Title: Rich Dad, Poor Dad
Author: Robert Kiyosaki
Rich Dad, Poor Dad is Robert Kiyosaki’s infamous book on personal wealth management that surely needs no introduction. Having topped the US bestseller charts for many years since its first release in 1998, it has since found some enthusiastic followers in the UK market too. In fact, the reason I personally purchased this book in the first place is due to the overwhelming number of positive reviews on Amazon (989 and counting – not bad for a finance self-help book).
To be clear, the first couple of chapters are very good. Robert explains that as a child he had two fathers. One was a high school dropout who went on to become one of the most successful businessmen in Hawaii. The other was a very highly educated university professor who died a relatively poor man, in spite of his well paid and respected occupation. He later goes on to explain that the rich dad was actually the father of his childhood friend, and the poor dad was his ‘real’ father.
The premise of the book is that the rich understand money and know how to use it. Instead of buying liabilities like the poor do, they buy assets instead. However, here is where the book starts to fall apart for me.
A sometimes confusing message
The author states quite clearly early on that the biggest liability someone can have is their house, which is completely against years of research and the general opinion of countless financial experts. I have to say I agree with the experts. Yes, of course in order to own a house you need a mortgage, which in turn takes money out of your finances (hence it’s a liability). But unless you come from a wealthy family or have won the lottery, you’ll be forced to get a mortgage. It’s unavoidable. The only other alternative is to rent, and I’d sooner be paying off my own mortgage than someone else’s through rental payments.
The other thing that irks me throughout the book is that the author is happy to advise that owning a house is a liability but then repeats countless times that he made his own riches through owning property. I’m not quite sure what kind of message is being given here, but for me, it’s a confusing one.
Spreading the word about financial literacy
Now after all this negativity, you may be surprised to hear me say that I actually wholeheartedly recommend the book. The reason for this is that it’s one of the best financial self-help books I’ve ever read that explains the very basics of becoming and staying wealthy. That is;
- Don’t incur debt unless you really need it i.e. a mortgage. Once you’ve got debt make it your absolute number one priority to pay it off.
- Spend less of your money on liabilities (things that lose you money like cars and holidays), and spend more money on assets (things that make you money, like stocks and bonds).
Many books give this advice in a condescending tone as if you’re stupid for not already knowing it, but Robert gets the message across extremely effectively through several examples of how his rich dad became wealthy by heeding these lessons, and how his poor dad never made any wealth because he amassed too much debt.
He appears to be on a personal mission to teach financial literacy to those who are lacking in the knowledge, and as opposed to many authors, he can at least back it up with real-world experience and the fact that he has made himself a very wealthy individual by taking ‘rich dads’ advice.
It has to be applauded that the author is actively seeking to reprogram our minds to how we regard money, and the impact that debt has on our lives. If only one person takes heed of these life lessons, then any other failings contained within the book can be forgiven.