Finthoughts

In this series of “Book Summary: Rich dad Poor dad”, I've been trying to summarize the book Rich Dad Poor Dad, authored by Robert. T. Kiyosaki. It primarily focuses on management of personal finance. The book covers a various range of lessons, which a middle-class and a poor person can apply it in daily life. In the first article, we saw lessons from the book about the income and rat-race, importance of information, nature of assets and liabilities. In the second article, we covered the importance of education, concept of cashflow and cashflow of various persons. We will try to cover the rest of the lessons of the book in this article.

The real idea behind employment

Work to learn- Don't work for money

The author was 9 years old when he was offered his first job. He was offered to work for 10 cents an hour, 3 hours a week on every Saturday. The rich dad offered this job to the author and his friend Mike, when they first enquired him about becoming rich. The job was to clean the shelves of the departmental store owned by rich dad. Few weeks later, the boys were frustrated as they didn't learn anything new but just kept dusting the shelves. The author felt like wasting his time in store at the cost of missing his softball games. He felt exploited when he earned such a low income but learned nothing and expressed the same to the rich dad.

After the author ended pouring out his frustration to his rich dad, the latter simply disagreed with the feelings of the author. Rich dad said

Life doesn't teach you with words, but by pushing you around. Some let life push them around; others get angry and push back against their bosses. Some people learn a lesson from it and welcome life to push them around.

People who don't learn the lesson, spend their lives blaming everyone else. When the author had asked his rich dad, what lesson he has learned by working for 10 cents an hour, the rich dad said, “the most people blamed others when in fact their attitude is the problem.” So, what would solve the problem? Our Brain. The rich dad said that, people should learn how the money works in order to make money work for them. When rich dad asked whether the author is still interested to continue the lessons, the author nodded. Rich dad then said, he will cut down his pay fully. The author must have to work three hours every Saturday in the store for free of cost.

The author and his friend Mike, worked for three more weeks and rich dad showed up one day, took them out for an ice-cream. The rich dad, offered increment to the boys. He offered them 25 cents per hour and went up to $5 per hour which the boys didn't accept. The rich dad was glad that they didn't have a price. The key lesson here for the boys is to make them overcome the fear of having nothing. This fear of having nothing would make people earn more, which would in turn increase their greed. This would increase their consumption, in turn making them try to earn more. This is the dreaded rat race that we discussed in the part-1 of the series as well.

Earning and Learning

Job security meant everything for my poor dad. Learning meant everything for my rich dad.

We live in a world where most people are qualified with a degree and spend their lives working for a job they were offered, working for money no matter how irrelevant the job may be for their qualification and passion. They are not to be blamed completely, considering the family financial background and the circumstances they come from and live in. Very few are particular in pursuit of knowledge and learning. More than the offered salary package, the knowledge we gain and the exposure we get in that job must be considered. There are many people here who are greatly talented but struggle financially. It is the lack of financial knowledge which puts them in such a plight. With a good skill set, pursuit of knowledge and financial literacy, everyone would come out of the financial struggle and the so called rat race. My personal suggestion would be to start working for money. Invest this earned money in various assets which would create other income for us. This would give us an edge and financial independence.

Management skills

According to author, developing the skill-set to manage the below three aspects are important for our success

• Cashflow
• Systems
• People
  

Managing Cashflow

We have discussed about the concept of cashflow in great detail in the previous article. In short, the inflow and outflow of cash from and to our pockets is called cash flow. Asset makes an inflow of cash by putting money in our pockets and liabilities incurs an outflow of cash by taking money out of our pocket. Having this in our mind, and understanding the income statement and balance sheet (illustrated in previous article) of rich, middle-class and poor persons, one can easily manage his cashflow and get the knowledge of what he must do further with his wealth.

Managing Systems

Management of systems cover various areas. One such example is the Technology that you are dealing with in your profession/business. Technology gets upgraded more often than anything else. Hence it is vital for us to keep updated with such advancements, in order to efficiently apply them in our lives and business.

Managing People

Managing people is very crucial when we want to succeed in our life. No matter what our profession is, no matter what our business is, unless we equip ourselves to manage people, we can't have an edge in our profession/business. Though we should be friendly and kind towards others, we also need to be in a position to understand the tactics so that none gains an undue advantage over us. By managing people well, we can create a good network which will give us a good amount of information. We all know, information brings business to us. Therefore management of people is vital to create good business opportunities for us.

Conclusion

In the remaining part of the book, the author discusses various things such as overcoming fear, laziness, bad habits and arrogance. Bad habits not only represents smoking or consuming alcohol but also lavish spending in the financial context. When one doesn't know/ care to spend wisely, all his earnings would go in vain and he will never come out of the rat race. It is important to spend wisely as taught by rich dad. Irrespective of age, qualification, and other such criteria, we should be open for knowledge and information from anyone and everyone. By this, we will overcome our arrogance. Only by overcoming arrogance, we get good business opportunities.

The author then gives steps to develop ourselves. Few of them are: * Choosing our association carefully * Master one particular knowledge and then step out for next * Improve self discipline * Give enough to others: Brokers and middle-men. Only by giving well, we get good return. * Buy assets first, then from the income generated out of such assets, buy luxuries. * Teach others what you know. Only then you will receive new information. * Always look for new ideas for investments.

In this series of “Book Summary: Rich Dad Poor Dad”, I tried to summarize the teachings of rich dad of Robert. T. Kiyosaki, the author of the book. Though coming from a middle-class background, the author from the age of nine took lessons from his friend Mike's dad (Rich Dad) and got out of the so called rat race and is financially independent now. The author portrays those lessons in the book, which I'd recommend everyone to read, who wish to manage their finances well. This book is a perfect start for those wishing to gain financial knowledge. Will come up with some fresh and informative articles in the upcoming weeks, so that our financial journey remains heated. Happy learning until then.

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