Nov 25, 2006

Book Review: Rich Dad, Poor Dad by Robert Kiyosaki

My dad gave me a copy of Robert Kiyosaki's book, Rich Dad, Poor Dad years ago but I didn't get around to reading it until a few weeks ago. I wish I'd read it earlier, although I'm not sure I would have appreciated it quite so much. I didn't agree with everything Kiyosaki says, but I thought he had some interesting points to make.

For example, he defines wealth not in terms of net worth, but in terms of how long you can pay your bills without working. His position is that ideally, one's income comes from assets, not a job. So if your assets produce enough income each month to meet your monthly expenses, you are wealthy because you don't have to work in order to pay your bills. Kiyosaki also suggests that luxuries should be purchased with income from assets, rather than with "savings." He believes that "savings" should be used to purchase assets, which will produce income.

One theme that Kiyosaki repeats throughout the book is that maximizing knowledge minimizes risk. In a similar vein, Kiyosaki also notes that opportunities for making money are everywhere if one has the right mind set. I liked these points of view as they are quite different from my usual perspective and, I suspect, the perspective of most people.

A disturbing moment, at least to me, was reading that Kiyosaki believes that paying oneself first is so important that he does it before he pays his creditors. He claims that knowing he owes his creditors money makes him work harder to make or find money, but that it's more important to build his wealth than to pay his bills. I personally can't agree, but it's definitely an interesting point of view that makes this book a worthwhile read.

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