Rich Dad is Different from his Poor dad, they have a different outlook in life.
Rich Dad
- Is not academically smart he only finished grade 8
- Businessman who owns a lot of income generating assets
- He is wealthy because he makes money work for him
- He advice to study and mind your own business
Poor Dad
- A PhD who has a high educational attainment
- Academically smart but not financially smart (financial illiterate)
- Working hard for money
- He adivce "Study Hard, Get good grades, Have a high paying job with good benefits
The Big Reason Why the Poor Gets Poorer
Complainer and Blaming Others- they blame their boss, the government and wishing that if they can be promoted on their job, they will have more money and solve their money problems, they don't know that the problem is on them itself. They don't want to find ways to solve their problems so they choose to blame others and refuse to make change on theirselves.
Spending more on luxury- Most of the people after they receive their paycheck, they spend first on buying luxuries. They thought that this is a reward for them because of their hard work on their job. They buy new things like gadgets, shopping in the mall and buying all the material things that belongs to their wants even if they really don't need it. Their paycheck comes from spending in their expenses and luxuries. They don't live below their means. As a result, there's no money left for savings and investments. Robert says "Instead of living below their means, you should increase your means."
If you want a good lifestyle and increase your expenses,you should first study how to increase the earnings of your income-generating assets to live a good lifestyle that you want.
Financial Illiterate- Most of the people are not financially educated because some are close minded people, they have a lot of money problems but they refuse to learn and become educated. The poor people don't know how to manage their own money. Even their savings in the bank is zero. They have more liabilities than having a real assets that will make the money work for them.
Poor people have more liabilities than having an income generating assets. One of the reason why the poor and the middle class struggle is that they work for money and steady paycheck. This is the only one that they know to earn an income. If this is your choice, you need to work harder and longer for you to make more money. You will suffer your time with your family and the problem is our time and energy is limited. If we became old, we cannot able to work again because our physical body will become weak soon.
The income of the poor and middle class are only dependent on the salary of their job. The more you work, the more tax are levied on you. You will become disappointed because of the big deductions on your salary. The income is just spending for expenses and nothing left. When they spend beyond their means, they will borrow money from others as a result they will have a lot of bad loans and bad expenses.
In contrast with the rich people, they get richer because every year of they work to build more assts. By adding more assets, it does not require them to work harder and longer. The true wealthy can survive and maintain their lifestyle even if they don't need to work. The rich don't have more taxes they find ways to have a tax advantage. They hire people smarter than them. Their income comes from the income generating assets and making their money work for them even if they don't work for money.
Fear and Ignorance- Most of the people are afraid of risk. They are the risk-averse! The reason why some had a fear of coming out in their comfort zone is because of Ignorance. Rich Dad says that instead of being afraid of risk, learn to manage risk. They have a lack of financial education because it is not taught in our school and this is also not being taught by our parents. The result is being ignorant because most people choose to play it safe rather than taking a risk.
Some are afraid to invest in stock market because they says that it's risky.
Some are not willing to mind their own business.
Rich dad taught Robert the true reality of life because this is not being taught in our school. In school, we will just sit and listen from the academic lessons that are being taught to us but we cannot apply it in reality. In my experience, I cannot apply the other things that are taught to me by my professors in real life. I will just learn and listen in the classroom and after the class, I can easily forget the things that I've learned because of memorizing the lessons and cannot remember it by heart.
To which Robert replied, "Have you ever noticed that there are a lot of accountants who aren't rich? And bankers, and attorneys, and stockbrokers and real estate brokers.
They know a lot, and for the most part are smart people, but most of them are not rich. Since our schools do not teach people what the rich know, we take advice from these people. But one day, you're driving down the highway, stuck in traffic, struggling to get to work, and you look over to your right and you see your accountant stuck in the same traffic jam. You look to your left and you see your banker. That should tell you something."
The computer programmer was also unimpressed by the game: "I can buy software to teach me this." The banker, however, was moved. "I studied this in school-the accounting part, that is-but I never knew how to apply it to real life. Now I know. I need to get myself out of the `Rat Race.'
"Today, the most dangerous advice you can give a child is `Go to school, get good grades and look for a safe secure job,' " he likes to say.
"That is old advice, and it's bad advice. If you could see what is happening in Asia, Europe, South America, you would be as concerned as I am."
"That's why it is foolish to simply say to a child, `Get a good education,' " he said. "It is foolish to assume that the education the school system provides will prepare your children for the world they will face upon graduation. Each child needs more education. Different education. And they need to know the rules. The different sets of rules."
"There are rules of money that the rich play by, and there are the rules that the other 95 percent of the population plays by," he said. "And the 95 percent learns those rules at home and in school. That is why it's risky today to simply say to a child, `Study hard and look for a job.' A child today needs a more sophisticated education, and the current system is not delivering the goods. I don't care how many computers they put in the classroom or how much money schools spend. How can the education system teach a subject that it does not know?"
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