Rich Dad's Classics
by Robert T. Kiyosaki with Sharon L. Lechter
Published by Warner Books
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Reviewed by Bob Pike, CSP, CPAE-Speakers Hall of Fame
Anyone who is interested in saving money, investing, or financial security who has not heard of Robert Kiyosaki or Rich Dad, Poor Dad has been on another planet. Since 1997 Kiyosaki has built a financial education empire around the concept expressed in his first book, Rich Dad, Poor Dad. Rich Dad's Classics is a boxed set of three of Kiyosaki's books in their most up-to-date printing.
Rich Dad, Poor Dad: In this the original, the author details the things he learned from his "two fathers." The first, his biological father, was a well-respected educator who spent most of his life needing to earn money to pay for things that demonstrated his status. Since he worked for money rather than putting money to work for him he is referred to as the "Poor Dad."
The "Rich Dad" was his best friend's father. He spent less than he earned and put the difference to work in building a business, developing land and real estate, etc. Since he put money to work for him he was referred to as the "Rich Dad."
The book reveals the simple truths: Those that build wealth and have money working for them, put to work every day. The average person is unaware of this simple truth. It is understanding what an asset is (something that generates money passively) rather than what it means from an accounting standpoint. If you have to pay into something every month, it is a liability because you owe. When it pays you it is an asset. For most people, then, their house, viewed on a balance sheet as an asset is really a liability. Though there may be equity there is a constant service on the debt.
The Cash Flow Quadrant: In the second book of the series, the author explores the four positions one can be in with respect to money: employee, boss, investor, self-employed. He argues that education is geared toward teaching people that the "e" or "s" quadrants are good places to be: get a secure job and save for retirement or get into a good profession and save for retirement.
Kiyosaki, on the other hand explains that real wealth and ultimate financial security is in either being a boss of your own business that leverages the efforts of others or being an investor who either invests in things that produce a positive cash flow or businesses that do the same. In each of the first two books, there are simple steps to move from employee to investor.
Rich Dad's Guide to Investing: In the final book, the author drills down into the fourth quadrant, the investor. He explores how people can move into the "I" quadrant while staying in one of the other quadrants. This book is really a financial literacy book. Here Kiyosaki demystifies what financial literacy is all about, what you need to know to start investing, and what it takes to succeed long term in the "I" quadrant.
He also deals with the feelings that this whole process is likely to raise in the average person--like what happens when you make an investment mistake (and you will)? Do you become a liar, a blamer, a justifier, a quitter, or a denier (there's one more--the only place to really go--but you'll have to read the book to find that out!
Armchair Interviews says: If you want to be either a business owner or an investor this series of books should not only be on your bookshelf, but read, underlined, and applied.