mind, the author contends that people acquire power of choice. The author also advises people to choose friends carefully. He says to avoid people who proclaim incessantly that the sky is falling and instead encourages readers to spend time with people who enjoy talking about money because they may have valuable lessons to share. The author also believes that people should study one field, and then go out and learn a new one, although it is important to choose what one studies. Here is another tip that the author observes most people dont practice: pay yourself first. Even if short of cash, people must pay themselves first. This goes in tandem with managing three things efficiently: cash flow, people and personal time. Another tip the author gives is being generous. He thinks it makes a lot of sense to pay ones broker well as hes an ally, and your eyes and ears to the market. The author suggests having heroes. They are indispensable in life because they not only inspire, they also make it seem so easy. They stimulate the human mind into thinking, If they can do it, why cant I? Teach and you shall receive is another tip that the author shares. His words are eloquent concerning this idea: There are powers in this world that are much smarter than we are. You can get there on your own, but its easier with the help of the powers that be. All you need to be is generous with what you have, and the powers will be generous with you.

Chapter 10: Still Want More? Here are Some To Dos

This chapter is sort of a supplement to the previous chapter. It gives readers additional tips to help them reach for financial rewards. One tip is to stop doing what youre doing that is, if its no longer working or viable. The author encourages readers to look for new ideas, to pick

the brains of individuals who have the experience and who have already done what one aspires to do. He advises on keeping the learning curve alive, taking courses, buying tapes, attending seminars. In looking for real estate investment opportunities, the author recommends looking in the right places. One way of doing this is to jog around the neighborhood one is interested in. People can acquire real estate even if they dont have sufficient funds for the down payment. In fact, with a bit of cleverness, the author says people can even make money with no capital.

Conclusion
The author concluded by stating that parents should teach these lessons to their children early enough, in order to guarantee their childrens financial future It is never too late to start building your financial empire. You could start right now, with your next pay check, or by looking around you, to see which need you can fulfill

First, I want to give my comments for 'Rich Dad, Poor Dad' by Robert T Kiyosaki. I want to thank him for such a great book and has opened my mind to a whole new angle about financial freedom. According to Robert T. Kiyosaki's book 'Rich Dad Poor Dad', he mentions about the Cash Flow Quadrant. The Cash Flow Quadrants are Employee Quadrant, SelfEmployee Quadrant, Business Owner Quadrant and Investor Quadrant. Most parents think that their kids need to go to college after finishing high school to achieve higher education in hoping to get a good job in a real life. This perception is not wrong but it's just not perfectly guarantee that their kids will be rich or success after getting a good job. As long as you still working for a company, you still can not be richer than the owner of the company. I also have a bad experience before. I worked for couple years in a start up company until I got laid off because the company was not doing very well. At that time, I thought that working with people can not guarantee me for life. Then, Robert Kiyosaki's book changed my mind. The book makes me realize that I had to move on and move to business quadrant or even investor quadrant. I want money works for me not me works for money. Again, I am not selling Mr. Kiyosaki's book here. I am just applying what he wrote in his book in my real life and I am starting to get the result now. And I am happy with it. Now, you might asked me then how to make money works for us not vice versa. Well, one ways is that by creating a passive income. Passive income can be sustained by many ways, like Mr. Kiyosaki, he created passive income by dealing in the real estate business. He even joined Amway and he was focusing in this business for 5 years until know he must earned a lot

of money from his passive income. In conclusion, what I want to say is that again you have to open your mind not working with people for the rest of your life. You might need to work with a company for couple years to get enough investment for you to move to business owner quadrant or event moving to the highest level of the quadrant which is an investor quadrant.